Dealing with invoices isn’t the most exciting part of running an e-commerce business, but it’s critical for getting paid. If you mess up any deets, your bank or payment processor may block a transaction, or you may face issues with the tax office (and no one wants THAT! 😣). 

Generate an invoice immediately after a customer buys your product and keep a copy as a record of sales. Include an invoice copy when shipping, especially for cross-border sales. A shipment without a proper invoice may be held at customs, causing extra headaches for you and frustration for the buyer.

To avoid such mishaps, read our refresher on how to create invoices for an e-commerce business.

What information to include in an e-commerce invoice

An invoice is a legally binding document with a standard structure. As such, it must contain the following information:

• Company details, including your legal entity name, address, tax/registry number, VAT number (if operating in the EU), and contact information.
• Unique ID number. Each e-commerce invoice must have a unique identification number to match it to a sales transaction and present it as proof of income (if a regulator asks).
• Date the invoice was issued, usually the same date as when the customer placed an order.
• Customer details. Buyer’s full name, shipping address, and location country (which must match the shipping destination) and contact information if available. 
• Product information. Add an itemized list of purchased goods, including quantities, unit prices, and totals before shipping, taxes, and other charges.
• Taxes. Add applicable VAT next to the product price. Include the total sale value first without tax, and then with all taxes applied at the bottom of the invoice. 
• Discounts. You can either add a discount in the product price line for each item individually and display a total sum with discounts applied at the bottom of the page. 
• Shipping. Include all shipping fees as a separate line and roll them into the invoice total. For free shipping, add 0 in the respective line. Include a tracking link if available.
• Terms and conditions. Add a quick summary of the main sales conditions, warranties, and other applicable store policies. Link to the full page on your website for full information. 

You can (and should!) also add some extra branding like a logo to your invoices. Most customers will view and oftentimes keep your invoices for a while, so it’s a great way to engage with them while they’re thrilled about their purchase. 

For example, you can include a personalized ‘thank you note’ and solicit a review (include a QR code for that!). Or you can include a special discount code for their next purchase. 

Example of an e-commerce invoice

How to issue an e-commerce invoice

Issuing an e-commerce invoice is simple. You can either create a standard invoice template in Word or Google Docs and manually add all customer details or use a digital invoicing tool. 

Digital invoicing solutions eliminate the hassle of manually creating hundreds of invoice copies (and inevitably messing up something). A digital invoicing app ensures all invoices are properly numbered (i.e., follow the same identification system) and oftentimes verifies the correct tax rate application.

You can get an invoicing tool from your bank, a payment services provider, or an accounting services provider. 

Popular digital invoicing solutions for e-commerce businesses 

• Xolo Leap is a one-stop-shop platform for launching and running an e-commerce business in Estonia (without living in the country unless you want to!). Our platform combines convenient digital technologies for invoicing, payment processing, and e-commerce recordkeeping, with integrated digital banking and payment processing services, and all-around accounting support. 
• Stripe Invoicing API gives access to invoice generation, payment collection (in  135+ currencies using a variety of local payment methods), and automated transaction reconciliation. With a bit of technical tinkering, you can create a fully custom e-commerce checkout experience for shoppers. 
• Square Invoices offers a sleek, simple, invoice generation experience and fast digital payment processing. On the back end, you also get plenty of great analytics features to track the state of your finances. 

How to manage e-commerce invoices 

E-commerce invoicing can easily get hectic, given that you have to manage both buyer and supplier invoices. 

An average small business owner handles over 500 invoices each month, a Webexpense survey found. The same study says that most owners spend at least five days processing invoices per month. To put that into perspective, that’s over 900 hours per year 🤯 You could find better use of your time. 

To avoid getting bogged with invoice management, you’ll need to remove three time-consuming things from your workflow — manual data entry, double-handling, and excessive communication. 

To do so, apply the following e-commerce invoice management tips. 

Set up a standardized invoice recordkeeping system

E-commerce businesses often have to deal with multiple types of invoices: 

• Account payable invoices from suppliers or manufacturers from whom you get your goods. 
• Regular account receivable invoices, issued to B2C and B2B customers when the transaction takes place. 
• Commercial invoices for cross-border transactions, which contain extra information for customs. 
• Credit invoices are generated to account for refunds or discounts, or to correct errors in previous versions. 
• Proforma invoices are used to provide price quotes before the actual sale. Popular in B2B transactions or for custom-made B2C products. 
• Receipts are issued after the sale to confirm successful payment. 

…And you must maintain a copy of each of the above invoices for bookkeeping and tax reporting purposes. So that’s a lot of work. 

To keep clean, manageable invoicing records, you should create standard templates for every invoice type to avoid subsequent issues with account reconciliation. Find an invoicing solution that supports all types of invoices you need for your e-commerce business and supports digital storage. 

This way, you can eliminate errors and inconsistencies due to manual data entry, plus easily search for a specific copy should you need to re-send it to the customer. 

Send customer invoices automatically 

Here’s how many new e-commerce business owners approach invoicing:

1. A customer places an order and makes payment with Wise. 
2. The manager manually checks their order details and inputs data into an invoicing tool to generate a receipt. 
3. Next, they download a PDF invoice copy and send it to the customer in an order confirmation email. 
4. Finally, they double-enter the same invoicing information to the accounting app for record-keeping. 

That’s a lot of work you can easily automate with different tools. Most e-commerce platforms offer automatic receipt generation, following a customer order. Thanks to pre-made integrations, you can also automate invoice creation in your accounting app. For example, Shopify integrates with QuickBooks Online, allowing you to auto-record Sales from Shopify as an invoice.   

Alternatively, you can try making a custom integration between your e-commerce platform and an accounting app to reconcile transactions and invoices using low-code tools like Zapier or Integrately. 

Monitor invoice payment statuses

Late payments to suppliers can jeopardize your relationship. While late customer payments due to technical issues or poor online payment experiences, leave you short on cash and unable to settle your other financial obligations. 

To avoid such scenarios, automate payment status tracking. You should have a clear idea of when different types of supplier invoices are due (i.e., what’s the payment term on each) to ensure you have enough money in your account to settle these. 

If you run B2B e-commerce operations, you should also track payment statuses on all customer invoices. Many companies are used to operating on a NET 30 basis, meaning invoices get paid within 30 days after being issued. You’ll have to factor in these delays by setting money aside to cover other expenses due in between. 

The above can quickly get messy without a tool for monitoring your e-commerce business cash flow. Many accounting apps offer such features, on top of invoice status monitoring. 

With Xolo Leap, for example, you get a visual dashboard, showing all invoiced, paid, and unpaid income for the day, week, month, or any custom period, as well as an equivalent view of all expenses. You can then easily jump to unpaid or overdue invoices to follow up with customers and monitor your sales volumes effortlessly. 

Back up all invoicing records 

An invoice is also a tax document. You’ll need your copies to properly calculate and remit VAT if you operate in the EU. In case of a tax audit, the local regulator may also ask you to provide copies of certain invoices. 

Moreover, your bank or a payment processor may also request invoice copies to approve certain payments as part of anti-money laundering (AML) and anti-fraud monitoring on their side. 

So you must keep historical invoicing records for 3 to 7+ years (depending on your jurisdiction) after the date of issue. Use a secure cloud storage application like Dropbox or Proton Drive to keep backup copies. 

Hire an e-commerce accountant for extra help 

E-commerce accounting is no small feat. As your business grows, you’ll have to deal with a rapidly snowballing volume of client and supplier invoices. Not to mention other bookkeeping tasks like transaction reconciliation, accounts payable management, tax reporting, and cash flow optimization. 

An e-commerce accounting app can automate a lot of data capture and provide simple financial analytics. But it still requires diligence and knowledge on your part to ensure accurate recordkeeping and precise tax report submissions. 

Hence paying for an e-commerce accountant is not a luxury, it’s a necessity for most e-commerce business owners. The good news is that you can get an e-commerce accounting app and access to a pro team for one subscription with Xolo Leap e-commerce offering, along with other ‘goodies’ like a business bank account, integrated invoice generator, and help with company incorporation in Estonia via the e-Residency program. 

Operating an e-commerce business via e-Residency allows easy access to the EU single market without the traditional hassle of establishing an on-site office (unless you want to) and dealing with endless paper forms on the ground. All the key government and tax services are digitally accessible, and Xolo Leap’s expert team will support you at every stage of your journey!