What Is an Invoice Number?

paid invoice that includes invoice number

Last Updated November 30, 2023

An invoice is a crucial business document for payment tracking and record-keeping. But if you’re dealing with hundreds of invoices per month, which the average business owner is, there needs to be a way to easily track and manage one invoice to the next. To achieve this, look no further than invoice numbers.

You’ve probably seen the seemingly random number on an invoice and glossed over it, but including an invoice number is very important, particularly when it comes to bookkeeping. This article will provide a brief explanation of why invoice numbers are important, an example of an invoice number, its difference from a PO number, and how to create unique invoice numbers.

What Is an Invoice Number?

To make transactions easier to track, manage, and record, business owners or operators like yourself assign a unique identifier to each invoice. When payment of an invoice happens, businesses include the invoice number on the receipt for the customer.

Why Is an Invoice Number Important?

Adding an invoice number is a critical step when writing an invoice. Beyond being the identifier for a payment transaction, it provides helpful organizational structure, making invoice verification much easier. Below are some of the top reasons why using an invoice numbering system is important for your business:

  • Adds Uniqueness to Each Transaction: An invoice number must be unique to each invoice. This uniqueness ensures that no two invoices are mistakenly identified as the same transaction.
  • Vital for Bookkeeping Organization: Your business might be involved with numerous transactions daily. When this occurs, invoice numbers help keep transactional records organized. They provide a clear reference point when searching for a specific transaction.
  • Tracking: Businesses need to track the progress of their invoices – whether they’re sent, paid, or overdue. For instance, if you notice a delay in payment from one of your customers, you can use the invoice number to track which invoice is causing the delay. They’ll also come in handy for invoice verification, so when your goods or services are delivered, you can easily find the invoice for the respective transaction and match what you received with what was on the invoice.
  • Communication: When communicating with clients or vendors about a specific invoice, referring to its unique invoice number ensures clarity and accuracy in discussions.

Invoice Number Example

Let’s look at an invoice number example to illustrate this concept further. You can use this as a guide to generate an invoice number for your own transactions.

Imagine you own a small business and provide a client with a consulting service. You create an invoice to bill them for this service. You assign it a unique invoice number, such as “042023001” This code not only identifies this particular invoice but also helps your client distinguish it from previous and future invoices.

Sure, adding a number to your invoice is mundane, but it’s an absolutely pivotal detail that assists both parties.

invoice example with invoice number

If you don’t have experience creating an invoice, you can start by using our small business invoice template or standard B2B invoice template.

Invoice Number vs. PO Number

You may have heard of a PO number and are now wondering, what’s the difference between a PO number and an invoice number?

The term “PO number” stands for “Purchase Order number.” While both an invoice number and a PO number serve to identify and track transactions, they differ in their purpose and when they are used.

  • Invoice Number: This is used by the seller to bill the client after goods or services have been delivered. It’s more closely related to the financial aspect of the transaction.
  • PO Number: This is used by the buyer when making an initial request for goods or services. The purchase order is typically created before the invoice, and it outlines the details of the desired products or services. The PO number is more focused on the ordering process.

Related: Invoice vs. Purchase Order

How Do I Create an Invoice Number?

Creating an invoice number is a straightforward process, but the most important aspect to remember is consistency. While the invoice numbering system is unique to each individual or business, it should remain consistent for every invoice you write. Below are some options to consider when deciding your invoice numbering system:

  • Start with a Prefix: It’s common to use a prefix to denote specific details about an invoice. For example, you could include the customer’s name as a prefix to the invoice number. Example: JSMITH001.
  • Use a Sequential Number: Assign a unique sequential number to each invoice. This number can start at “001” and increase with each new invoice.
  • Consider the Date: Including the date in your invoice number can help you organize invoices chronologically. For example, you could start each invoice number with the month and year, followed by a sequential number. Example: 012023001. With this format, we can easily see that this invoice was created in January of 2023.
  • Be Consistent: If you write invoice numbers in a different format than shown above, that’s OK – just remember to make sure to maintain consistency in your system to avoid confusion.

Invoice Number FAQs

Let’s answer some common questions about invoice numbers.

How many digits are in an invoice number?

The number of digits in an invoice number varies by business. It can be a short sequence like “001” or a longer one, depending on the business’s needs and the volume of transactions. If your business completes hundreds of transactions per month, you should probably create numbers that are at least five digits, so you don’t run into a scenario where you’ve used up all of your available numbers.

Where do I find an invoice number?

You can usually find the invoice number at the top of the invoice document, but it can vary. Regardless, it’s a prominent identifier for the transaction.

Where is the invoice number on a receipt?

On a receipt, the invoice number is often placed near the top along with essential information related to the transaction.

Can you track an invoice number?

Yes, an invoice number is essential for tracking an invoice’s progress. It helps businesses keep records and ensure that payments are received.

Does an invoice have to have a number?

Yes, almost all invoices have a unique invoice number. This number is crucial for efficient tracking and record-keeping. It helps businesses stay organized and ensures clarity in financial transactions.