As a small business owner you might wonder “what is an invoice amount?” The invoice amount is the total dollar amount of a particular invoice. This is the amount your customer or client owes you. This amount varies invoice-to-invoice.
Where the Invoice Amount Appears on an Invoice
The invoice amount usually appears in two places on your invoice:
(1) In the Invoice Header
The invoice amount is usually stated in a prominent place at the top of the invoice. This allows clients to quickly, at-a-glance understand how much is due.
(2) As a Total Beneath the Invoice Details
The invoice amount also appears as the calculated total underneath your invoice details. This is where more of the math is shown so your client can verify the amount in the header.
Note: It is essential that the invoice amount in both places match. If they don’t, you’ve made an error.
How to Calculate Your Invoice Amount
The invoice amount is calculated this way:
ADD
- Every line item on the invoice (if multiple products or services where sold there will be many line item. If you only sold one service or product, there will just be one line item.)
- Any applicable taxes on these goods and services
SUBTRACT
- Any discounts offered to the customer / client
- Any installments already paid by the customer / client
(Invoice items + tax) – (discounts + installments) = Invoice Amount
Why It’s Important to Calculate Your Invoice Amount Accurately
If you’re manually building an invoice, you’ll need to have a calculator handy to tally up these amounts. It’s essential you get the math right so you:
- Bill your customer / client accurately
- Reduce the hassle of going back-and-forth over calculation errors
- Ensure you get paid faster
- Make sure your financial records are accurate
Many business owners make simple calculation errors on their invoice amount that can lead to the following negative consequences:
- They appear unprofessional to their customers / clients
- They waste time going back-and-forth to correct the mistake
- They wait longer to be paid
Better invoice templates will handle this calculation for you so you don’t have to worry about these unfortunate errors. All you do is simply enter your invoice items and the template will do the rest for you, including:
- Adding up the invoice items
- Adding applicable tax (at a rate you send)
- Totally the amount in all Invoice Amount fields on the invoice.
In Summary: Get Your Invoice Amount Right the First Time
The invoice amount is an easy calculation to get right. And for the reasons stated above, it’s important to get it right.
As you send more and more invoices, it will be easy to make mistakes. Especially if you’re just rushing to get an invoice out the door. Or, if you’re saving over past invoices every time.
Instead, look for an invoice template that automates some of this simple math for you. In the long run, it will save you time, money and headaches.