Your First Invoice: What to Include, What Terms to Set, and What Mistakes to Avoid In 2026

Your first invoice sets the standard for how customers pay you. If it’s missing key details, you’ll spend the month chasing approvals, disputing “what we agreed to,” and reconciling messy payments in your books.

This guide covers what to include on the invoice, what terms to set, and the mistakes that cause avoidable AR headaches.

Last verified: Jan 2026

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What an Invoice Actually Does

An invoice is both:

• a customer-facing document that requests payment, and
• a supporting record for your accounting system (revenue, AR, taxes, and collections)

The IRS expects businesses to maintain records that support income and expenses, including supporting documents generated by business transactions (sales, purchases, payroll, etc.). Invoices are a common supporting document in that record trail. Recordkeeping overview and what kind of records to keep.

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What to Include on Your First Invoice

If you want your invoice to be payable without back-and-forth, include the details a customer’s AP team needs to approve it.

Required basics

• seller legal name (entity name) and address
• customer legal name and billing address
• invoice number (unique, sequential)
• invoice date
• payment due date (or payment terms, like Net 30)
• currency (if not obvious)
• point of contact for billing questions (email)

Line items that are audit-proof

For each line item, include:

• description of what the customer is paying for
• service period (especially for subscriptions)
• quantity and unit price, if applicable
• subtotal

If you bill subscription software, include the coverage period (example: “Platform subscription, Feb 1–Feb 29, 2026”). This prevents disputes and simplifies revenue and deferred revenue tracking.

Totals and adjustments

Include:

• subtotal
• discounts (if any)
• tax (only if applicable)
• total amount due

If you give credits or adjustments, show them explicitly as a separate line or section. It reduces “why is this less than last month” emails.

Payment instructions

Make payment easy:

• ACH / wire instructions (account name, routing, account number, bank address if required)
• card payment link (if you accept cards)
• remittance instructions (what to include in memo)

If you accept ACH, include a short reference format (example: “Include invoice number in memo”).

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What Terms to Set

Payment terms are not just finance language; they change cash flow and collections behavior.

Common SaaS terms

• due on receipt (common for self-serve, SMB, and first invoices)
• Net 15 (faster cash, still AP-friendly)
• Net 30 (common for mid-market and enterprise)

Net 30 is widely used in B2B purchasing because it defers payment while the buyer processes the invoice. The SBA explains Net 30 as a trade credit concept that helps conserve business cash flow. SBA Net 30 overview.

What “Net 30” should mean in writing

Define it clearly on the invoice:

• “Payment due 30 calendar days from invoice date”
• include the exact due date (example: “Due: Mar 31, 2026”)

Many disputes come from ambiguous language like “Due in 30 days” without stating whether it’s 30 days from invoice date, service delivery date, or contract start.

Late fees, interest, and collections

If you plan to charge late fees or interest:

• put it in the contract and repeat it on the invoice
• keep it reasonable
• follow applicable state law (late-fee and interest rules vary)

A practical rule: if it’s not written and agreed to, it’s harder to enforce. The Uniform Commercial Code (UCC) is the baseline framework for commercial transactions in the U.S., but late-charge enforceability is still driven by contract language and state-specific rules. Uniform Law Commission UCC overview.

Early payment discounts (optional)

For enterprise customers, an early-pay discount can improve cash conversion:

• example: “2/10 Net 30” (2% discount if paid within 10 days, otherwise due in 30)

Only use this if you can operationalize it in billing and AR without manual work.

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Taxes: What to Think About Before You Send the Invoice

Sales tax and other transaction taxes

If you are required to collect sales tax, it should appear as a separate line item and flow to a sales tax liability account (not revenue). Whether SaaS is taxable depends on state rules and your facts.

If you’re not sure whether you should be charging sales tax in a given state, do not guess. Identify where you have nexus and whether your product is taxable in those states before you start billing tax.

Cross-border customers

If you bill non-U.S. customers:

• confirm whether you should include VAT/GST
• confirm whether your invoice needs specific fields (tax IDs, reverse charge language)

Treat this as a jurisdiction-by-jurisdiction issue.

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How to Send the Invoice (So It Gets Paid)

Route it to the right person

For mid-market and enterprise customers, ask for:

• AP email alias (example: ap@customer.com)
• required PO number (if any)
• vendor onboarding steps (W-9, bank form, portal setup)

Make it easy to reconcile

Ask customers to include:

• invoice number in remittance
• a remittance advice email if they pay by wire

On your side, use a consistent deposit reference and avoid combining multiple invoices into a single payment unless you have a clean remittance process.

Keep invoice records

Invoices are supporting documents for revenue and accounts receivable and should be retained as part of your records. The IRS discusses how supporting documents are used to record business transactions and how long you should keep records. Recordkeeping and how long to keep records.

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Mistakes to Avoid (The Ones That Break AR)

Missing service periods

If the invoice doesn’t state what period the subscription covers, customers question it, and finance teams can’t tie it to contract terms.

Not including a due date

AP teams approve faster when there’s an explicit due date, not just “Net 30”.

Mixing usage charges with subscription without detail

If you bill a base subscription plus usage, show them separately:

• subscription for the period
• usage for the period (with a usage summary reference)

When customers can’t validate the variable portion, they delay payment.

Failing to align invoice terms with the contract

If your contract says Net 30 but the invoice says due on receipt, you’ve created a dispute. The invoice should reflect the contract.

Not having a clean invoice numbering system

Use sequential numbering and do not reuse invoice numbers. It matters for both customer AP and your own audit trail.

Treating invoices as “just a PDF”

A scalable process ties invoicing to your ledger:

• invoice created
• AR recorded
• payment matched
• credits tracked
• refunds reconciled

This prevents revenue mismatches and simplifies month-end close.

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A Simple First-Invoice Checklist

Before you send an invoice, confirm:

1. customer legal name and billing address are correct
2. invoice number is unique and sequential
3. service period is listed for subscription line items
4. due date is explicit and matches the contract
5. payment method and instructions are included
6. PO number is included (if required)
7. tax line is correct (if applicable)
8. the invoice is stored where your accounting records live

One way teams centralize this workflow is to keep invoicing, AR, AP, the general ledger, and compliance tasks connected so payments and month-end close reconcile cleanly; Afternoon offers an invoicing and accounting platform across those functions.

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Summary

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Official References

• IRS recordkeeping overview
• IRS: what kind of records should I keep?
• IRS: how long should I keep records?
• IRS Publication 583: Starting a Business and Keeping Records
• SBA: Net 30 accounts and cash flow
• Uniform Law Commission: Uniform Commercial Code overview