The short version
- No US federal law prescribes an invoice format. What makes one work is that it names both legal entities, carries a unique number and date, itemises what was supplied, and states the due date as a calendar date.
- An invoice is a request for payment under a contract that already exists. Terms appearing on it for the first time are a proposal, not an agreed term.
- "Net 30" means the full sum is due 30 days from the invoice date. "Net 30 EOM" runs from the end of the month of issue, which can be twice as long.
- A late-payment charge is enforceable only if it was agreed in advance and sits within your state's limit on interest. Both conditions, not one.
There is no legal invoice template
Nothing in US federal law prescribes what an invoice looks like. There is no VAT-style invoice regime, no mandated numbering sequence, no registration to obtain before you can issue one. That surprises people who have traded in Europe, where the invoice is a regulated tax document with a fixed field list. Here it is a commercial document with two audiences: the customer's payables process now, and a tax authority reconstructing your gross receipts later.
The IRS position is about records rather than format. You have to be able to show the amounts and sources of gross receipts, and invoices are one of the documents it names for that purpose, alongside cash register tapes, deposit information, receipt books and Forms 1099. It expressly leaves you to choose a recordkeeping system that suits the business. Format freedom, evidence obligation.
The real constraints come from three other places: state sales tax rules where you are registered to collect, customer requirements such as a purchase-order number or a specific supplier portal, and your own contract.
What actually has to be on it
The fields that make an invoice payable
- The word "Invoice", so it is not filed as a quote, a statement or a receipt.
- A unique invoice number in a sequence you can explain. Any consistent scheme works; duplicates and unexplained gaps are what cause trouble.
- Your full legal entity name — the one on the contract — with address and a tax identification number where the customer needs it.
- The customer's correct legal entity. Not the trading name, not the individual you deal with.
- The invoice date, and separately the due date written as an actual calendar date.
- The purchase-order or reference number the customer asked for. Its absence is the most common reason an invoice stalls.
- Line items: what was supplied, quantity, unit price, and the period or milestone covered.
- Subtotal, any tax shown separately with its rate, and the total with the currency stated.
- Payment methods and full remittance details, including what to put in the payment reference.
- The late-payment term, quoted from the contract rather than announced here for the first time.
An invoice, region by region
A commercial invoice
An invoice is not a contract
This is the misconception that costs money. An invoice is a request for payment under an agreement that already exists. It does not create the obligation, and terms that appear on it for the first time are not automatically part of the deal.
Where goods are involved, Article 2 of the Uniform Commercial Code addresses exactly this situation. Under section 2-207, a confirmation or acceptance that states additional terms still operates as an acceptance, and between merchants those additional terms become part of the contract — unless the offer expressly limited acceptance to its own terms, the other side objects within a reasonable time, or the terms materially alter the agreement. A finance charge or a new set of remedies arriving for the first time on an invoice has to survive that last test, and it is precisely the kind of term the argument is about.
The practical rule follows, and it is worth applying to every term on the page.
Where a term has to live before you can rely on it
You want to enforce this term when the customer pays late. Where did it first appear?
In the agreement they accepted
The payment period, the interest rate, the right to suspend work, recovery costs. Agreed before the debt arose is the only version that reliably binds.
For the first time on the invoice
Between merchants it may still come in under § 2-207 — unless it materially alters the agreement, which is precisely the argument a new finance charge invites.
Payment terms, and what each one actually means
| Term | What it means | When it fits |
|---|---|---|
| Due on receipt | Payable immediately; no credit period at all | Small jobs, new customers, anything where you would not extend credit |
| Net 15 / 30 / 60 | The full amount due that many days after the invoice date | 30 is the working default. 60 is a financing decision you are making on the customer's behalf |
| Net 30 EOM | Due 30 days from the end of the month of issue | Common in corporate payables. An invoice dated the 1st can wait 60 days — price for it |
| 2/10 net 30 | A 2% discount for payment within 10 days, otherwise the full sum at 30 | Where cash three weeks early is worth more to you than the last 2% |
| Stage payments | A percentage at defined milestones, each invoiced separately | Long projects. Caps your exposure at the value of the current stage |
| Deposit and balance | A sum up front, the remainder on delivery or completion | Custom work, bought-in materials, and any customer you have not traded with before |
Two details do more work than the length of the term. The first is what the clock runs from — the invoice date, the delivery date, or the date the customer says the invoice was received. Say which, and say it in the contract, because "received" is the version that drifts. The second is putting the due date on the face of the invoice as a date. Someone approving payments does not do date arithmetic. They read a date, or they defer.
Invoice template
Full text free to read and copy — parties, numbering, line items, tax line, due date and remittance block, with the payment-terms wording already in place.
Late fees, interest, and what is actually enforceable
You can charge for late payment, on two conditions. The customer agreed to it before the debt arose, and the rate sits within your state's limit on interest. Usury caps are state law, they differ substantially, and many states treat commercial and consumer transactions differently. Take the applicable ceiling from your own state rather than copying a rate out of an invoicing article — including this one. Exceeding it is not a harmless overreach that gets quietly trimmed back; depending on the state, the consequence of charging over the cap can be worse than having charged nothing.
Distinguish two things people routinely merge. Interest accrues on the outstanding sum over time. A flat late fee is a fixed charge for the breach, which is closer to liquidated damages — it needs some relationship to the real cost of being paid late rather than operating as a penalty for its own sake.
Purchase orders, and the number that unblocks everything
In any customer large enough to have an accounts-payable function, an invoice is not paid because it is correct. It is paid because it matches. The standard control is a three-way match: the purchase order, the record that the goods or services were received, and the invoice. If those three disagree on entity, amount or reference, the invoice goes into an exceptions queue where nobody is chasing it and nobody has refused it either.
The purchase order is also the offer in contract terms — the customer proposing to buy on stated terms — which is why a PO carrying terms different from your quote raises the same battle-of-the-forms question as the invoice does. Practically: get the PO number before you start, quote it on every invoice, and if the scope changes, get the PO amended before you invoice the higher figure. An invoice for more than the PO authorises will not be paid, however right you are.
Keeping the record
For retention, the audience is the tax authority rather than the customer. Keep four things together: the invoice, the contract or engagement note behind it, evidence that the work was delivered or accepted, and the record of payment. A payment receipt is the piece most small businesses skip and later wish they had, because it is what ends an argument about whether a particular payment was made and what it was applied to.
Retention periods vary with what the record supports and how the return was filed — the ordinary period, the longer one where income was substantially understated, and the open-ended position where no return was filed are all different. Take the current periods from the IRS rather than from a template, and keep anything supporting a bad-debt claim for the longer window.
The part that actually changes your cash position
None of this matters as much as when you send it. An invoice issued the day the work is accepted, addressed to the person who approves it, carrying the reference number and a calendar due date, gets paid faster than a better-drafted invoice sent at month end to a general mailbox. The legal content of an invoice is thin by design. The operational content is the whole game, and unlike most things in a commercial relationship, it is entirely within your control.
Sources
General information, not legal advice. This guide explains how these documents and rules generally work. Law varies by jurisdiction and changes, and none of it is applied to your circumstances here. For anything consequential, consult a licensed attorney where you are.
Frequently asked
Is an invoice a legally binding document?
Not on its own. An invoice is evidence of a claim for payment under an existing agreement, not the agreement itself. It becomes powerful evidence when it matches a contract, a purchase order and a delivery record, because together those show what was agreed and what was supplied. Terms printed on the invoice for the first time are a proposal rather than an accepted term.
Does an invoice have to have an invoice number?
No US statute requires one, but issuing invoices without numbers makes your records unreliable and makes disputes harder to resolve. Use any consistent sequence — sequential, year-prefixed, or customer-coded — and stay with it. What matters is that every invoice has a unique identifier you can trace to a job, and that you can explain the scheme if the numbering is ever questioned.
What exactly does net 30 mean?
The full invoiced amount is due 30 days after the invoice date, with no discount for paying earlier. It is not 30 business days, and it is not 30 days from when the customer got round to opening the email. Net 30 EOM is a different term: it runs 30 days from the end of the month of issue, which can nearly double the wait on an invoice dated early in the month.
Can I add a late fee to an invoice that is already overdue?
You can write it on, but you may not be able to enforce it. A charge for late payment generally has to have been agreed before the debt arose, which means it belongs in the contract, the quote or the terms the customer accepted. Adding it afterwards is a proposal the customer can simply decline. The rate must also stay within your state's limit on interest.
Do I have to show sales tax separately on the invoice?
Where you are registered to collect it, generally yes — most states expect the tax to appear as its own line with the rate applied, so the customer can see what was charged and the state can audit it. The rules are set state by state, and they differ on rounding, exemption certificates and shipping charges. Confirm the requirement with the revenue department of each state you sell into.