Invoice Numbers - Rules and Best Practices
The invoice number is an essential part of every invoice. Here you will learn how to handle it correctly.
What Is an Invoice Number?
An invoice number is a unique identifier that distinguishes each invoice from all others. It is used for:
- Payment reference
- Traceability in bookkeeping
- Documentation during audits
- Communication with customers
Legal Requirements for Invoice Numbers
Tax authorities in most countries require invoice numbers to meet these criteria:
1. Unique
No two invoices may share the same number. Each invoice must have its own unique identifier.
In the UK, HMRC requires that invoices carry a unique sequential number. In the US, the IRS expects invoices to be uniquely identifiable. The EU VAT Directive requires sequential numbering for VAT invoices.
2. Sequential
Numbers should follow a logical order without gaps. It should be possible to follow the number series and verify that no invoices are missing.
3. Traceable
It must be possible to locate any invoice in the series. Each number should link to a specific invoice.
Common Numbering Systems
System 1: Simple Numbers
Simple and clear for small businesses with few invoices. Example: 1, 2, 3, 4, 5.
System 2: Year + Number
Restarts each new year. Popular choice that clearly shows when the invoice was created. Example: 2026-001, 2026-002, 2026-003.
System 3: Year + Month + Number
Provides more detail about when the invoice was created. Useful for businesses with high invoicing frequency. Example: 202601-001, 202601-002.
System 4: Prefix + Number
Useful if you have different document types and want to distinguish between them. Example: INV-001, INV-002, INV-003.
Best Practices
1. Choose One System and Stick with It
Do not change systems mid-year. It creates confusion and can cause problems during audits.
2. Do Not Skip Numbers
Gaps in the number series may raise suspicion that invoices are missing. If you need to cancel an invoice, mark it as voided instead of skipping the number.
3. Reset at the Start of Each Year
Most businesses choose to restart the number series on 1 January. Include the year in the number (2026-001) so it is clear which year the invoice belongs to.
4. Allow Sufficient Margin
If you start at 001, you have room for 999 invoices. If you need more, use more digits (0001). It is better to have too many digits than too few.
What If You Have Skipped a Number?
If you discover that you have skipped a number:
- Do not use it later - That creates more confusion
- Document the gap - Write an internal note
- Continue as normal - From the next number
During an audit, you can explain the gap if questions arise. The important thing is that you have documented it.
Credit Notes and Numbering
Credit notes should have their own number series to avoid confusion:
Invoice: 2026-001, 2026-002, 2026-003
Credit: CN2026-001, CN2026-002
Alternatively, you can use the same series, but it must be clearly indicated that the document is a credit note.
Automatic Numbering
With an invoice generator, you do not need to track the number series manually:
- Automatic next number
- No risk of duplicates
- Follows the chosen system
- Clear history and overview
Use Fakturagenerator.com
Our solution handles invoice numbering for you:
- Automatic sequential numbering
- Year-based system (2026-001)
- No gaps in the series
- Easy overview of all invoices
Focus on your work, let the system handle the numbering.