What the number is for
An invoice number is a reference, not a serial code. It has one job: to let two people — you and whoever is paying you — talk about the same document without describing it. A number that does that job is a good number, however plain it looks.
In most countries the sequence also has to be traceable. Not clever, not encrypted: traceable. An auditor should be able to run down your invoices in order and see that none are missing.
The three parts
Every workable format is some combination of three things, and nothing else is load-bearing.
- A prefix. Usually your initials or a short word — INV, KM, STUDIO. It exists so a number is recognisable in an inbox, not so it encodes anything.
- A year, if you reset the count each year. Write it in full: 2026, not 26.
- The count itself, padded to a fixed width so the numbers sort and line up. Three or four digits is plenty.
That gives you INV-2026-0042, or KM-0042, or 2026/042. All three are fine. What is not fine is a format that changes halfway through a year.
Resetting, and when not to
You can restart the count every January, restart it at the start of your financial year, or never restart it at all. Never restarting is the simplest thing that works, and there is nothing wrong with sending invoice 1,204.
If you do reset, the year has to be in the number. Otherwise your second January produces a second invoice 0001, and you now have two different documents with the same reference — which is the one failure the whole system exists to prevent.
In India, a financial year runs April to March, and plenty of creators reset with it. That means an invoice dated 31 March belongs to the old year's sequence and one dated 2 April starts the new one. It is the issue date that decides, not the day you got round to sending it.
Gaps, and the mistake everyone makes
A gap in the sequence is the one thing an accountant will ask about, every time. It looks like a document that was issued and then made to disappear, and that is a conversation nobody wants to have about their own books.
You cannot un-send an invoice. You can only issue a document that cancels it.
So when you get one wrong, do not delete it and reuse the number. Void it — mark it cancelled, keep it in the list, keep it dated — and issue the next number with the corrected details. The sequence stays intact and the record explains itself.
Collabill does this for you: it allocates the number at the moment you issue, never when you start a draft, so an abandoned draft never eats one. Voided invoices keep their number and stay in the list.