What is service rendered?

Businesses generate revenue from rendering services and the sale of tangible products. Income generated from service rendered is referred to as service revenue. The transaction is recorded when an entity delivers a service and sends an invoice to the client.  The accurate recording of services income according to accounting principles is of great significance. In this article, we will discuss what services are rendered, their accounting treatment, and service invoices with the help of examples.


Services rendered are the services that an entity provides to its client before receiving payment for these services. An invoice is presented to the client after the service agreement to receive the payment. Here are some of the examples of businesses that deliver services in advance (before receiving payment). 

  • Consultation services
  • Real estate business services
  • IT services
  • Services provided by doctors such as surgeries, treatments, etc
  • Auditing services
  • Banking services
  • Freelance works services

Service rendered meaning in accounting

The word rendered means the provision of something as a service. The invoice for services rendered on credit is issued when the work is complete.  When a business performs their service, they record it in their accounting records in the form of a transaction. Invoice for service income is generated to record the income when the work is complete, and account Receivable keeps track of incomes earned from rendering services.

Journal entry for service rendered

A journal entry is recorded for all the business transactions to maintain accurate and up-to-date accounting records.  A double-entry is posted in a ledger in the form of debit and credit amounts. Services rendered on a credit basis are recorded by debiting accounts receivable and crediting services revenue.

Accounts Receivablexxx 
                   Service Income xxx
(Recording of service income on a credit basis)  

Service rendered invoice

Businesses that offer professional services can issue service invoices.  The invoice will help a business maintain a professional impression on clients and assist in maintaining healthy cash flows.  The details of the invoice document depend on the type of service you are offering. Here is a step-wise detail for generating a service invoice.

Once the services are rendered, companies issue an invoice for this service. Following components are generally included in the invoice. 

1. Custom-built invoice

Create an invoice for your services by including details of your brand. Use your company logo on top of the invoice. Make sure that the fonts used are attractive and readable.  The invoice should be designed in such a way that it gives a personal touch. A good invoice contains all relevant information and leaves a professional impact on a client.

2. Contact information and Business details

Mention the name of your business on the top of the invoice, along with the business logo. If you are an individual and don’t have a business name, add your name in its place. Add other details along with your business name, such as phone number, fax number, email address, etc. These details assist clients in getting in touch without difficulty.

3. Customer’s details

After adding your business details, add the client’s relevant information such as name, contact number, email address, business address, etc. It gives a more professional look to the invoice.

4. Invoice numbering

Sequentially pre-numbered invoice issuance is a reasonable control to avoid any inconvenience later on. A unique number for every invoice makes it distinct, and this reference number helps a company keep track of records.  This feature is also available in Online invoicing software.

5. Issuance Date

The date is a compulsory component of every invoice. The date on which invoice is issued and sent is significant to track business payments. The billing period can be added instead of the date if you invoice your clients based on that period. For example,1st September to 15th September can be added as a billing period on the invoice.

6. Services Rendered

An invoice includes the list of all the services provided to a customer. It is helpful for the clarity of communication. When a client knows the details of every service’s cost, it will be easy to pay the amount. The invoice should include the following details:

  • List of services rendered
  • The rate for each service
  • Quantity of each service
  • Subtotal of all services

7. Taxes or other fees

Different sales tax rates are applied based on different locations. Use updated tax rates in your invoice.  If you are charging any other fee or additional revision fee, mention it clearly on the invoice.

8. Payment Method

In this section, mention the modes of payment acceptable to you. Do you accept payments in the form of a cheque, cash, online transfer, Paypal, or Payoneer, or all? Mention relevant details of these accounts on the invoice. Let the client choose the most convenient option for him out of your list. The flexibility in the mode of payment can result in receiving quick and timely payment.

9. Total amount due

Calculate the exact total amount of invoice by adding taxes, additional fees, and services fees. The total amount should be visible prominently, and it should be bold.

10. Discounts

You can include the terms related to early payment discounts on the invoice. Follow-up for late payment can also be included.

Service not rendered

If any services are not rendered and included in the invoice by mistake, then a refund letter can be written to the service provider to claim the amount already paid by a customer. Explain the details of the agreement that which services were requested, and the time of those services. Mention the wrongly included services by the service company in the invoice. Request them for the refund payment for services not rendered.

Services rendered example

A new mobile company has launched its operation in the UK. It has hired a JK information technology(IT) company to assist them in developing mobile applications and designs. Jk company has the policy to bill their customers after the completion of services. So, they will account for their revenue by increasing asset accounts receivable and services income. Later on, after receiving the cash for services rendered, they will record this transaction by debiting cash and crediting account receivables.

Also read, due diligence services.

Conclusion for service rendered

Services rendered are the services performed by the business. However, the business has not received payment for the same. Mostly, professional firms render the services and invoice their clients later on. Ac accounting treatment of the services rendered is simple and straightforward. Once services are performed, an account receivable is debited in the books of accounts, and service income is recorded. However, once the collection is made for the money, the accounts receivable is credited and cash is debited.

Once service is rendered, the service provides issues an invoice that is supposed to include different components including business details, contact information, customer details, the break-up of the services rendered, taxes, the total amount due, and other relevant details.

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