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In this video tutorial, Sarah Banks from Banks in Business Solutions explains how to create a basic invoice template in Word. She starts with a blank Word document, where her logo is already inserted into the header. Sarah mentions checking her previous video for instructions on adding a logo. To begin creating the invoice, she utilizes the preset Heading 1 for formatting. Key components of the invoice include the client's name, supplier address, date, and invoice number. The tutorial focuses on setting up these essential details to ensure a professional invoice layout.