Invoicing is an important part of any business. Without an invoice you can’t get paid, so it is best to get it right the first time. Here are 13 important items to include in your invoice:
- The word ‘invoice’
- Your business name, address and contact information
Since every document you create for your business needs to reflect your brand, make sure to include logos, colours and fonts that are consistent with the way your clients perceive your business.
To make it obvious to the recipient that the document is a request for payment, mention the word ‘Invoice’ on the document. Be sure to include it toward the top of the template.
These details should definitely go up on your invoice as invoices can pass through several departments before you get paid. If available, also include email and web addresses. Limited companies must include the full company name as it appears on the certificate of incorporation. And if you decide to put names of your company directors, don’t forget to include the names of all directors. For sole-traders, the invoice should include:
- your name and business name
- an address where legal documents can be delivered
Include your client’s name, contacts details and the name of the person who placed the order. It’s a common mistake to address invoices to the wrong person as this is known to delay payments.
Also known as invoice number, bill number or reference number this is a running serial number that you must maintain for the work you’ve carried out. You can only have one number per invoice - 2 invoices should never have the same number. Using unique invoice numbers for payments will also make it easy to reconcile your accounts later.
Make sure the date you need the payment by is very clear on the invoice.
Make sure to include thorough descriptions of the items/services your clients bought and the date the order was placed.
If your client uses a Purchase Order Management system and issues you a PO number, include that in your invoice so that they know which Purchase Order the invoice relates to.
If you’ve agreed to any discounts with your client, these should clearly be stated on your invoice.
Include a column in your invoice which shows details of cost like:
- Number of products/services and hours/days chargeable
- Cost per product/services per hour/day (align these to the above)
- Total amount for each product/service with an overall total at the bottom
Stating your invoice payment terms (T&C’s) consistently on your invoices ensure the client is aware of the key requirements. Be clear about timeframes, acceptable payment methods, what you are going to charge up-front, and costs associated with late payments. Penalties for late payment can range from a small fine to interest for all late payments. If you want more information on this subject you’ll probably like to read our tips on how to deal with the pain of late payments.
To make it easy for your clients to pay you, mention your payment methods. If you want to receive direct payments from online baking or BACS, including your bank account details. This should include bank, account name, account number and sort code.
For VAT registered businesses HMRC has created specific rules for invoicing, so make sure to include the following on your invoice:
- a unique VAT invoice number that follows on from the last invoice
- your business name and address
- your VAT-registration number
- invoice date
- tax point, time of supply or the date the transaction takes place
- customer’s name/trading name and address
- description of the goods or services delivered
- rate of any discount per item
- total amount of VAT charged
For each different type of item listed on the invoice include the following:
- net price and rate per item, excluding VAT
- quantity of goods or the extent of the services
- the rate of VAT applicable
- total net amount payable, excluding VAT
For VAT invoices that include zero-rated or exempt goods and services you must:
- clearly state that the goods/services are VAT exempt
- state the total value of those good/services
For more information please have a look at Gov.uk’s guide on VAT invoicing.
Being a small or medium business owner or a freelancer means you are always short of time. But creating a proper template from the start ensures that other commitments and disruptions don’t come in your way when it is time for you to get paid.