It may seem simple in theory but when you come to producing your first invoice do you really know where to start? What do you need to include? Below we’re looking at the essential features of your invoice.
Tell them it’s an Invoice
This may sound like common sense but all invoices need to be clearly marked with the word INVOICE. This is to make it clear to the recipient that it is a straightforward request for payment. Standard practice is to write the word INVOICE in large letters at the top of your page – then no confusion can be possible. Invoices need to be simple.
The Key Details
There are some key details which must be on all invoices. These include your name (or your businesses), your business address and contact details – including an e-mail address and phone number. Many firms print their invoices onto their letter-headed paper so this information is already present. However, if you plan to email your invoices you’ll need a standard template.
You should also produce an invoice number for each one and these numbers should be unique and only used once to help with the tracking of your payments.
Your invoice should also include the customer’s name and address. In some cases you may also need to include the name and the job title of the person who placed the order. The main part of the invoice should include a full description of the products or services ordered alongside their price and a total column. You need to also include the date that the goods or services were bought. Depending on the complexity of the order you may need to break this down into smaller sections.
The invoice also requires a date of issue and should include some basic terms and conditions where you’ll state your payment terms. If you want to receive payment by direct bank transfer then you’ll need to include your bank account details including account name, number and sort code.
For VAT Registered Businesses
If you’re a VAT registered business then your invoice must also include your VAT Registration Number. It is also essential that you break down the amount of VAT on each item and the VAT rate charged. If it’s the same for them all then you can simply provide an overall amount and rate rather than individual detailing. You must also include a net unit price or rate, the quantity, the rate of VAT applied, total net payable, any cash discount and total amount of VAT.
For Limited Companies
If you’re registered as a limited company there are further elements to include on your invoice. You must include your full company name, its registered number, registered business address and the part of the UK in which it is registered. If you have a different trading name you must also state that.
Terms and Conditions
It is essential that your provide terms and conditions with your invoice to guard against late payment and ensure your customers are aware of the invoice’s key requirements. Your T&Cs will include an explanation of payment terms (usually 14-30 days) and what happens if late payment occurs. You can find examples of terms and conditions statements online but it’s important you tailor anything you find to your specific business. At the absolute minimum you should state ‘Please pay within X days’ on your invoices.
Getting your invoices right will go a long way to ensuring you avoid cash flow problems in the future.
If this seems too time consuming, our Virtual PA Services can help! We look after invoicing and credit control for many of our clients.
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