Raising and sending invoices might seem like one of the simpler parts of running a business. But you would be surprised at just how many businesses are missing crucial pieces of information every time they send one out. These range from small to pretty major things, and can cause all sorts of issues for your business if they’re not included. Everything from confusion and time wasted on emails back and forth to late payments and contested invoices. So today, I wanted to give you a pop quiz. Do you know the 8 basic pieces of information that should be on every single invoice you send?
Your Company Details
Right at the top of every invoice, before anything else, you need to include your information. Think of it a bit like a letter – this allows people reading it to immediately know who the invoice is from. This section should include your company name, address and contact information (phone number and email address if possible). Now anyone reading it will know who to get in touch with if there are any issues.
Your Client’s Details
Your client’s details come next. A full company name, a contact name (either a specific person you deal with or for the attention of the accounts department), along with a purchase order (PO) number if relevant. PO numbers are often only needed for bigger organisations, but it’s worth checking with your client if they need one before you send any invoices, so that you can avoid delays.
A Unique Invoice Number
All of your invoices should have a unique number. It’s entirely up to you how you number them, but sequential is usually best. So starting at 001, 002, 003 etc. You don’t have to start at 1, you can start wherever you like! I’ve seen people start their invoices in the mid hundreds as a way of looking more established, which depending on your client base might be the best option. Whatever you choose as your starting point, sequential numbering will make it a lot easier for you to check if any invoices are missing when you reconcile your accounts.
Relevant Dates
You need to have a few dates on your invoices, and they need to be in different places. You need to have:
- The date the invoice was issued. This is so that you can refer back to it if there are any disputes, and so you can file it properly for your accounts.
- The invoice due date. This makes it clear to both you and the client when payment is expected. This due date should be agreed in advance, ideally in email format, but having it on your invoice means there will be no confusion for the person paying the invoice.
Description of What You Supplied
You need to include a clear description of the services or products you’ve provided. This needs to be clear and precise for both you and the client. Avoid writing vague descriptions like ‘building work’, since this will cause a lot of confusion both for you and your accountant! Instead, you would write something like ‘extension at 3 Home Road, Hampshire.’ This makes it clear what has been done and what’s being invoiced for, so there’s no confusion.
How Much is Owed
This is the one bit you probably wouldn’t miss off, since it’s the whole point of an invoice! The amount the client needs to pay you. Just remember that if you’ve supplied more than one service or product, you should put each one on a separate line with a separate price, so that it’s crystal clear what the client is paying for, along with a total balance due at the bottom.
Your Payment Details
While all of the information so far is important, this one is absolutely vital. How are they going to pay you? Even if you’ve already told your client your account details, or if this is the 100th invoice you’ve raised for them, you need to make sure that your payment details are on every single invoice. This makes it much easier for them to pay you, and means that you have recourse if they’re late paying for any reason. If your details change, make sure you update them as soon as possible, as well as sending an email to all of your current clients to update their records.
Any VAT Information
If you’re a VAT registered business, then you’ll need to include your VAT registration number on any and all of your invoices. This one isn’t only for your benefit. With this number and the VAT amount on the invoice, your clients can claim back the VAT on any money they spend with you. You’ll also need to include the VAT rate applicable to each line item (so each product/service offered). Even if the item is zero-rated for VAT purposes, you still need to include that on the invoice. The easiest way to do this is to provide the price for each product/service supplied excluding VAT, what the VAT rate is, and then the total including VAT for each line item. Don’t worry if this seems too complicated, your accounting software will do most of this for you.
Late Payment Information
Did you know that you’re legally entitled to charge interest if your client pays late? This is called the statutory interest rate for late business payments, and in the UK it’s 8% plus the official Bank of England base rate. A lot of businesses either don’t know this or don’t bother to charge it, but if you have clients who pay late, that money can cover the time you spend chasing them. Make sure you state on your invoices that any late payments will incur statutory interest, plus any extra late fees you decide you want to charge! Personally, I use a nifty app called Adfin to receive payments, and you can set it to apply interest and late fees automatically, as well as any bank or card charges (if that’s what you choose to do).
A Note on Format
Finally, a quick note on how you should actually send it. I still see businesses sending their invoices in Word format, which is a big no-no as far as HMRC is concerned. This is because Word documents can be easily edited, which means they’re a minefield for fraud for HMRC and for you. The simplest way to send invoices is to use accounting software to generate and send your invoices. That way you only have to set up your template once, and every invoice you send will have all the information you need on it.
And if all of that sounds too much, I can help. At Bluebell Bookkeeping and Admin, I support my clients with all stages of the bookkeeping process, from designing and managing your invoices to reconciling your books every week (or month), depending on what you need. I can provide a fully managed bookkeeping services, just give your books a quick check over, or provide set-up and training support to help you manage your own bookkeeping needs. If you need support but don’t know where to start, just get in touch today and book your free, no-obligation consultation.