How To Raise An Invoice
When starting your business you might not be sure if the invoices you are submitting include everything that is required! Invoicing is one of the most important parts of your business, mainly as this is how you are going to get paid so ensuring all essential information is on your invoice is a high priority.
Let’s start with the basics;
What Is An Invoice?
An invoice is a document that you will send to your clients highlighting the services you have provided and requesting payment for completing said services. The invoice should include your company details, a description of the services and goods, payment amount, terms & conditions and payment method.
Invoices are a way of proving the sales of your company which means the invoices in your records would be matching the money entering your bank account. It is also a good way of being able to see if a client has over or underpaid.
HMRC requires businesses to keep such records for up to 6 years plus the current year.
When Are Invoices Required?
An invoice should be sent to your clients where you need a client to pay for services or goods. This is your way of recording the company’s sales in the business, usually via a bookkeeping software like Xero. Being able to send invoices whilst on site can save £000’s a year.
The invoice will state what the client has purchased, the date it was purchased and how much they paid. It could also show information such as the expected delivery date for completing such services. If you also using Xero, once a payment has been reconciled, you will be able to see when the invoice was paid.
What Is Included In An Invoice?
If you are using a bookkeeping software like Xero, a lot of the information will be pre-filled for you automatically nevertheless this is what should be included on your invoice:
- A unique identification number i.e. invoice number
- Your full company name (including limited), address and company contact information
- The client's name and address
- A description of the products and services you are providing
- The Invoice date
- The date the goods/services were provided
- The price you are charging
- The amount and percentage of VAT if applicable
- The total amount of the invoice
How Do You Structure An Invoice?
You can either use a bookkeeping software to provide the structure for you or use a template that is provided online. Here are some general tips about structuring your invoice:
- Brand your invoice
This makes your invoice look more professional by adding your company logo and colours. It is always good to make your invoice stand out from the crowd. If you need help with branding speak to your marketing team
- Add the word Invoice to your document!
Probably something that sounds obvious but your invoice should have the word invoice on the document... Another tip is to use invoice numbers as this will help you organise your records plus avoids any duplicates on your system
- Company Details
Your invoice should include your company’s details such as company name, address and contact information. This is typically presented on the top right of an invoice with the client details on the left hand side.
- Description of your goods and services
Every invoice should have a description of what is being provided, this is for the knowledge of the customer plus an extra layer of defence for you as if the client ever queries if something was not provided or who was supposed to be doing what, your invoice could save your day.
You would also be required to show the number of goods/labour and price.
- Include Dates on the invoice
The dates that should be included are the invoice date, the date for goods/services to be provided and the date the payment is due.
- Breakdown of costs and totals
Your invoice should breakdown the different services and products being supplied, how much these total to, if any discounts have been applied and if/how VAT has been charged on each item.
Do I Include Payment Information On Every Invoice
Every invoice you produce should include your payment details as this is what your clients are going to use to pay you! Your invoice should show clearly how much is to be paid, what payment should be used (cash, card, bank transfer, Paypal etc) and clearly show your account details.
If you offer payment terms, this should also be clear on the invoice. The client should be able to see when the expected payment date is for your invoice.
If a client does not pay on time, small businesses are allowed to charge up to 8% plus the Bank of England's base rate on any late payments (under the Late Payment of Commercial Debts Act 1998) however this needs to be stated in your terms & conditions
If an invoice is late, it is always best to follow up with an email or call after the expected payment date as the client may have simply forgotten to pay!
How Do I Send An Invoice?
Modern technology has turned invoices being sent by post to being sent by email in seconds! If you are using a bookkeeping software, you can send invoices directly from the system in your company’s name.
The best software we would recommend for construction businesses is Xero. This is a bookkeeping system that will help you control your finances and keep on top of your admin in one place. If you need any support with getting set up on Xero, speak to our team today!
Frequently asked questions
This article has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.
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