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Cash is the lifeblood of whatsoever business, without it y'all don't survive. Being paid what you are due is important but being paid on time is essential to avoid a strangled greenbacks menstruation.

1 option is to use an automated solution that takes payments direct from your invoices so you get paid on time.

Meanwhile, a well-formatted invoice tin make the difference to ensure you go paid quickly avoiding complication from incomplete or unclear information.

A well-designed invoice that covers all the required information will transport a good impression to your clients and customers.

A page with basic errors and unclear layout can make yous appear unprofessional and is something that yous will want to avoid.

For dissimilar business concern types such as sole trader, limited visitor and those registered for VAT there are specific legal requirements for what you must include in your invoice.

Below is a total guide to creating an invoice for your small business organization. To help y'all exist professional person, check out our article on invoice templates – we've designed a serial of them, which you lot can download.

You can also use accounting software to create and ship professional invoices, and track what is owed to you.

Here's what we comprehend in this article:

What should be included in an invoice?

VAT registered invoices

What a full or modified invoice must show

What a simplified invoice must show

International invoices

Invoice payment terms

Common invoice payment terms

Invoice payment methods

Mutual invoice payment methods

When is the best time to send your invoice?

How to send your invoice

Finally, how to get paid on time, every time

What should be included in an invoice?

A standard (non-VAT) invoice must include:

1. 'Invoice'

Identify the document with the word 'invoice' to differentiate from a quote, credit note or receipt.

2. A unique invoice number

The number must be unique to each invoice (without duplicates) for clear identification and y'all must continue a record of the numbers and references used.

Using a sequential numbering arrangement is the easiest mode to manage this.

The reference can contain messages as well equally numbers.

3. Your company name and address

This is different for sole traders and limited companies but essentially, you lot must show conspicuously your trading proper name, business accost and too, where you can be contacted by the customer, in case of query or dispute.

4. The company name and address of the customer

This is standard process on all invoices (except simplified VAT invoices) but is important for customers who want to claim back any VAT that has been charged.

5. A clarification of the goods/services

A clear description of the appurtenances and services beingness invoiced for, with each service or item on a separate line for articulate identification.

6. The appointment of supply

Known equally the 'supply date', this is when the appurtenances or services were issued. The supply date may be different to the invoice engagement merely is commonly within xxx days.

seven. The date of the invoice

Date of when the invoice was generated and not when the goods were supplied.

8. The amount of the individual appurtenances or services to be paid

If you have a list of items in the description, then each i will be marked with an individual amount.

ix. The full amount payable

The sum total of all goods listed on the invoice.

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Y'all should too include:

10. Payment terms

Usually divers in your terms and conditions and agreed by your customer.

These are your terms for the length of time to pay and should exist marked at the bottom of the invoice. For example, payment within 30 days.

11. Buy order number

If your client provides you with a purchase social club number, then this should be conspicuously shown on the invoice.

Some customers may also require that the proper noun of the contact person is shown on the invoice.

Asking for a purchase order is recommended as once generated this is a legally binding contract betwixt yourself and your client/client.

12. How to pay the invoice

List the unlike ways that an invoice can be paid and include the bank business relationship references. For instance, your banking company sort code and account number for BACS payments.

For invoices to international customers, IBAN/BIC/SWIFT numbers should be included.

Read more than about getting paid on fourth dimension:

How to alter the way you manage your cash flow
This is how to become paid on time
5 late payments rules you demand to follow to become paid
How to process an invoice

VAT registered invoices

If y'all're registered for VAT you must produce a VAT invoice and keep a re-create (digital or paper) of all invoices issued, including ones issued by error or cancelled.

A VAT invoice must contain additional information to a standard (non-VAT) invoice.

At that place are three types of VAT invoice:

Full version – can be used for all supplies and amounts of invoice.
Simplified – can be used for all supply and retail supplies under £250.
Modified – tin can be used for retail supplies over £250.

What a full or modified VAT invoice must show

You don't demand to issue a VAT invoice if all the goods are exempt or zero rated.

What a simplified VAT invoice must show

If you use the cash bookkeeping scheme, then the invoice must exist stamped with the amount of cash paid and the date.

You don't need to issue a VAT invoice if all the appurtenances are exempt or zero rated.

VAT invoices are ordinarily supplied inside thirty days of the appurtenances or services beingness delivered.

International invoices

For invoices issued in a foreign currency or a foreign language, so yous must show the VAT payable in sterling, if the goods or services are supplied in the Great britain.

You should also accept an English translation bachelor for inspection by a VAT officer.

Invoice payment terms

It's your responsibility to set and concord your payment terms with your customers in advance.

Make it piece of cake and conspicuously state your terms on the invoice so that the recipient knows when payment should be fabricated.

In large companies, a divide accounts section may not exist aware what terms y'all agreed with your contact.

If you're a small business or contractor, it's by and large best to avoid complicated payment terms to avoid being misunderstood and having payments delayed.

To get the best results simply state:

'Payment due within xxx days.'

Or, be polite and use less rigid language:

'We capeesh your business organization. Please send your payment inside 30 days of receiving this invoice.'

Common invoice payment terms

Payment in advance (PIA)

Tin can be used when dealing with new clients or customers with a poor payment history. PIA means that you require payment to be fabricated in full earlier appurtenances or services will exist delivered.

Net (Northward)

A common payment term. 'Net x' would mean that the full corporeality of payment is due within 10 days and 'Net 30' would mean within xxx days.

'Cyberspace' tin be abbreviated to 'Northward' such as N10 or N30.

End of calendar month (EOM)

Terminate of month means that full payment is due within the amount of days stated after the calendar month-cease that the invoice is issued in.

An invoice can exist worded as, 'Payment due xxx days month-terminate' or abbreviated to 'Internet EOM 30'.

If your invoice were dated 5 April and your terms were Net EOM xxx so the full payment would exist due on 30 May.

Month post-obit invoice (MFI)

'xv MFI' means that the full amount payable is due on the beginning xv^th of the calendar month following the invoice date.

For example, if your payment term was fifteen MFI and the invoice was dated 5 January, payment would be due on 15 January. If the same invoice was dated 20 January the payment would be due on fifteen February.

Disbelieve

A discount is extended on the total amount payable if payment is made within the amount of days stated.

'ane/10 Net 30' or 'one% 10 Internet 30' means a discount of 1% is offered to payments made inside 10 days, otherwise total payment is due inside 30 days.

If the speed of payments is an important factor for you, offering early payment discount could ensure that you lot get cash in the depository financial institution more than quickly.

Stage payment

A payment plan can be agreed by you lot and your client to offer a proportion of the full amount payable in stages.

For example, iv stage payments of 25% each or, two phase payments of 75% and 25%.

If you're working on a large projection then inquire for part payment upfront, such as 25% and staged payments though the lifetime of the projection to avoid risk and manage your cash flow.

Invoice payment methods

After being articulate about how much the payment is, you also want to brand it easy for your customer to physically pay you.

Include in your invoice the different methods of payment that y'all accept, together with your banking company details.

Common invoice payment methods

Bank transfer (BACS)

One of the most common payment methods used, Bankers' Automatic Clearing Services (BACS) payments are electronically made payments, directly from one bank account to another and ordinarily made online or by phone.

Payments unremarkably have three working days to articulate into your account.

The Faster Payment Service (FPS) is becoming more mutual as standard beyond UK banks (some concern accounts have to pay) and means that a payment will be cleared into your account the aforementioned day it was paid.

On your invoice include:

Name of your banking company: My Banking company
Sort code: 00-xi-22
Account number: 01234567

IBAN/BIC/SWIFT

If you take customers away and desire to receive international payments, then your bank can provide you lot with codes to do this.

International Bank Business relationship Number (IBAN) is the international version of your banking company account number and allows yous to receive international payments in either strange currency or sterling.

IBAN is used by most European countries, Commonwealth of australia and New Zealand just non in the USA or Canada.

A Bank Identifier Lawmaking (BIC) or Society for Worldwide InterBank Fiscal Telecommunications (SWIFT) is a code to place your specific depository financial institution.

You will need this alongside your IBAN payment. Most banks use BIC but SWIFT is needed for payments from the Usa and Canada.

Both numbers can usually be found on your concern banking concern statement or by request your bank.

On your invoice include:

BIC AAAAGB12345
IBAN: GB00 AAAA 0000 0000 0000 00
SWIFT AAAAGB12345

Credit or debit carte

To accept card payments, you need a merchant business relationship and a credit card reader. For online payments, you need an ecommerce payment gateway and merchant account.

For remote payments over the phone, you need an online virtual terminal and a merchant business relationship.

Due to the cost of operating a merchant account, credit card payments are but a cost-effective solution if you are expecting to have a pregnant amount of payments past card.

Be aware that a customer can issue a 'chargeback' to opposite a credit card transaction by challenge the particular didn't arrive or was not every bit 'described'.

A chargeback can be made up to 120 days afterward the payment transaction was made.

PayPal

PayPal allows worldwide payments betwixt ii people who accept PayPal accounts but various fees employ. Y'all can also accept credit and debit bill of fare payments through PayPal.

Cash

Accepting cash payments is an pick for small businesses dealing with the public simply most business concern to concern invoices cannot exist paid with cash.

Don't forget that cash is not the most secure method, equally you can exist exposed to counterfeit bank notes and you lot have the added risk of carrying cash in person when depositing at the banking company.

Also, banks unremarkably accuse a counter fee for depositing cash.

When is the best time to send your invoice?

The obvious answer to this question is, as soon as yous can. The more delayed your invoice is, the longer it will take to get paid.

When selling appurtenances

The options are more straightforward. You can request payment clears before goods are shipped, paid upon receipt of the goods or on your terms such as a standard 30-mean solar day net.

For services there is more than flexibility

At that place accept been plenty of studies virtually when is the best mean solar day of the week/month to send your invoice but the reality is that you volition get paid when companies consummate their payment runs. This is generally at the cease of the month but not e'er.

Find out when your customer/client payment run is and enquire them for the cut-off date for submitting invoices in that month.

If you have a long-term projection then you will most probable negotiate to submit an invoice on a monthly basis. Usually, at the finish of the month to cover that month.

If you accept staged payments (as to a higher place) you can concur in advance the dates that your invoices volition be raised. Such equally, before you brainstorm, later proposals have been submitted, upon first drafts being presented and then upon completion and sign-off.

For individual freelancers dealing with a large visitor who has a payment policy of 90 days this tin be unmanageable for your cash flow and also a huge run a risk. Negotiating to invoice them every bit you begin, or fifty-fifty backdated before y'all begin the work tin can circumnavigate their fixed arrangement and help reduce your payment times. You can insist that they run across your payment terms merely that is not ever possible with their rigid system.

Always retrieve to double-bank check your invoice for accuracy before you lot send it to avoid delays.

Be prompt, polite and accurate.

How to send your invoice

The structure of your invoice is only half of the procedure and making sure your invoice gets to the right person who tin pay you lot is probably more important.

Ask your client for the proper noun and contact details of the person in accounts who will exist making your payment.

Having this information is vital so that you can chase late payments as the person who actually makes the payment holds the ability.

E-mail is the preferred standard for submitting invoices and when yous send to the accounts department call up to CC your contact on the e-mail.

Employ a certificate that can exist universally opened. Accounts departments prefer PDFs above everything else.

Do not send Word or Excel files, every bit when opened on different machines these can be reformatted, making the data unreadable and more importantly they can be edited.

Subject header

Large companies who bargain with thousands of invoices want their life to be as like shooting fish in a barrel as possible and to avoid your electronic mail becoming lost information technology is recommended to use a legible field of study.

A busy accounts section volition thanks for information technology.

Bailiwick header format

[Your visitor proper noun] [Your company services/appurtenances Invoice] [calendar month/year]

For example,

Sparkle Pattern, Brochure Design Services Invoice, Jan 2021

Writing your email

War And Peace is not required. To be professional person, brand your email clear and concise:

——————————————————————–

Dear [Large Visitor],

——————————————————————–

Delight find attached my invoice dated 31 January 2021 in the sum of £500 for brochure design services.

(Not essential) If you lot accept a PO number insert here. Authorised by [the proper name of your contact hither].

If you take any queries do not hesitate to contact me.

Kind regards

Jane Smith

——————————————————————–

Finally, how to get paid on time, every time

Chasing tardily payments can be like death by a thousand newspaper cuts, draining your fourth dimension and taking energy abroad from running your business.

Your all-time line of defense is what you lot do earlier the invoice is issued:

Accept clear terms and weather (T&Cs) and obtain understanding in writing (newspaper signed or by email).

Concord your payment terms in advance as part of your T&Cs.

Ask for a PO number – a buy number (PO) forms a contract betwixt yourself and your client.

Ask new customers to pay their beginning invoice PIA.

For big invoices, ask for a staged payment in accelerate to spread chance. If payment is delayed at any stage you can cease work to avoid risking farther toll.

Make your payment method like shooting fish in a barrel – BACS is the best.

Get the proper name and contact details of the person responsible for making your payment.

Go along on elevation of your invoices and issue reminders every bit shortly every bit the due date is passed. Don't ever leave late payments hoping they will become paid without request.

Chasing up a tardily payment shows that yous are a professional concern owner and expect to exist treated as i.

If you have a payment that is overdue yous tin follow our guide on what to do when your invoice hasn't been paid.

To help manage your fourth dimension better y'all can utilize bookkeeping software, which can ship professional invoices for you every bit you process orders instead of the time-consuming procedure of manually completing and sending your invoices.

Leaving yous more time to focus on what y'all do best: build your business.

Editor'due south notation: This article was first published in March 2018 and has been updated for relevance.