- Make it personal, add your logo and branding to it
- Make it clear at the top that it is an ‘invoice, bill or statement’
- Include your company information
- Include your company’s contact information
- Include date of invoice and payment terms e.g 5 days, 10 days, 30 days
- State what you are invoicing for and the price
- Add VAT
- Add your payment details
- Add a reference number
There are quite a few things to consider when preparing an invoice and missing out certain sections may look unprofessional and result in being paid the wrong amount. Accurate billing is extremely important and also means that you can manage your tax and your accounts efficiently.
Whilst writing invoices may seem rather tedious, it is essential for every business and worth taking time to get it right. If you are looking for something automated, you can use invoicing software which is available online to prepare the invoices and take payments.
However, most businesses use manual word documents to create their invoices and then send them by email or post.
In this guide, we will be shedding light on exactly what an invoice is and how you should go about writing one up correctly.
What is an invoice?
An invoice is a payment bill or a document which is sent by a supplier of goods and services to their customer. It is commonly sent at the end of each month or upon the completion of the service and is like giving the check at an end of the meal.
Essentially, an invoice’s purpose is to itemise the transaction and include the payment amounts as well as the terms- which is a written agreement between two parties and verifies the exchange between said parties (buyer and seller). It acknowledges an obligation to pay on the part of the buyer.
You may also have heard an invoice being referred to as “sales invoices”, “bills” or “statements”.
Step-by-step guide to writing an invoice
Step One: Personalise and make the invoice professional
To get your invoices in line with your branding, choose a colour and style which best represents your brand and have your logo present somewhere on the document. You should also make it clear on the document that it is an invoice. Do this by displaying the word ‘Invoice’, ‘Bill” or ‘Statement’ etc. at the top in big letters.
Step Two: Company information
This is a very simple step which is often overlooked when writing an invoice, however it is important for clarity. You should provide your company information including the name of the limited company and number according to Companies House.
Your invoice should include the contact information of the company it is being sent to which should incorporate the names, email, address and phone numbers of your entity. If you have a number which is specific for business, include this as well.
You should also display the date of the invoice to make filing and organising it more effective. It is also recommended to add ‘payment terms’ such as immediate, 10 days or 30 days so that you have a clear expectation of when you should receive payment.
Step Three: what are you invoicing for?
When you are invoicing someone, it is because you have provided them with goods or a service. This is the most important step. Clients will like to know exactly what it is you are billing them for, so the more detail you provide the better such as hours or details of the order.
Aim to give a clear description of the exact service or task. For example: “24 units of red designer leggings”. Under this, provide a description reminding the client what your work actually entailed and what you got done for them.
Next, fill in the price you are charging and whether you are charging hourly or by the project. Time is money and it is important to keep track of it. Displaying time also adds transparency to your billing, so that the client can see how long you have been working on the tasks they had for you.
Finally, you can add any additional comments at the bottom –perhaps a thank you to the client for working with you, it is great to have good relations with people within your industry.
Step Four: Add tax or discount information
If you are VAT registered, you must add 20% to the bill and make it clear that this is for VAT. You are also required by law to include your VAT number on the invoice. If there are any discounts included in the service you have provided, you should include this too.
Step Five: Add payment details
You need to provide your payment details and where you would like to receive the funds. This is typically your sort code, account number and bank name. Just in case, you can also add your IBAN number in case the payments are made from abroad.
Step Six: Add reference number
Your invoice should include a reference number that is matched up to your own accounts and internal records. This can be simply INV-01 or anything you like, but should always include a number that goes up for every extra invoice you produce.
By having a reference number, it allows you to record your invoices more effectively for accounting purposes and keep track of who has paid and who has not.
Step Seven: Send your invoice
Once you have checked that your invoice includes the full criteria above, you are ready to send your invoice. Most invoices these days are sent by email but it is also practical to send an invoice in the post so that the client receives it and keep its on record.