Invoicing Basics

When running your business, invoicing is always a time-consuming task.

If you set up your templates right from the beginning, and if possible, use the right software applications, it can become a quick and smooth process.

What is an Invoice?

Also known as a “bill,” “statement,” or “sales invoice”

So firstly, what is an invoice? Invoices are used to send to your client/customer for either products you have sold to them, or services you are providing them. They also form part of tracking your business sales for accounting and tax purposes.

How often should I Invoice a Client?

One of the most common questions regarding invoices is how often you should invoice a client. Every business is different, and different types of companies will invoice at different times.

Some may invoice at the end of the month, in instalments, on completion of a project/service, or when goods or products have been ordered. You may want to invoice in advance or a deposit before services commence.

When deciding how often, consider the services you are providing, and your costs — if you are providing equipment or supplies which you have to purchase upfront, then you’ll want to be reimbursed as soon as possible for it doesn’t affect your cash flow.

If you are selling products which require delivering to your client/customer, then most retail businesses will ask for payment immediately upon the client/customer making their order. In those cases, you should consider using online payment services to enable your clients/customers to pay straight away.

The sooner you send out an invoice, the sooner you’ll get paid!

What to include on your Invoice?

Depending on your business type, you must include different information on your invoices:


Sole trader invoices

  • your name and any business name or trading name you use
  • an address where any legal documents can be delivered to you if you are using a business name

Limited company or LLP invoices

  • Full company name as it appears on the certificate of incorporation
  • The company’s Companies House registered number and address


If your business is registered for VAT, you will need to include:

  • VAT number
  • the total amount payable, excluding VAT
  • the total amount of VAT charged, expressed in sterling
  • VAT Rate (usually 20%)

And if you issue a VAT invoice that includes zero-rated or exempt goods or services, you must:

  • show clearly that there is 0%, or no VAT payable on those goods or services
  • show the total of those values separately

If you make retail sales and you make a sale of goods or services for £250 or less (including VAT), you can issue a simplified VAT invoice. For more information, take a look at HMRC's guidance.


Always put the date of your invoice. This is mainly for tax purposes, but also helps identify invoices for both you and your client.

When do you expect it to be paid? As mentioned previously, it will depend on your business as to how quick your client or customer should pay it. It’s not uncommon for clients to pay an invoice 7, 14, 30, 60, or even 90 days after receiving the invoice. If you want to get paid faster make it clear that the invoice is due on a specified date. Also, mention any late fees or charges if the invoice is not paid on the due date.

Remember that it’s for you to decide how quickly you want to get paid. Set your payment terms and make sure your customers keep to them!


It’s important to make sure that your price or any rates you use are what has been quoted for or agreed with your customer. Otherwise you could find yourself in the position of either having to ask your customers for more money, or give them some back.

When you include a reference to your quote or proposal in your invoice, make sure you use your most recent pricing - and don’t forget any additions, discounts or special offers that you might have promised to all your customers or to just this particular customer.


Including an invoice number is a way to simply track and organise your invoices. An invoice number comes in handy for tax and accounting purposes as well, or if you are going to be audited. Instead of shuffling through hundreds of invoices, you can locate any queried invoices quickly and easily.

If you use accounting or invoicing software, you can set it so it will automatically enter the next available invoice number into your invoice, so you don’t need to track those too!


You should include the name, address, and contact information for both you and your client. Not only does it look professional, it ensures your invoice is sent to the right individual (which in larger organisations can aid you being paid quicker) and that you can be contacted if there are any questions or queries about the invoice.


A clear description of your services/products should match what you quoted initially (subject to any agreed changes or variations). This helps to avoid queries from customers and consequent payment delays.

By doing this, you can avoid any misunderstandings by clearly detailing the work you did for the client. For example, if you spent two hours testing a website, then that should be specified. The last thing you want is for a client to think that you are overcharging them. This also speeds up the payment process since clients can see exactly what work you did for them.

Some customers will want details of time spent on a project, such as timesheets, or copies of receipts for any expenses or supplies you incurred and are recharging them for. In instances where you want to mark up expenses you incurred (for instance, the cost of item plus 10%), make sure your client understands that you may do this in the terms and or proposal.


You may have been given a client reference to put on your invoice, this may relate to the person you have been dealing with, or a specific job number often referred to as a Purchase Order number. This can speed up the payment process (especially if your client is larger company) as sometimes they will refuse to pay an invoice that doesn’t have a valid purchase order number on it.


Your invoice is a document that you send out from your business, so make sure that it reflects your brand. Think about your logo, colours, fonts, and wording of the item descriptions and of your payment terms.


Prior to conducting any work for a client, both parties should have some sort of agreement or contract in place that specifies payment. Of course, this will be dependent on the following situations:

  • The Client’s Timeframe
    Try all you want some clients will only pay for invoices during their established timeframes. For example, they may only pay their suppliers on a Thursday or the 3rd week in the month, so if your payment terms don’t match up, you will be paid late. Asking for a payment before that date will not guarantee that you will be paid earlier. Make sure you fully understand the clients’ payment process and factor that in to when you expect payment to be made.
  • Your Timeframe
    As mentioned earlier, this will depend on what your business does.
  • The Size of the Job
    If you are working on a larger project, you may want to invoice in instalments or have a deposit paid upfront. For example, you may agree on 50% of the final amount upfront and receive the other half once the job is finished. In other situations, you may have a smaller job that will be completed within one month and can be invoiced in one go.
  • The Relationship between You and Your Client
    If you and your client have established trust between each other, then you could agree on invoicing them prior to the start of a project. You could also send an invoice after completing a project without asking for a deposit since you know that they will pay immediately after completion.

If you and your client have agreed on payment terms, then this will guide both of you on when to invoice them as you both know what to expect.


There are some items that must be legally included on an invoice document, make sure you comply with this to avoid an invoice being rejected.

  • You must clearly display the word ‘invoice’ on the document
  • a unique identification number / invoice number
  • your business name, address and contact information
  • the business name and address of the customer you’re invoicing
  • a clear description of the goods or services
  • the date you provided the goods or services
  • the date of the invoice
  • the amount(s) you’re charging
  • VAT rate & amount if applicable (if you are VAT registered, it will usually be 20%)
  • the total amount owed

When to Chase your payment

The frequency of when you send out invoices ultimately comes down to the timeframe of your clients and what works best for you and your business.

By having all the details correct and agreed payment terms with your client in place, there should be no reason for your client not to pay on time. However, sometimes clients just don’t pay up when they should.

Be consistent and stick to your payment terms and chase as soon as your due date arises. If your client still doesn’t pay, don’t be afraid to remind them that you will start charging a late payment fee or interest on late payments.

Many clients will take liberties where possible, and if they think they can get away with delayed payment, they will, so don’t give them the opportunity!

While chasing payment is no one’s favourite job, the invoicing process is a key factor in the survival of your business and if you take the time to chase regularly, even sending reminders a few days prior to the due date, you should get paid faster.

Payment Methods

Make it as easy as possible for customers to pay you. The most common payment options for businesses are:

  • Cash
  • Cheque
  • Credit Card

Electronic payment transfers:

  • Online Banking
  • Wire Transfers, BACS, CHAPS
  • Online payment services

Include your bank account details on your invoices if you are taking payment from online banking or by BACS. If you send your invoices by email and use a service such as PayPal, Stripe or GoCardless to collect payment from customers, include a link when you email the invoice, so that customers can pay with one click.

Make sure that your invoices are clearly laid out with all the information a customer needs. Your aim is to make your customers’ lives as easy as possible so you get paid quicker.

Finding the best payment solution for your business depends on your particular business. If you have an online business, then it would obviously make sense for your business to accept electronic payments since you are dealing with remote customers. It’s best to discuss which payment option works best with your business with your accountant or financial adviser.

There are lots of different applications you can use to facilitate invoice payments, most will now integrate straight into the invoice or accounting software you use.

Invoicing & Accounting Software

Invoicing isn’t the most exciting of tasks, so why not simplify the process by using invoicing software?

Most invoicing services allow you to quickly create invoices, send them out electronically, track which invoices are pending, keep track of time spent on projects, any expenses incurred, and even automate any recurring invoices. Most invoicing and accounting software also enables you to get paid through payment services, and can be used to accounting purposes, from managing cash flow, to filing your VAT Returns and annual accounts.

Accounting Software

Invoicing no longer requires a master’s degree in accounting! Although you may still want to consider using a bookkeeper, adviser or accountant to support your business. These days, there are so many tools to help make getting paid easier, so you can focus on running your business.

Make the most of them!

Published on 15th Oct 2019

Rachel Ayres

Joining the team in 2015, Rachel specialises in business compliance and processes, company secretarial and contractual services.

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