What is an Invoice?
An itemized bill for goods sold or services provided, containing individual prices, the total charge, and the terms
(with thanks to dictionary.com:)
What is it's purpose?
When you sell a product or service to your customer it is request for payment.
If you are VAT registered it is a requirement by law to issue an invoice to record a business to business transaction.
It's not the same as a Receipt which is an acknowledgement / confirmation from the supplier to the purchaser that payment as been received for a product or service.
Sales invoice or Purchase invoice ..
They are essentially the same document!
If you send a customer an invoice it is your Sales Invoice, to your customer it is their Purchase Invoice.
Therefore, it is important to ensure that your invoice is clear and understandable so that your customer will be able to process it quickly without having to ask you further questions before they can settle it
What should you include on an invoice?
When issuing an invoice there is a requirement to include certain items of information, that are mandatory these include:
These include but are not limited to:
Your Name and Address *
Your Customer's Name and Address
A clear description of what you're charging for
The date of the invoice
An invoice number (these should follow in sequence)
The amount being charged for
VAT amount if applicable **
Total amount owed
*Your Name and Address
This should be your name and any business name being used (eg. Joe Bloggs t/a Bloggs Design) and an address where any legal documents can be delivered to you if you are using a busness name.
This should be your full company name as it appears on the certificate of incorporation, and should you decide to include the names of your directors on the invoice - it must include be ALL directors.
Only VAT registered businesses can charge VAT on their invoices
If your are a VAT registered business you must charge VAT on all goods and services you sell (unless they are exempt)
The overall purpose of you invoice is to get paid! So a a few additional items to consider when designing you invoice layout.
Make sure your invoice is clear - can the client identify who you are, what and how much you're charging.
Include your payment terms on the invoice, and details of how to pay (if using accounting software make use of the pay-now-button)
Include a telephone no. or email for contact - encourage them to contact immediately with any questions, so that you can rectify quickly & still get paid on time.
Worried about your invoice?
Is your invoice clear? The simpler the better, try not to clutter your invoice with with adverts for services as it distracts the reader from the important details.
Always include a phone number or email and encourage prompt contact if they have a query.
Make sure you have your preferred method of payment shown, eg. bank details or a payment link. A Pay Now button within your accounting software is super helpful for this!
''Helping you look after your numbers, so you can look after your Business''
Anything else causing you bookkeeping pains?
Let me know in the comments, for the subject of future blogs