Create an invoice to provide a record of goods sold or services provided, and the amount payable.
What is an invoice?
An invoice is essentially a bill sent to business customers or clients in respect of goods supplied or services rendered. It's a crucial part of the business transaction and serves as a record for tax purposes.
An invoice should not be confused with a receipt, which is an acknowledgement of payment.
When should I use an invoice?
Create and send invoices as a seller to:
- send a bill or fee note to a purchaser
- sell goods or services to a purchaser
Find out more about invoicing.
What is included in an invoice?
This sample invoice template covers:
- a description of the goods or services to be purchased
- the price and payment terms
- the details and contact information of the seller and the purchaser
- how payment may be made
- VAT details (if relevant)
- any discount applicable
Why do I need an invoice?
All VAT registered businesses are legally required to submit invoices to any clients who are also VAT registered. However, it is good practice for all businesses to generate invoices as part of the overall transaction process, irrespective of their VAT status.
As most businesses will only pay for goods or services once they have received an invoice, ensure all invoices are processed in a timely fashion. This will facilitate quick payments and avoids discrepancies and delays.
Keeping an accurate record of invoices is also crucial for annual tax returns, and for calculating business turnover, profit and expenses.
What should be included in an invoice?
How to write an invoice:
the word ‘INVOICE’ should be clearly displayed at the top of the document
an invoice number that uniquely identifies this invoice
the invoice date
your business name (for companies, this should be the full company name as it appears on the certificate of incorporation)
your business address
contact information, including an email address and phone number
the name of the client that you are invoicing
a brief description of the services provided or goods supplied and individual costs/fees
the total amount being invoiced
payment method and details (eg bank account number and sort code)
- a Purchase order number (if required by your client)
VAT registered businesses must also include:
- their VAT registration number
- details of VAT charges
VAT invoices should be used where both businesses involved in the transaction are VAT registered. See the Government website for information on VAT invoices.
What is an appropriate payment period?
You should negotiate payment terms with your client before sending an invoice. However, an invoice can include a reminder of the payment period, or a preferred payment due date if one was not discussed.
Many small businesses require payment within 14 calendar days but larger organisations may agree to up to 60 days (or longer if reasonable to both businesses). If there is no specific payment period, clients must pay within 30 calendar days of receipt of the invoice. 30 days is generally considered to be the standard payment period amongst businesses.
What payment methods can I set out in an invoice?
As most businesses pay by direct bank transfer, make sure to include your bank account name, sort code and account number on invoices. Alternatively, you can ask to be paid by cheque - in which case you should specify the best postal address. Some businesses also offer the option of card payment. However, this will often incur a processing charge and there are rules on passing on these processing fees.
What if I charge different rates of VAT or discounts on my products or services?
This sample invoice only allows you to charge one rate of VAT or one rate of discount applicable to all the products or services. If you wish to charge different rates or VAT for different items, create multiple invoices or Ask a lawyer for help drafting a bespoke invoice.
Ask a lawyer for:
- advice on setting up a business
- finding out about international sales including web sales
- advice if you charge different rates of VAT or discounts