“I am the despair of my accountant; I am the plastic bags of receipts.” – Val McDermid
First rule is to get the invoice itself right as this document is your route to cash.
Invoices – what they must include
You must clearly display the word ‘invoice’ on the document. An invoice must include:
- A unique identification number / invoice number
- Your company name, address and contact information
- The company name and address of the customer you’re invoicing
- A clear description of what you’re charging for
- The date the goods or service were provided (supply date)
- The date of the invoice
- The amount(s) being charged
- VAT amount if applicable
- The total amount owed
Sole trader invoices
If you’re a sole trader, the invoice must also include:
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- Your name and any business or trading name being used
- An address where any legal documents can be delivered to you if you are using a business name
Limited company invoices
If your company is a limited company, you must include the full company name as it appears on the certificate of incorporation.
If you decide to put names of your directors on your invoices, you must include the names of all directors.
When invoicing, you must use VAT invoices if you are VAT registered. These include more information than non-VAT invoices, specifically the rate of VAT charged and your VAT registration number.
The invoice document is one thing, equally important is the system you use for invoicing. The invoice system can be manual, computerised or driven from a spreadsheet but good practice dictates that:
- Always invoice when a job is completed or goods delivered, do not leave it to ‘batch invoice’ at a specific time of the month.
- Institute a failsafe check, you should not be able to despatch a product without an invoice being created first.
- Always put payment terms and expected payment date on your invoice to help debtor management.
- Match your payments against the invoices on receipt.
- Actively use an aged debtor report to look at old unpaid invoices.
Ensure you are sending your invoices to the right place and the right person in a company or payment will be delayed.
Invoicing advice from Yorkshire Powerhouse
Understanding cash flow is the life blood of any business and needs to be one of the key priority areas for anybody running a business. Read >