How to write an invoice

Whether you’re a sole trader just starting out or an established limited company, it’s important to get your invoicing right.

Here’s our step-by-step guide to writing an invoice for your UK business.

Whether you’re a sole trader just starting out or an established limited company, it’s important to get your invoicing right.

Here’s our step-by-step guide to writing an invoice for your UK business.

Emily Kindness
From the Business team
3
minute read
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Posted 19 JANUARY 2021

Why are invoices important?

An invoice is basically a request for payment for goods or services you’ve provided.

Writing an invoice correctly is essential for getting paid the right amount, on time. A clear, simple and accurate invoice helps avoid any issues or misunderstandings – it’s also the professional thing to do.

Invoices are essential for record-keeping and are important tax documents that show your income and sales. Getting your invoicing wrong could get you into trouble with HMRC.

What details need to be on a UK invoice?

Gov.uk says that certain information must be included on UK invoices. These include: 

  • Invoice date 
  • A unique invoice number 
  • Your company name, address and contact information 
  • The name and address of the person or company you’re invoicing 
  • A description of the goods or service/s you’ve supplied 
  • The amount being charged 
  • VAT amount (if applicable) 
  • The total amount owed 
  • Payment due date 
  • Payment instructions and details

If you’re VAT registered, you’ll also need to include: Your VAT

  • registration number 
  • VAT rate 
  • Total VAT charged

You can find more information on VAT invoices on the government website

A step-by-step guide to creating an invoice

These steps will help you create a professional invoice that’s easy to understand and HMRC-friendly.

1. Display the word ‘Invoice’
Make sure you put the word ‘Invoice’ in a clear and prominent position on your document – usually at the top.

2. Company name, address and contact information
As well as your own company name, address and contact information (including email and phone number), you’ll also need to add your customer’s details.

  • If you’re a limited company, you’ll need to put your registered company name and address as well as your company registration number. If you want to add the names of your directors, you’ll need to list all directors on the invoice.
  • If you’re a sole trader, you should put your name, address and business name – if you have one.

3. Invoice number
Each invoice needs to have a unique identification number, so you can keep track of what’s been sent. The invoice number can include letters, for example, your customer’s initials. Put the numbers in increasing order, so they can be easily sorted by date.

4. Dates
These should include the date the invoice is issued, and the all-important due date – when the invoice is due be paid, for example, 30 days after the invoice date.

5. Description of goods or services
This doesn’t have to be a long-winded description – keep it short, snappy and clear to understand, so your customer knows exactly what they’re paying for.

You then need to fill in the quantity of each item and the price.

6. Amount owed
Once you’ve listed the goods or services, quantities and costs, you’ll need to add the total amount due. If you’re offering a discount, this should be listed, and the amount taken off the total amount due.

If you’re VAT registered, you’ll also need to include the VAT rate and add the VAT amount.

7. Payment terms and details
Set out your payment details, how you want to be paid and the types of payments you accept – for example, credit card, PayPal or bank transfer. In most cases, customers prefer to pay by direct bank transfer, so you’ll need to add your bank details:

  • Account name
  • Bank account number
  • Sort code
  • Reference – it’s easiest to use the invoice number

Use the invoice example below as a rough template guide:

INVOICE

Your company name

Address

Contact details

VAT number (if registered)

To:

Customer’s name/company

Contact name

Address

Your Logo
Invoice number: ABC001
Invoice date: 30 November 2020 
Due date: 30 December 2020 
Description  Qty Unit price  Total
products 5 £100.00 £500.00
    Sub-Total  £500.00
    VAT @ 20% 
(if applicable) 
£100.00
    TOTAL £600.00
 Payment term: 30 days 

Payment details
Account name
Account number
Sort code

How to send an invoice

The quickest and easiest way to send an invoice is by email, attaching your invoice in a non-editable PDF format.

Another option is to use invoicing software. As well as using a ready-made default template, some software apps let you create and send invoices directly from your iPhone or Android smartphone. Most invoicing apps also let you set up payment reminders and recurring invoices.

Some mobile-only banks also have invoicing software and can even chase invoices for you.

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