An invoice is a document that bills a customer for products or services that you have rendered. An invoice, also known as a bill, contains all of the details of a transaction.
What are you up against?
As a freelancer, your primary point of contact at your client's office would most likely be uninvolved with their company finances and will simply forward your sales invoice to their accounting department when you submit it. It is also better for all (and can prevent payment delays) if you communicate directly with the accounts department.
When it comes time to pay, request the contact information of whoever is in charge of actually paying the invoice. This way, you know they got it, and if you need to follow up with them, you can do so directly.
How do you create a sales invoice?
The next step toward invoicing professionalism is to use invoicing software that allows you to add customers, customise and beautify your invoices, and monitor your profits. Persona Finance, fortunately, has you covered with our bookkeeping service.
What information is needed by law to be included on an invoice?
HMRC requires you to include certain information in each invoice you create. You must have the following:
- A distinct identification number;
- Name, address, and contact details for your business;
- The customer's company name and address, as well as a detailed explanation of what you're charging for;
- The invoice date is the supply date (i.e. the date the goods/services were provided);
- A rundown of the fees you charge your customer;
- The relevant VAT number;
- The total amount owed.
If you are a sole trader, you must also include:
- Your name, as well as any company names that are being used;
- A physical address where legal documents can be mailed to you (if you are using a business name).
In the case of limited companies, use the full business name as it appears on your certificate of incorporation. If you need and/or choose to include the names of some of your directors on your invoice, make sure you include all of them.
How do you keep track of the services you charge for?
When it comes to documenting the services you charge the client for, there is no one-size-fits-all solution; it is entirely dependent on what you charge for. It may be as basic as a single line item describing the product or service you sold.
It is always best to provide as much information as possible on your invoices. You'll be able to quickly find what they were about if you decide to take them out of your folder for some reason.
A timesheet is another type that an invoice will take. For example, if you work on an ongoing basis for a client and bill by the hour. Each line item, in this case, should include the date, the number of hours worked, and the cost.
Is it necessary to have VAT on my invoice?
If the company issuing the invoice is VAT registered, the invoice should contain VAT. If you are unsure if you are VAT licenced, you are not. It's something you'll need to think about as your revenue grows, and an accountant will help you determine if you should file.
If the job is big, consider asking for a portion of the payment upfront or staggering the invoices at predetermined thresholds. Also, don't put off sending out your invoices. For accounting and business advice, please contact Persona Finance [email@example.com].