Business Advice · 17 November 2021

How To Write An Invoice

How To Write An InvoiceIt’s always an exciting day for an entrepreneur when your first invoice has to be issued. You might even feel like framing it or issuing it with gold leaf detailing. But before you can get to that step, let’s delve into the how-to guide for writing an invoice.

Functions of an invoice

In a retail scenario, the majority of invoices are issued post-payment and act as receipts. In other scenarios, when issued as a call for payment, they function as a service or product explanation and the linked value to that product or service.

In the latter, it is important to clearly differentiate the product or service from others so that the client never thinks they are being invoiced twice for items that are actually two different things. Your clear invoice also calls for payment, stipulates when payment is kindly required, what types of payment are acceptable, and where to pay the money.

You can also use your invoice to thank customers and notify them of specials, new arrivals or services and products that might go well with what they have just purchased.

Key requirements of how to write an invoice

If you are working on paper, HMRC requires a digital version to be captured as well. While non-digital is still an option, it is slowly being phased out completely. You may still keep issuing paper versions, but note they will only accept digital accounting submissions, so you will have to capture your sales into bookkeeping software. You can find the HMRC invoice rules here.

Creating an invoice that suits HMRC requirements and works well for your business and clientele may take a few iterations and will definitely require periodic updates.

Keep your layout uncluttered, make the reference number, total value, banking details and payment terms easy to find, and double-check the calculations and list of items.

A clear layout of information

There are numerous invoice layout examples available online. If you use bookkeeping software, it will have recommended layouts. You may find it simpler to issue an Excel or Sheets invoice due to the complexity of the product content and then capture simpler versions digitally.

Using examples usually results in a neater outcome and avoids the omission of important info.

Insert your company logo into the header space of the example layout and tailor the colours to your brand’s visual language. It would also be nice to stick to one font type for all documents relating to your business for consistency. It’s best not to use multiple fonts and colours as it can look a bit ‘school project’ and be visually confusing. Logo font plus invoicing font should suffice, and different font sizes with emboldening can differentiate items like headers.

An important invoice header

It is very important that you actually label your document as an invoice and make it clearly visible. An invoice has legal ramifications, and if it is not marked as such, you may have challenges collecting a debt in future.

Individual identification number

Having invoice numbers makes bookkeeping, payment allocations and queries so much easier. When you are starting out, you might not see the benefit of this when only issuing three invoices a month. But when there are thirty or three hundred, you will go mad without numbering! Having said that, HMRC also requires you to allocate an individual identification reference number to each of your invoices.

Save all your invoices into one folder as this will simplify queries and month-end

Bookkeeping software may use sequential numbering, but in your Excel or Sheets version you might prefer to include letters that reference the client, the date (MMYY) and another differentiator for multiple invoices per client, e.g. CC1121-01.

The choice is yours.

Important inclusions

You must include your business’s name, your legal address and your contact details (for ease of reference for queries), as well as the name of the person or business you are invoicing and their legal address and contact details.

The details that you need to include in a sole proprietors invoice are:

  • The name of the legal entity and business, i.e. you trading as “insert business name”.
  • Your legal address. Important legal documents might be delivered to this address, so make sure it’s an address from which you will or can collect post.
  • The client’s name and address (person or business), their legal address, their contact details and the name of the person you are dealing with.
The details that you need to include in a limited company invoice are:

  • The details of your business as they are on your certificate of corporation:
    • Name
    • The registered address of the offices
    • The registration number of the company
  • The company’s contact details (or you may want to add an accounting department number here)
  • The client’s name and address (person or business), their legal address, their contact details and the name of the person you are dealing with.
Note: if you list directors on your documents, you have to list all of them or none of them.

Be clear on the description of items

Try to have standardised descriptions of your products and services wherever possible as this is easier for repeat clients.

List a clear description of each item being invoiced.


 
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