An Invoice… What Should It Say?

Invoicing is something that we get asked about regularly here at Cube Accounting, particularly by businesses that are about to start or who have recently started in business.

 

How do I create an invoice, what does it have to say, how frequently should I send them are just a few of the questions we are asked, so we thought a blog post about invoicing might be helpful.

 

What is an invoice?  

An invoice is a statement of goods or services provided with a request for payment.  

 

How can I create them?

You can create an invoice using any computer programme, it doesn’t have to be an invoice or accounting software package, something like excel or word will do just fine.  There are however lots of accounting packages such as Xero or Sage that have an invoicing functions that link directly to your accounting programme or stand alone invoice software such as Zoho invoice or Invoice2go.  Some website template packages also have an invoicing function e.g. WIX.

 

What information should your invoice include?

 

  • It should clearly state ‘Invoice’ at the top of the page.

  • Date of the invoice.

  • Business name and address (Limited company you must legally have the full business name)

  • Itemised and clear description of goods or services provided, so that your invoicing is transparent and easy for your client or customer to understand charges made

  • Hourly rate or product price (number of hours worked or number of products)

  • Payment terms (30 days considered standard however more common and better for cash flow to give 7 or 14 days payment terms)

  • Methods of how you would like people to pay and the bank details for the account where you would like people to.  

  • Invoice due date and details if you operate a late payment fee.

  • VAT number if registered and mark the document as a VAT invoice.  Include the details for the amount of vat on each item as the VAT amount payable on some items may vary.  

 

What happens if someone doesn’t pay an invoice?

It is good etiquette is to send a polite reminder before an invoice is due.  If your invoice becomes overdue for payment, follow up with a ‘firm’ letter and if payment still isn’t received after a further 7 days or a period of time considered reasonable, pick up the phone to confirm that they have received the invoice, mention that the invoice is overdue and ask when you can expect to receive payment?  However, please ensure that you are speaking with the person responsible for paying the invoice though, so as not to cause upset or offence.

It may also be worth noting that some accounting packages have the capability to send auto-reminders and late payment reminders etc. so it will be worth checking your settings.  While there are various opinions on how to deal with invoices that are not paid, there are no hard and fast rules, but your accountant can of course advise.

 

Finally, when invoicing we would always recommend that you have a regular process for the benefit of your own business and for your clients, so that your customers know when they can expect to be invoiced.  Keep a track on your invoicing activity, be prompt to invoice and prompt to follow up. Having enough cash flowing through any business is vitally important for the success of any business.

 

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