So, you’ve started out on your business journey. You have your first client. You pitched or quoted for the job, landed it and now you need to send your first invoice. 
Getting paid for the first time when you're self-employed is such a good feeling! But you need to make sure you're doing it right. Here are my best practice tips for invoicing. 

What is an invoice? 

It may seem obvious, but let’s break it down. 
 
An invoice is a bill – a request for payment for goods sold or services provided. They are important because they show the products or services that you’ve provided, and what you are owed in return. 
 
The invoice should hold all details of a business transaction between client and supplier – it should be easy to refer back to when required, and unambiguous. 
 
Your invoices should always be kept on file, whether electronic or hard copies, because you will eventually require them when you complete a self-assessment or tax return to prove how much money you have earned. 
A woman's hand with black nail varnish and rings holding a pen and using a calculator with a pile of papers with the header 'invoices' stacked next to her
These days most of us use cloud software to prepare our invoices. 
 
As Xero Silver Partners, we at Effective Accounting support our clients with training to ensure that invoices are set-up correctly. 
 
Whether you choose cloud software or a simple Word template, it is important to understand what you need to include. 
 
Note: the same applies for credit notes. A credit note is essentially the opposite of an invoice; it is a document you give to a client or customer when you want to notify them that they have been credited with a certain amount. This can be owing to an error on an invoice, when an over-payment has been received or when issuing a refund, amongst other scenarios. 
Four £20 notes on a table
The following information should be included on an invoice:- 
 
- The word “Invoice” (or “Credit”) written clearly in the header of the document 
- A unique number or reference, preferably sequential 
- Invoice date (being the date the invoice was issued to your client) 
- Your business name, address and contact details as the supplier 
- Your client’s name, address and contact details 
- A description of the goods or services you have provided 
- The date the goods or services were supplied 
- The price of the goods or services you provided 
- A total value for the invoice excluding VAT (known as “Net”) 
- VAT should then be added and shown separately (if applicable) 
- A total value for the invoice, including VAT (known as “Gross”) 
- Payment terms 
- Payment method details i.e. bank details or a PayPal link 

How to send the invoice 

Invoices are now usually sent by email, but if you wish you can provide a hard-copy of the invoice with the goods if you’re supplying them via courier or mail. 
 
This can be useful for orders containing lots of items, such as stationery orders to an office, as the customer then has the option of cross-checking the goods against the list on the invoice. 
 
If you are sending an invoice by email, it’s a good idea to create a company email address that is different from your usual email address. An email address starting with “accounts@” or “finance@” is likely to hold more authority than a “contact@” or “hello@”. Nobody needs to know it’s actually you sending the invoice, rather than an accounts department! 

When should you send the invoice? 

Ideally, you’d send the invoice as soon as possible after supplying the goods or services. 
 
The sooner you send an invoice after you’ve finished a project or whatever work you’ve completed for a client or customer, the sooner you’re likely to be paid. There will always be tardy payers, but the majority of your clients will appreciate the fact that you’re on the ball, and pay you in a timely manner. 

How should you request payment? 

It is up to you, but, generally speaking, the more payment options you offer, the more likely it is that you will be paid on time. 
 
Xero integrates with a variety of online payment methods such as PayPal, Stripe and Go-Cardless, which removes the hassle of your client having to login to their online banking system, set you up as a new payee, and send the payment over manually. 

What about receipts? 

Sending a receipt once payment is received is optional. 
 
Most of the time, a simple email to thank the client and confirm that their payment has been received is enough for both parties, but you should always send a receipt if the customer or client requests one. 
 
If you are requested to supply a receipt, you should include the following information on it:- 
 
- Your business name, address and contact details as the supplier 
- A description of the goods or services you have provided 
- The date the goods or services were supplied 
- The price of the goods or services you provided including VAT information if relevant 
- The method of payment i.e. PayPal, bank transfer, Stripe, etc 
 
It will look similar to an invoice in layout. 

Other hints and tips 

Invoicing is an essential process for any business and doing it right can really boost your business cashflow. 
 
We recently compiled a list of our seven top tips to ensure you get paid on time and with as little hassle as possible. Read the blog here

Next steps 

If you would like to know more about invoicing and how Xero (our number one cloud bookkeeping choice) can help you, get in touch with us at Effective Accounting. We have worked with contractors and small businesses for over 10 years, and our founder, Nicola, has over 15 years’ experience in the industry. 
 
 
 
Written by: 
 
Nicola J Sorrell - 
Effective Accounting 
 
Founder | Xero Champion | IR35 Expert 
Share this post:
 
"I couldn't recommend them highly enough and will continue to use them for Spiral Static and all future ventures!" 
 
Matt Badley | Spiral Static 
 
 
"I have found their help in modernising my accounts invaluable and would recommend them to anyone in a heartbeat." 
 
Matthew Finch | Trailer Aid Ltd 
 
 
"The whole team at effective accounting are exceptional."  
 
Jennifer Duthie | Skribbies Ltd 
 
 
"Nicola is one of the most adept and accessible accountants that I have ever had the pleasure of working with." 
 
Carter Stewart | Transworld Consulting Ltd 
 
 
"Choosing Effective Accountants has been one of the best decisions we made when we started our company."  
 
Matthias Geeroms | OTA Insight Ltd 
 
 
"Nicola and the team have proven to be extremely professional, efficient and always on hand to answer any questions I have (and I have a lot!)." 
 
Emily Hodges | EM Hodges Ltd 
 
 
"I find the service to be prompt, professional and friendly." 
 
Simon Weightman | Mercury TS Ltd 
 
 
"They are quick to respond and are always ahead of the curve for us. Keep it up and thank you." 
 
Freda McMahon | Lobster Noodle Ltd 
 
Our site uses cookies. For more information, see our cookie policy. Accept cookies and close
Reject cookies Manage settings