Invoicing is an important part of any small business’ operations. Timely invoicing ensures that you have the cash flow that your small business needs to function properly. We’ve answered the most common invoicing questions for you, including what an invoice is, when one should be issued, and the information that should be included on it.

What is an invoice?

An invoice is a business document that is sent to the person or company buying the goods or services. It explains what the customer has bought – i.e. it describes, or lists, the goods or services, showing the costs by item and also showing the total amount due to be paid. It will also explain how and when to pay.

What information should an invoice contain?

Generally, invoices must include the following:

  • A unique invoice number.
  • Company/business name, address and contact information.
  • Customer company/business name and address.
  • Description of goods and services supplied.
  • Date the goods and services were supplied.
  • Invoice date.
  • The amount charged.
  • VAT amount.
  • Total amount.

If you are a Limited Company and you decide to put the names of directors on the invoice. All directors must be included.

If you are VAT registered, there are additional requirements:

  • The unique invoice numbers need to be sequential.
  • VAT registration number.
  • Price per item excluding VAT.
  • Quantity of each type of item.
  • Rate of discount per item.
  • Rate of VAT charged per item.

For invoices under £250, a simplified invoice is allowed. You do not have to show the following:

  • Customer name and address.
  • Amount excluding VAT.
  • Price and quantity per item.
  • Discounts per item.

When should I send an invoice?

There are no defined rules relating to when to send invoices. A general rule is that you should invoice as soon as possible after the provision of the goods or service.  This will enhance your chances of getting paid promptly.

Should I always create invoice numbers?

Unique invoice numbers are a requirement for all invoices. Sequential unique invoice numbers are a requirement for VAT registered businesses.

A sequential number system for your invoices will greatly simplify your accounting system, allowing queries to be dealt with efficiently.