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Essential Components for Effective Invoicing: What to Include on Your Invoices

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Over the many years working as an accountant we've seen thousands of invoices ranging from the good, the bad, and the downright ugly. But what makes a good invoice and what information should you include on your invoice?

Whether you're sending your invoices electronically (which we hope you do) or in paper form, let's strip it right back to a plain page and go from there.

The Essentials

As far as HMRC are concerned the following items are the essentials that you absolutely must include on your invoice. We've added our own thoughts on these items and while they may not have been the reasons HMRC want to see them on your invoice we hope they'll help show you why you absolutely must have them on there.

A unique identification number

Often referred to as the invoice number, this unique reference number identifies and separates it from all your other invoices.

This is important for a number of reasons, most importantly to help spot duplicated invoices. Invoice reading software such as Hubdoc with its powerful AI technology scans invoices and flags up any suspected duplicated invoices, most commonly highlighted from the invoice number.

Duplicate invoices can cause your customers to pay your invoice twice, it could cause you to pay supplier twice or you could have the same invoice recorded twice in your accounts and pay twice as much tax as you should do!

A great way to ensure all your invoices have a unique invoice number is to make use of accounting software such as Xero.

Your company name, address and contact information

It's important that your customer knows who the invoice is coming from. If you've got a business logo this will do the job just fine, make the logo nice and clear and stick your company name, address and contact information out the way of some of the more important details to come.

The company name and address of the customer you’re invoicing

It's really important that you get this right and for a number of reasons. If you're sending an invoice to a business customer they need to make sure that the invoice is correctly addressed to them so they can put it through their own accounts and prove it is a legitimate business expense, so making sure it's correctly addressed to them will help them tick that box.

Secondly, should the worst happen and your customer doesn't pay you, you may find yourself having to pursue legal action. Make sure you have the correct company details to prove you invoiced the correct customer in the first place or you may find yourself having to jump through more unnecessary hoops to get your money back.

A clear description of what you’re charging for

An invoice with a clear description of the goods or services provided ensure the customer knows what they are paying for and has a clear record for the future should they need to evidence what they have paid for.

If you're a VAT registered business and supply both VAT rated and non-VAT rated goods or services you also need to clearly describe those goods or services so you can evidence to HMRC, should you need to, that you have charged the correct amount of VAT.

The date the goods or service were provided (supply date)

In practice, it's uncommon to see an invoice which highlights the date goods or services were provided. In fact a lot of accounting software packages don't even provide an option to include such a date. It's often taken that the date of the invoice also represents the date in which the goods or services were provided. However, if this is not the case you could include the supply date within the description on your invoice.

The date of the invoice

Two very important reasons to date your invoice. Firstly you'll need to evidence which tax period your invoice falls in to, ensuring you're paying tax on your sales invoices at the right time.

The second reason is especially important if you're offering credit terms to your customers. The date of the invoice starts the countdown from which you expect payment. Credit terms such as 7 or 30 days are usually in relation to the date of the invoice.

The amount(s) being charged

The amounts being charged usually relate to the lines on your invoice. For example, you may chose to itemise your invoice or pool it all together depending on what goods or services you are supplying. Against each line of your invoice will be the amount charged from which the total amount is calculated.

VAT amount if applicable

If you're a VAT registered business then you will need to show the amount of VAT charged as a separate figure, this usually sits between the amount being charged and the total amount owed.

The total amount owed

From a cashflow perspective, this is the most important number on the whole invoice. This is the figure you expect to see drop in to your bank account. Make sure it stands out.

If you're a VAT registered business it's very easy for customers to mistakenly pay the net figure without the VAT rather than the gross figure with. Sometimes invoice reading software mistakes the net figure for the total figure and if you customer is reviewing what to pay from their accounting software they may underpay you.

If you've got a long itemised bill with sub-totals, a customer can again mistakenly pay a sub-total of the bill rather that the full sum.

Don't just have the total figure at the bottom all on it's own, make sure you have 'Total' or 'Total To Pay' or words to that effect right next to it.

Sole trader invoices

If you’re a sole trader, the invoice must also include your name and any business name being used.

If you're a sole trader operating under a separate business name, the best way to type this out is 'Your Name' trading as (or t/a for short) 'Your Business Name'.

An address where any legal documents can be delivered to you if you are using a business name. In most instances this would likely be your home address, however if you own a shop, salon, etc you may want to choose the business address.

Limited company invoices

If your company is a limited company, you must include the full company name as it appears on the certificate of incorporation.

You may have a limited company in one name and trade under another or shortened version of the registered name and that's fine.

Just like a sole trader type 'Full Company Name' trading as 'Chosen Name'.

If you decide to put names of your directors on your invoices, you must include the names of all directors.

We've covered the essentials but we're by no means finished, let's dive into the other aspects you should be including on your invoices.

Payment Terms

If you've not taken payment up front from your customer then you need to let them know when you expect payment following receipt of your invoice.

Payment terms set out a clear expectation of when a customer should pay you, depending on the customers you deal with it may be wise to inform the customer of your payment terms prior to supplying goods or services.

Make sure the payment terms are clear and stand out on the invoice. There will be a lot of information on the invoice and the date you wish to be paid is an important one.

Payment Details

The Holy Grail of invoice information, I can't tell you how many times I've seen invoices without any information on how to pay the bill!

It may seem obvious and I'm sure you have them on your invoices or thought to include them but a large number of businesses neglect this vital piece of information.

Not including this information is a guarantee for getting paid late. Would you spend your time ringing round suppliers asking for their bank details so you can pay their bills or would you wait for them to call you when the bill hasn't been paid and for obvious reasons!?

Make sure these details are crystal clear on your invoice, put a box around them, make them bold, make them red, whatever you do, make sure they stand out.

Payment Reference

Depending on your type of business, the number of customers you have and the payment values you receive it's important to have a payment reference and ask your customer to quote this reference when they make a payment.

If you have lots of customers all paying you at the same time or at regular intervals, especially non business customers, then you may just get a surname on your bank statement. If you've done a boiler service for a Mr Smith and a Mr Smith and their bills both cost the same, how do you know which one paid you?

As your invoices must include a unique identification number, this is usually the best thing to ask them to quote, if you’re using accounting software which produces a customer account code you could alternatively ask them to reference their customer code instead.


Think about how your invoice reflects your business, you've offered a professional service up to this point, don’t let your invoice let you down.

A consistent and professional font throughout your invoice with a choice of colours that makes your invoice easy to read, keep it simple but stylish, keep the text in black and any important information such as the payment details or payment date could always be in red if you wish to do so.

Make sure all the information is spaced out and the figures are clear. If you offer a cost breakdown make sure the total figure is clear with the word 'total' next to it and this is important for a very good reason.

Remember that more and more people are making use of the huge time saving advantages of invoice reading software such as Hubdoc, it's clever stuff but there's always room for error so make sure your invoices are crystal clear so that both your customer and the bots from their accounting software can clearly read the key information.

Some parting wisdom

Whether your invoices fall into the good (after reading this they should!), the bad or the downright ugly, the most important thing you can do with your invoice, is send it!

Far too often business owners get bogged down in the day to day running of their business that sending invoices gets dumped to the bottom of the to do list.

You've done the work or supplied the goods, now get paid, and without delay. Don't be that person who gets chased by their customers for an invoice.

If you're struggling with your bookkeeping and taking way too long to get paid, invest in Xero. We highly recommend this fantastic software package that will allow you to raise invoices from your phone, tablet or laptop and fire off automatic reminders if a customer is late to pay you.

Xero also syncs with your bank account so you can match off those payments each day and run a list of who still owes you money.


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