Invoicing basics: 5 essentials to include in your invoice template
Here's a handy checklist to keep in mind when setting up your invoice template.
Your invoice is a document that you send out from your business, so make sure that it reflects your brand - think logo, colours, fonts, and wording of the item descriptions and of your payment terms. For example, if the brand tone you want to convey is fun and quirky, avoid using lawyers’ English in your invoices.
If you use FreeAgent to create and send your invoices, you can use our customisation designer to create a custom invoice template that aligns with your branding.
2. Legal information
There is some information that you must legally include on your invoices.
You must clearly display the word ‘invoice’ on the document. You must also include:
- a unique identification number
- your business name, address and contact information
- the business name and address of the customer you’re invoicing
- a clear description of what you’re charging for
- the date you provided the goods or services (which is also known as the supply date)
- the date of the invoice
- the amount(s) you’re charging
- the VAT amount, if applicable
- the total amount owed by your customer
Sole trader invoices
If you're a sole trader, the invoice must also include:
- your name and any business name you use
- an address where any legal documents can be delivered to you if you are using a business name
Limited company invoices
If your business is a limited company or LLP, your invoices must also show the full company name as it appears on the certificate of incorporation and its Companies House registration number and address. If you put the name of one director or member on your invoice, you must include the names of all the directors or members.
If you’re registered for VAT
Whether you’re a sole trader or your business is a limited company, if you're registered for VAT, you must include your VAT number on your invoices and comply with HMRC's rules about VAT invoices. These rules state that an invoice must include:
- an invoice number which is unique and follows on from the number of the previous invoice (if you cancel a serially numbered invoice, you must keep it to show to a VAT officer in the event of a VAT inspection)
- your business’s name and address
- your business’s VAT registration number
- the invoice date
- the time of supply (also known as the tax point) if this is different from the invoice date
- your customer's name (or trading name) and address
- a description sufficient to identify the goods or services supplied to the customer
- the rate of any cash discount
- the total amount payable, excluding VAT
- the total amount of VAT charged, expressed in sterling
For each different type of item listed on the invoice, you must also show:
- the unit price or rate, excluding VAT
- the quantity of goods or the extent of the services
- the rate of VAT that applies to what's being sold
- the rate of any discount for that item
And if you issue a VAT invoice that includes zero-rated or exempt goods or services, you must:
- show clearly that there is 0%, or no, VAT payable on those goods or services
- show the total of those values separately
If you make retail sales and you make a sale of goods or services for £250 or less (including VAT), you can issue a simplified VAT invoice. For more information, take a look at HMRC's guide.
It's important to make sure ‘The Price is Right!’ - otherwise, you could find yourself in the very embarrassing position of either having to ask your customers for more money, or give them some back.
When you include your quote in your invoice, make sure you use your most recent pricing. And don’t forget any discounts or special offers that you might have promised to all your customers or to just this particular customer.
Remember that if your business is VAT registered, HMRC say that you must include the price per unit on your invoices.
The best way to avoid queries from customers is by making sure the description on the invoice is as clear as possible. If a customer has to contact you to query an invoice, they may see this as poor service on your part, and it may also mean they take longer to pay.
5. Payment information
Make it as easy as possible for customers to pay you. Include your bank account details on your invoices if you are taking payment from online banking or by BACS.
If you send your invoices digitally, for example by email, text or WhatsApp, consider using a payment solution from Tyl byNatWest, Stripe, GoCardless or PayPal to collect online payment from your customers. Simply set up a connection with FreeAgent, then with some payment solutions you can include a payment link when you send your invoices so that customers can pay with one click.
Remember that it's for you to decide how quickly you want to get paid. Set your payment terms and make sure your customers keep to them. You can set up automated email reminders and let FreeAgent’s automated invoice software chase late payers for you and thank them once they’ve paid.
Lastly, make sure that your invoices are clearly laid out with all the information a customer needs. Your aim is to make the experience of paying your invoice as easy as possible for your customers. Remember, word of mouth is valuable and happy customers are more likely to recommend you and your business.
Send professional invoices in three simple steps
FreeAgent users can choose from a gallery of invoice templates or customise their own with CSS. All of our templates include all the information HMRC needs, so you'll never need to worry about your invoices meeting legal requirements again.