Invoicing basics: essentials to include in your invoice template

Here's a handy checklist to keep in mind when setting up your invoice template.

1. Legal requirements

There is some information that you must legally include on your invoices:

• 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, your invoice must also include:

• your name (if different to the business name from above)
• an address where any legal documents can be delivered to you (if different to the business address above)

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. If you decide to put the name of a company 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.

Find out more about how to get the VAT details right on your invoices.

2. Another essential: your payment details

Late payment of invoices is a huge problem, so 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 also include a due date for payment on your invoice to help with this.

Fun fact: If you're a FreeAgent user, you can set up automated email reminders and let our automated invoice software chase late payers for you and thank them once they’ve paid.

3. Other best practices

If you include all of the above, you'll be well on your way to sending a great invoice. But if you want to really stand out, there are a couple more things you might want to consider:

Show off your brand

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.

Make your invoice easy to understand

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.