You create invoices because you want to be paid for goods and services you’ve sold.
There are other important reasons for raising invoices but nothing else comes close to the objective of getting paid.
This is where your invoice typically sits in the sales process:
Your invoice must be consistent with steps 1,2 and 3 otherwise you open the door to delayed payment.
I always advocate that a business uses bookkeeping software and that invoices are created in that software because:
Alternatives include creating your invoices in Word or Excel or in a CRM / e-commerce system if you have one.
Whatever you use to create your invoices, make sure they’re consistent, clear and unambiguous.
💡Don’t go overboard on the design because most invoices are produced, sent and processed electronically and these days no one cares too much what they actually look like!
Oddly, the first on my list is not legally required:
Include your bank account details!!
The details that are legally required by HMRC are:
And returning to my theme of making sure you get paid, don’t omit any information that your customer requires. The most common of which is the Purchase Order number.
Make sure there’s a space for this.
There are two main areas of law to follow:
Sales invoices are part of your business records, so you need to create them and a simple rule to follow is that businesses and limited companies should keep their records for six years from the end of the last financial year.
If you’re VAT registered then your invoices must follow some additional rules.
Two useful links to keep you on the right track are:
💡If you’re designing your own invoice template then follow the legal requirements. If you’re using bookkeeping software the templates within the software should keep you on the right lines.
But remember – it’s your responsibility to keep your invoices legal.
It’s not uncommon for a service or project being delivered to take on a life of its own and cost more than anticipated.
The real world often turns out a bit different from what was agreed.
And this can create anxiety over raising and sending your invoices.
We’ve all been there, it’s not uncommon.
Be transparent and sensible – but send your invoice. The chances are it will be acceptable but, if you need to have a discussion with your customer, at least your invoice is the starting point.
💡One of the benefits of using bookkeeping software is you can automate some or all of the invoice process. This can take a lot of the anxiety out of the equation.
Invoice promptly, don’t delay. At the very least, have one invoicing run each month and set aside time to do it properly.
Have a clear, consistent invoice layout.
If you create your invoices in Word or Excel then convert them to PDF before you send them so that can’t easily be changed at the other end.
Many businesses use software to read and process incoming invoices so use a format that makes it easy for the software to extract the details correctly.
Send your invoices by email as a PDF attachment but DON’T send them as a link.
Remember, the first rule of Invoicing Club is you want to be paid!!
Don’t overlook the legal aspects of invoicing but the primary objective is to get paid on time.
Each of your invoices should be clear, complete, accurate, free of surprises and easy to pay.
Set up a process to invoice regularly and keep to it.
Use any automation tools you have in your accounting software to send recurring invoices each week or month.
Accounting software makes invoicing so much easier and can reduce invoice anxiety.
At Blue Dot Consulting we work with many SMEs to make sure their bookkeeping and accounting is in good shape so they can understand and improve the financial performance of the business.
We do a lot of hands-on training in the more popular software apps such as FreeAgent, Xero and QuickBooks and, although we very much embrace technology, we don’t let pointless tech get in the way of reliable numbers.
Can we help you and your business?
Let’s have a free-of-charge chat about your business – call Michael Austin on 020 7125 0270 or email info@bluedotconsulting.co.uk
Michael
Why Every SME Needs Solid Bookkeeping — And How to Make It Work
This is bookkeeping in the 21st century
Get paid quicker – 5 tips to improve your sales invoices
At Blue Dot Consulting, we work with owner-managed businesses across Central, West and South West London, including Fulham, Hammersmith, Richmond, Putney, Wandsworth, Kensington and Chelsea. If you’d like to improve your financial reporting, bookkeeping or decision-making, we’d be delighted to help.
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We don’t believe in forms, we believe in talking to people, finding out your needs and tailor-making a solution just for you.
Give us a ring on 020 7125 0270 or email us at info@bluedotconsulting.co.uk
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