When it comes to the time-consuming process of invoicing, the internet is awash with information, much of it quite confusing.
While it’s not a legal requirement for you to issue invoices unless both you and your customer are VAT-registered, it’s still a pretty good idea. After all, some customers simply won’t pay you until they’ve received an invoice.
An invoice is a record of sale between you and your customer. If you keep good records and invoice correctly, you’ll get paid more quickly, you’ll save time and hassle sorting out your taxes, and you’ll also get a much clearer picture of your business’s financial health.
What must your invoices include?
The UK Government has created a list of everything that an invoice has to include. It might sound like a lot, but once you’ve created an invoice template, you’ll be able to reuse it again and again for all of your customers.
Oh, and if you’re VAT-registered, you need to be issuing VAT invoices, which include a bit more information than standard ones.
The journey towards prompt payment
When invoicing, your goal is to give your customers every bit of information they need to process your payment request. If the information you provide is incorrect or incomplete, they’ll ask you to reissue it, and you’ll have to wait longer to get your money.
The most common errors with invoicing are getting the amount wrong or failing to include the correct payment information. You may need to include your bank account number, sort code, the address of your bank, or, if your customer is based overseas, your Bank Identifier Code or International Bank Account Number.
Finally, you’ll find that some companies won’t process an invoice in the first place if it has no payment reference number. You can choose whatever reference you like, as long as each invoice has a unique number.
Setting out your payment terms
Your payment terms are the timeframe by which your customer must pay the invoice. Here are the most commonly used payment terms:
- PIA - Payment in advance.
- Net 7 - Payment seven days after the invoice date.
- Net 10 - Payment ten days after the invoice date.
- Net 30 - Payment 30 days after the invoice date.
- Net 60 - Payment 60 days after the invoice date.
- Net 90 - Payment 90 days after the invoice date.
- EOM - End of month.
Avoiding accountancy headaches
Something as simple as putting the wrong payment reference on an invoice can lead to unwanted consequences – chasing customers for payments they’ve already made; messing up your internal records; confusing your accountant (if you’re using one).
Another classic error many self-employed people make is accidentally saving over their old invoices when creating new ones – guaranteed to cause you a problem further down the line.
Automated invoice generation could be a game-changer
Creating invoices as soon as your work is complete is the best way to ensure you get paid promptly. That’s why, in the Osu app, we allow you to automatically issue Certified Public Accountant (CPA) compliant invoices with every payment request.
All you need to do is fill in a few details and upload your company logo, and you’ll have a beautiful invoice template ready that our app will automatically fill in and issue to your clients with every payment request you send.
These invoices will be available to your clients as email attachments and directly in the payment request, and they’ll also be stored for you in your Osu app, ready for the end of the tax year.