With that in mind, let’s take a look at what you should include in your invoices and other best practices.
What to include
As stated on the UK government’s website, when you issue an invoice to your customer you must include:
- a unique identification number
- your company name, address and contact information
- the company name and address of the customer you’re invoicing
- a clear description of what you’re charging for
- the date the goods or service were provided (supply date)
- the date of the invoice
- the amount(s) being charged
- VAT amount if applicable
- the total amount owed
If you’re operating as a sole trader, your invoice should also include your name and the name you’re using for your business. If your business is a limited company, you should include the full company name as it appears on your certificate of incorporation.
It’s important to let your customers know how and when you expect to be paid. Your payment terms can include details about accepted forms of payment and late payment fees. The most important part of your payment terms is when you expect to be paid.
Unless a payment date has been agreed, the customer must pay within 30 days. Don’t be afraid to ask for early payment, we live in a world where most invoices are sent electronically and payment is made online. Expectations are changing and up to 75% of businesses ask for payment within two weeks.
Send invoices out as soon as possible
Your payment terms don’t mean a thing if you’re sending your invoices out late. Your invoices need to be delivered before the clock can start ticking on the payment terms.
The last thing you want is for there to be a delay on payment because you haven’t got the invoice out on time. Getting your invoices out on time also means the work is still fresh in the customer’s mind which means the chance of them forgetting to pay are reduced.
Don’t be afraid to chase payment
There’s nothing wrong with sending your customer a friendly reminder as it gets closer to the end of your payment terms. You can follow up again if the customer lets the invoice go past it’s due date. If your customer doesn’t respond to emails, try giving them a call.
Chasing payment isn’t the most fun part of doing business but sometimes it’s essential to keeping your cash flow healthy. The government website has lots of advice if you’re having trouble getting paid.
Whether you want to ensure your cashflow stays healthy, or you need to get on top of late payments, Numero can provide your business with outsourced bookkeeping you can rely on. Ready to find out more? Get in touch with us today.