What Are the Invoice Requirements in the UK?

When you first start taking on clients and accepting payments, following the correct invoice requirements will save you a lot of time and energy down the road.

An incorrect invoice can delay payment, cause confusion and negatively affect your relationship with your client - which is why getting it right the first time can make a big difference. We’ve put together this article to help you understand what the invoice requirements are in the UK and the steps to issue an invoice correctly.

Why are invoices important?

Invoices are an essential part of doing business, whether you are a sole trader, limited company or partnership. Invoices are basically a request for payment and will contain information such as your deliverables, the due date and agreed payment terms. Invoices are different from receipts, which are just a confirmation of payment.

Every invoice you send is a tax document that acts as a proof of income, so make sure to save them in case you ever need to show them to the HMRC. Whether you’re working in construction, the food and beverage industry or anything that offers products or services, the following invoice requirements apply.

Invoice requirements

Correct specifications

According to the HMRC’s website, these need to be officially on your invoice:

  • a unique identification number (like an invoice 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 are VAT registered, then you’ll need to have these details on there too (the vat invoice format is similar):

  • VAT number
  • Tax point (time of supply)
  • Price per item (excluding VAT)
  • Total amount excluding VAT
  • Total VAT amount
  • Item quantity and discount rate (if applicable)
  • VAT rate charged per item
  • Total amount including VAT

In addition to those details, you may also want to add instructions on how to pay and your payment terms. Here is an example of an invoice from the FreeAgent website (they offer some free templates to download):

Image from Freshbooks


Deliverables

The clearer your invoice, the easier it will be to get paid and maintain an ongoing relationship with your customer or client. Make sure your deliverables are as concise as possible and not too general. For example, it’s best to write “computer hardware” rather than just a general “hardware”.

Include the date the deliverables will be completed by, when payment is due and any other information your client would need to know about your product or service.

Type of invoice

There are different types of invoices, so make sure you are issuing the correct type in the correct format. If you’re sending an invoice in exchange for a product or services, then you are issuing a sales invoice. If VAT is included, then it’s usually called a tax invoice.

There are a few other types of invoices that may be useful, such as:

Interim invoices: if the job is a long project that requires several payments, you may issue interim invoices (such as in construction).

Recurring invoice: if you are providing a recurring service or product, you may be issuing recurring invoices (such as subscriptions).

Commercial invoice: this type of invoice is used to calculate customs on imported goods, and makes the sale official.

Credit note: these are used to reverse a charge from a previous invoice, if you’re returning an item or you’ve overcharged a customer.

Invoice number

Adding a unique number to your invoice makes it easy to keep track of all your records and find them whenever necessary. The simplest method is to use a sequence of numbers that increase with every invoice.

You may also choose to issue invoice numbers with letters if you are issuing consecutive invoices for one client. If your client was Sainsbury’s, for example, you could use SAIN001, and so forth.

Payment method

Adding instructions on how to pay will make the payment easy and smooth for your client or customer. Some invoicing software will allow you to add a “Pay Now” button that integrates with a payment solution, making it easy for your customer to pay with just one click.

You can also add a section on your invoice under “Terms” that outlines your preferred method of payment along with your bank account details, address and name. If you are sending your invoice abroad, make sure to add your IBAN/BIC.

If you’re using Pomelo Pay, you’ll also be able to send your customer a payment link, allowing them to complete payment on the spot just by filling in their card details. It’s more secure than taking card details on the phone, and your customer can rest assured that no platform will store their card details.

Read more about Payment Links.

Formatting and sending an invoice

Remember that your invoice represents your business, so it’s worth putting some effort into how your invoice appears and making it look professional. You can choose to add your logo, your tagline and anything you feel represents your business best.

We put together some practical tips to follow so your invoicing process goes as smoothly as possible.

Use an invoice template

Using the same invoice template will make it quick and easy to send future invoices, and it means you won’t need to keep copying and pasting the details every time. You can choose to follow an invoice template on Microsoft Word, through a spreadsheet or an invoicing software such as Xero or FreeAgent.

Remember to create the invoice in the first place (many businesses forget), and remember to adjust and check the invoice number, deliverables and anything that may need updating before sending it over. Using an invoicing software can speed up this process by automatically adjusting the invoice number, updating customer details and sending late payment reminders.

When to send your invoice

The sooner you send your invoice, the less time you’ll need to wait to get paid. The most straightforward answer to “when should I send my invoice” is simply: when you have delivered your goods. However, this may depend on the specific products and services you offer; if you are covering a longer project, you may need to send interim invoices and recurring invoices as well.

It’s also worth asking your client when the cut-off date is for submitting an invoice so you can then get paid when a company completes its payment runs - which usually happens at the end of the month. A good tip is to call your customer or client when you send your first invoice to make sure they’ve received it and don’t have any issues with the payment method.  

How to send

The easiest and most convenient way to send your invoice is by email. The most universal document is the PDF; avoid sending it with Word or Excel, as it can make the document unreadable for the receiver.

When you send over the email, make sure the subject is clear and concise and includes the invoice you are sending. You can also choose to send your invoice through the post if that’s necessary.

How to get paid on time

Chasing late payments can drain a lot of your time and energy. For this reason, it’s best to have clear terms and conditions, along with an agreement in writing on the specific payment terms. If it’s a large project that requires more money, consider breaking up the project into smaller invoices to lower the risk.

One of the best ways to get paid on time is to ask for payment on the spot when you’re with your customer. With a tool like Pomelo Pay, you can accept payments with your smartphone. All you need to do is show them your unique QR code, and your client will simply scan it with their phone and fill in their card details securely on their end. Another way to get paid quickly is to send a payment link directly to their phone rather than by email. With Pomelo Pay, you can send your payment link by SMS or Whatsapp, allowing your customer to receive it immediately and pay.

The invoice requirements in the UK are quite straightforward; once you have the first template and invoice done, it’s just a matter of copying and re-using that same format. Make sure your deliverables are clear and that the payment terms are easy to follow. Want to make sure you can take payments anywhere and at any time? With Pomelo Pay, you can take payments with just your phone.

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