An Introduction to Invoices

At a basic level, an invoice is a document that records a transaction between a buyer and a seller. Invoices can take many forms, such as an Excel spreadsheet, Word document or pdf.

Having a quick, efficient invoicing method is crucial for tracking transactions, maintaining cash flow and even reducing customer billing queries. Manually creating invoices, however, can be time consuming and can increase the likelihood of errors if data is being inputted by hand. This makes invoicing functions within accounting software a great option that can both save time and improve your company image. Remember, invoices may well be the most frequent documentation your clients receive from you, so it’s important that they are accurate, timely and professional.

What to include in your invoice

There are some details you must include on an invoice, depending on whether you are VAT registered or not.

If you are not VAT registered

• Company name, address and contact information
• The company name and address of the customer you're invoicing
• A unique reference number
• A clear description of the goods or service you're charging for
• The date the goods or service were provided 
• The date of the invoice
• The amount charged
• And the total amount owed

Sole traders must include:

• Your name and any business name 
• Your registered address

Limited companies must include:

• The company name as it appears on the certificate of incorporation. 
• If you decide to add the names of your directors on your invoices, you must include the names of all directors.

Regulatory requirements for UK VAT-registered companies

When issuing invoices there are a number of requirements that VAT-registered companies in the UK must fulfil. These include:

• Issuing and keeping valid invoices - whether in paper or electronic format
• Keeping copies of all sales invoices issued, even if they are subsequently cancelled or have been produced by mistake
• Keeping all purchase invoices for items you buy

In general, the following additional elements must be included on your invoice:

• Invoice numbers must be unique and sequential
• Your business name and address
• Your VAT number
• The invoice date
• Customer name and address
• A description of the goods or services
• The total amount excluding VAT
• The total VAT amount
• The price per item, excluding VAT
• The quantity of each type of item
• The rate of VAT charged per item
• The total amount including VAT

Timing

VAT invoices must be issued within 30 days of the date of supply, or within 30 days of payment (if you are paid in advance).

Crucially, you cannot reclaim VAT using an invalid invoice, pro-forma invoice, statement or delivery note, so it's essential that these criteria are met. Although be aware that there are a few exceptions, namely:

• If your invoice is only for exempt or zero-related sales within the UK
• You’re giving goods as a gift
• You sell goods under a VAT second-hand margin scheme
• Your customer operates a self-billing arrangement

Invoice Types

There are three types of invoices in the UK:

• Full invoice
• Modified invoice - can be used for retail supplies over £250.
• Simplified invoice - can be used for retail supplies under £250, and for other supplies from 1 January 2013. The information required for each of the invoice types varies - more information is available at https://www.gov.uk/vat-record-keeping/vat-invoices#valid-invoices.

International Trade

For those companies operating internationally, you can convert invoice amounts to sterling, but this isn't a requirement. If you choose to issue VAT invoices in a foreign currency or language, however, you must show the total VAT payable in sterling on your VAT invoice if the supply takes place in the UK. You must also be able to provide an English translation of any invoice within 30 days if asked to do so by a visiting VAT officer.

Accounting Schemes

Note that if an item is exempt or zero-rated, this must be made clear. Also, if you use the Cash Accounting Scheme, you have to stamp an invoice with the amount of cash paid and the date.

Personalise your invoice

Once this information has been included, personalising your invoices can be a great way to highlight your company and make it stand out from the competition. For example, adding your logo to the invoice takes only a few seconds and can help to encourage brand recognition. Also consider introducing colours that complement your logo, or a page design and font that supports your branding. This can be particularly important for creative companies, such as writers and designers, where a well-crafted invoice can act as a place to showcase your skills.

Any personal touches you add should reflect your brand tone, so if your other branding is formal and simple, it probably wouldn't work well to introduce complex colour patterns and informal wording on your invoices.

Once you have a design you're happy with, save this as a template so you not only have a professional-looking invoice that enhances your identity, but you will also help reinforce your branding.

How do I generate an invoice in AccountsPortal?

Creating and sending invoices using AccountsPortal couldn’t be simpler. To get started, head to the Sales section and click New Invoice. You can use one of the predefined professionally-crafted templates or create one of your own by following the step-by-step instructions.

From here you can add a new customer or search your existing contacts, add the relevant details for each item and your invoice is ready to go.

Invoices can then be approved, and sent via email at the touch of a button. AccountsPortal will even track the email to confirm whether it’s been successfully delivered and opened by the recipient. 

Your clients can view their invoices via a PDF attachment to the email, or online. One of the key benefits of online invoices is that payment can be made via PayPal or any debit/credit card.

Keeping track of your invoices is also simplified thanks to the clear AccountsPortal dashboard that makes it easy to identify any outstanding invoices and send payment reminders.

Recurring and batch invoices

If you are managing multiple invoices and regularly billing the same clients, AccountsPortal can save you even more time. It possible to generate Recurring Invoices, and AccountsPortal will automatically generate and send the invoice to your clients on the right date.

Other time saving tools include the Clone feature that allows you to copy an existing invoice rather than having to manually re-enter details. In addition, if you already have a quote recorded in AccountsPortal for a customer, this can be converted into an invoice as soon as you’re ready without having to input customer details again.

These are just some of the ways that AccountsPortal can take the hassle out of generating and sending (invoices)[https://www.accountsportal.com/features/invoices] while making it easier to track (cash flow)[https://www.accountsportal.com/features/dashboard]. To find out more, please get in touch with us via our support pages.

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Further Reading

Hospitality VAT rate set to rise to 12.5%: How to manage the change in AccountsPortal

A Guide to Capital Gains Tax for Small Businesses

How To Manage Out Of Pocket Expenses