What needs to go on a UK invoice

Overview

Your invoice is a document that you send out from your business, so make sure that it reflects your brand – fonts, think logo, colours, and wording of the item descriptions and of your payment terms. An invoice is not the same as a receipt, which is an acknowledgement of payment.

Invoices – What they must include

It is very important that you clearly display the word ‘invoice’ on your invoice. You must include:

  • A unique ID number
  • The invoice date
  • Your business name, address and contact details
  • Correspondence business name and address
  • A clear description of what is being charged
  • The date the goods or services are provided (which is otherwise known as the supply date)
  • The date of the invoice
  • The amount(s) that is being charged
  • The total amount owed
  • VAT amount (if applicable)

Sole Trader invoices

If you are a sole trader, your invoice must also include:

  • Your name and any business name being used
  • A contact address where legal documents can be delivered to you.

Limited company invoices

If you’re running a limited company, you must include the company’s full name as it shows on the certificate of incorporation.

You must also include your company registration number and what part of the UK your company is registered in.

If you decide to put the name of a director/member on your invoices, you must include the names of all directors/members.

VAT invoices

If you’re registered for VAT, it is compulsory that you include your VAT number on your invoices, and comply with HMRC’s rules concerning VAT invoices. These rules include that an invoice must show:

  • A unique invoice number which follows a sequential order from the number of the previous invoice (if you cancel a serially numbered invoice, you must safe keep it to show to a VAT officer at your next VAT inspection)
  • The invoice date
  • The seller’s VAT registration number
  • The seller’s business name and address
  • A good description of goods or services supplied
  • The time of supply (also known as the tax point)
  • Customer’s name and address
  • The rate of cash discount
  • The total amount of VAT charged.
  • VAT registration number
  • The amount of VAT on each item
  • The VAT rate charged on each item

Payment obligations

You can set your own payment terms, such as payment upfront and discounts for early paymeway.

Either way, it is also important to make payment easy as possible for customers to pay you. And make sure to include your bank account details on your invoices if you are making use of online banking or BACS as a means of payment.

If you choose to send your invoices through email and a service such as GoCardless or PayPal to collect payment from customers, make sure to include a link when sending the invoice via the email, so that customers can pay with one click.

Remember that it’s up to you to decide how quickly you want to get paid. So, ensure to set your payment terms and also make sure your customers keep to them!

Charging interest for late payment

You have the right to charge interest for late payment under the law, but you can choose not to.

Liability for disputed card

If a customer asks their credit or debit card issuer to revert a transaction, they have the right to reclaim the value of the transaction they made with you. This is known as a ‘chargeback’.

Cases for a Chargebacks include:

  • Untimely arrival of items purchased
  • When items aren’t as described
  • And also when a customer’s card was used in a fraudulent manner to purchase an item

You can as well be charged up to 120 days after a transaction has been debited or from when the goods or services are due to be received.

Minimising chargebacks

If a customer uses their PIN for the transaction, you’ll only be prone for a chargeback if the goods are faulty or aren’t as described.

However, if you can’t accept a PIN, a clear signature will really help but there is no guarantee against a chargeback in this case.

For card-not-present transactions, such as online trading, their will be very high tendency of a chargeback.

Regulation

If you have plans of setting up a business that takes a sum amount of money from a customer every time they make use of the service, for example, online trading, you may be required to be authorised by the Financial Conduct Authority.

If customers settles you in large amounts of cash, your business may need registration with an anti-money laundering scheme.

Protecting customer data

You must follow the rules already laid down on safe keeping customer data so as to protect their financial information.

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