How to Draft an Invoice

How to Draft an Invoice

What to include when drafting an invoice

By Emma Meakin

Business owners often take it for granted that their invoices will be paid - and paid on time. Unfortunately, this isn’t always the case so it's important to include few key details to help ensure payment.

From the top

The information on the invoice should be clear throughout. It’s common practice to add a bold central title at the top of the document, clearly identifying it as an invoice. Also, on the right of the document, make sure your company name, address and contact number are obvious.

On the left of the invoice, include details of the payee, ensuring the invoice is made out to the right person and/ or business. If incorrect, you’re likely to experience problems if enforcement is needed.

Invoices also need to be dated, since the repayment date is calculated as per your payment terms. Also use invoice numbers - they not only provide a point of reference in correspondence, but they also help you in your accounting and balancing the books. Numbers should be consistent and follow a logical pattern – most businesses adopt an invoice numbering system that relates to a client or is specific to the company’s name, for instance Flex0001.

The body of the invoice

The body (the middle part of the document) should state the services delivered, the cost of those services and the detail of any expenses incurred. Sometimes it’s best to set this out in a table for clarity. If you’re VAT registered, the expenses should be set out both with and without the VAT. These totals should be detailed as a Subtotal and a Total. For example:

Item Cost

Provision of IT services from 11th August to 31st August 2015 at £20 a day

£420

Subtotal

£420

VAT payable

£84

Total

£504


And finally…

Your payment terms, VAT number (if applicable) and the registered name and address of your company must be set out at the bottom of the invoice. This is crucial so that all parties understand your terms, plus, it also ensures that, if any legal proceedings are necessary, the facts are very clear for the court. Also, payment terms can also include any late payment interest you’ll charge if payment is late, or any other procedure you’ll follow to recover the money owed to you.

Remember - you can only charge VAT if your company is VAT registered.