11 Crucial Elements You Should Include On Your Sales Invoices
Our Oxford bookkeeping team deals with invoices on a daily basis. Missing or wrong details on sales invoices aren’t uncommon. They don’t only make bookkeeping more difficult and tedious but some missing elements are legal requirements. Are your sales invoices correct? Check them against the list below.
1. your company name and address
Your company name and address on sales invoices are very important. They allow your customer to see who the invoice is from and are also a proof for your own bookkeeping records that the invoices really relate to your business. There are a couple of legal points here to note. If you’re a sole trader, you must include your full name and your business name or only your full name if you don’t have a business name. If you’re a limited company, your sales invoices must have the exact name your business is registered under with Companies House.
2. your contact details
If you want to be paid by your clients as soon as possible and definitely within your payment terms, this is a must-have on the sales invoices. If you customer has an issue with the invoice, like an incorrect price or discount, it is important they can get in contact with you easily and quickly. Exchanging letters could take ages! Make sure the contact details included are for someone in your business that can actually help with any sales invoice queries. Depending on the structure, this could be your bookkeeper’s contact details, maybe a sales team or you.
3. invoice date and tax point
Invoice date and a tax point are a legal requirement on sales invoices. The tax point is important for VAT-registered businesses, because it gives the information about which VAT return a particular invoice relates to. An invoice date and a tax point can be sometimes the same.
4. customer details
The details of your customer, like their name and address, are also very important as this lets them know the invoice is really for them. If it is not addressed to them, how can they be certain they should pay at all? Would you pay a bill that wasn’t addressed to you? Lack of these details on a sales invoice will raise queries which then will delay any payments to you.
5. Unique invoice number
The sales invoice numbers should be unique and in sequential number order. This does not only help with your bookkeeping and keeping better business records, but is also a great audit trail. If you give all your invoices random numbers or names, how will you be able to distinguish which invoice relates to which job or client? If there was a duplicated invoice number and you receive a query, how will you know which invoice is being queried? Things like that make your bookkeeping quite messy and time-consuming.
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6. due date
If you don’t agree any payment terms with your clients, they have to pay you within 30 days. It’s important to be clear when you expect the payment to be made by. Even if you include this information in your contracts, add it to your sales invoices too. Your clients aren’t going to go through contracts with their suppliers every time they receive an invoice. Make it easy and clear for them. It’s you who wants to be paid.
7. payment terms
This can be added additionally to the due date information or instead of the due date. Make sure you have one at least, so your customers know when to pay. Our Oxford bookkeeping team come across invoices lacking both of these things, so we’re trying to really stress the importance of these elements.
8. clear description
A clear description of the goods or services will help the customer identify what it is they purchased, so they can match this to their bookkeeping records and make payment. For example, how will a customer be able to confirm they are happy to pay an invoice if it just says “Goods”. What goods have they purchased? How many? If you are descriptive here (e.g., 6 tins of red paint rather than ‘goods’), you will be doing yourself a favour by enabling the customer to make sure they are satisfied with their purchase and thus pay it promptly.
9. payment details
We provide bookkeeping services regularly and missing payment details isn’t uncommon. How can clients pay you if there’s no payment information on your sales invoices? If your preference is to be paid by bank transfer state this. Include all of the bank details the customer will need to make payment. This is usually the account name, number and sort code. If you have overseas customers you might want to include the swift code and IBAN. Digital invoices allow your customers to also pay online via card. If you have this option, you may add a ‘pay now’ button to your sales invoices and make it even easier for them to pay. If you use accounting software, like Xero for example, you can very often integrate this feature.
10. VAT registration number
If you are VAT registered, then you must include your VAT number on your sales invoices. This tells the customer that you are able to charge VAT and that they are able to reclaim this VAT if they’re also VAT registered.
11. other VAT details
This is only applicable if you’re VAT registered. If the invoice is for £250 or less including VAT, you can create so called simplified invoice. A simplified invoice contains the price per item inclusive of VAT and the rate per item if you have different rates. If the invoice is for more than £250, you need to include the net amount, total amount of VAT, net price per item and rate of VAT for each item.
Extra bonus tip for easy bookkeeping and invoicing
An easy way to make sure your sales invoice templates are always correct is to use accounting software. It will be able to number your sales invoices, include the due date and other payment information, work out the VAT and automatically email it to the customer. You set up your template once and job done. Accounting software will also let you create different templates which you can easily choose when raising sales invoice.
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