Do I Need To Send Invoices To My Clients?
If you are already generating some sales in your business, huge congratulations!
If you’re not quite there yet, I strongly recommend checking this article anyway. It will ensure you are doing the things right from day one in your business.
So, you are selling products or services or will be doing this once you launch and the question is should you raise and send invoices to your clients?
First of all, let’s make sure we are clear on what an invoice is and how is it different to a receipt.
Difference between an invoice and a receipt
An invoice is a document usually raised by a business when a service is provided or goods are requested by a customer. An invoice also acts as a request for a payment. Invoices can have various payment terms. They can be due on receipt or offer longer payment terms, e.g., 30 days. The payment terms on your invoices will depend on an arrangement you have with your client and you can offer different payment terms to different clients.
A receipt, on the other hand, is an acknowledgement of a payment that has already happened. You can receive a receipt in a shop, like Sainsbury’s, or after making an online purchase – this receipt is in a form of an email.
Do you need to send invoices or receipts to your clients?
You are required by law to give an invoice to a client if both you and that client are VAT registered. You must include certain elements on your VAT invoices.
Although you don’t have to give an invoice in other cases, if you sell things to clients on credit terms (for example, a payment is due in 14 days), it’s a good practice to raise and send these invoices out. Once your client receives an invoice from you, they can process it in their system and monitor when it is due. This can help with being paid by you customer on time and avoid any delays. You can also include you bank details on each invoice which can also speed up receiving payments. When you also add clear description to your invoices (what services or goods you supplied), you may avoid any questions and confusion from your clients.
In terms of the receipts, you’re not legally required to provide them. A client’s bank statement can act as their proof that their purchased something. But if you operate an online shop, most of the payment providers will generate a receipt and email it automatically to your client. So it’s a great way of making things clear to your clients but it also means you don’t have to generate these manually, so a great time saver.
Why not get in touch with our professional Oxford accounting team today to see how they can help you and your business achieve its potential.
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