How to Create Invoices

That’s why today, whether you're a freelancer sending your first invoice or a small business owner refining your process, we’re printing out a guide that covers all things invoicing to help you with all things invoicing.

We’ll cover:

• What is an invoice?

• When should you send an invoice?

• What to include on your invoices

• Invoicing layouts and template creation

• Common invoicing issues

• Invoicing tools 

 By the time you're finished here, you'll have everything you need to handle invoicing with confidence and precision, so you can get paid accurately and on time, every time. Let's dive in! 

What is an invoice?

First things first, let’s be certain we know what we’re talking about here: at its core, an invoice is a document that a creditor, that is, anyone who was provided goods or services without taking immediate payment, sends to the person or business that received the goods or services requesting the payment owed.

You could think of an invoice as a record of the transaction and a request for the buyer to complete their side of the sale. But invoices also serve a legal purpose, as well as a financial one, as they provide a clear paper trail for accountants and auditors. This is useful for tax reporting, tracking cash flow through the business, and providing proof of purchase for both the client and the seller. 

It’s important to note that invoices are different from both quotes and receipts. A quote is sent before the service is provided or the goods are sent out, as a cost estimate of the final sale, while a receipt confirms that payment has already been made. An invoice sits between the two: the formal request of a payment that is now due.

When should you give someone an invoice?

Invoicing situations vary depending on your line of work, but the basics stay the same.

Scenarios when you'll typically send an invoice:

• After completing a project. Once the planned work is delivered, it's time to bill for it. For example, tradespeople like plumbers and electricians will send invoices to their clients once they’ve completed the job.

• When delivering goods. Invoices are issued alongside or shortly after delivery of ordered goods that weren’t prepaid. Wholesalers and suppliers might do this for their payments.

• After a set number of billable hours. Consultants and freelancers with ongoing contracts will often invoice on a regular basis, such as after a week’s or a month’s worth of work.

• At project milestones. Larger contractors often split payment across stages, with an invoice due at each stage. You might see this during construction work.

• On a recurring schedule. Subscription services and retainer arrangements call for regular (often monthly) invoices.

Who you might find yourself invoicing:

• Individual clients. One-off customers paying for a specific product or service.

• Other businesses. B2B work often uses invoicing. That is, where you're billing a company or sole trader rather than an individual person.

• Government bodies. Public sector contracts often come with their own invoicing requirements and timelines.

• Freelancers or contractors. Subcontracted work still needs a formal invoice, even between self-employed professionals.

Sending invoices: getting the timing right

Timing matters just as much as the invoice itself. Typically, for one-off projects, it's best practice to send your invoice as soon as the work is complete, while the details are still fresh for both parties. Waiting too long can cause confusion and disputes as parties may have forgotten or misplaced the specifics of the agreement you made. Time also makes it easier for the payment to slip down someone's priority list, which could result in longer invoice payment waits.

For ongoing or retainer-based work, both parties usually agree on a schedule upfront (weekly, monthly, or at each milestone) so both sides know exactly when to expect an invoice and/or payment.

As a general rule, the sooner you invoice after work is delivered, the sooner you're likely to get paid, and the less likely issues are to arise. Prompt invoicing signals professionalism, and it keeps your records accurate and your cash flow predictable. Delaying, even with good intentions, tends to create bottlenecks further down the line.

What to include on your invoices

A professional invoice isn't just a number and a request for your clients to “pay up”; it's a complete record that protects both you and your client and makes accountancy much easier. That means it needs to include a lot of information. Here’s what you should put on the templates for your invoices:

• Your business details. Include your business name, address, phone number, and email. If you operate as a registered company, add your business registration or company number.

• The client's details. List the name and address of the person or business you're billing. Getting this right ensures the invoice reaches the correct department or contact who will know what to do with it. This can be especially important when invoicing larger organisations.

• Invoice number. Every invoice needs a unique reference number. This makes tracking, filing, and referencing specific transactions far easier for both you and your client's accounting team.

• Invoice date. This is the date the invoice was issued, not the date the work was completed or the date you wish to be paid. It serves as the anchor point for calculating the payment deadline. 

• Payment due date. Clearly state when payment is expected, either as a specific date or a term, such as "Payment due within 30 days." Ambiguity here is often one of the leading causes of late payment!

• Description of goods or services. Break down exactly what it is you're charging for, including quantities of goods or materials, hours worked where relevant, and any add-ons. The clearer this is, the less room there is for dispute.

• Itemised costs and subtotal. List the individual prices for each item or service, then add them together to create a subtotal.

• Tax details. Include any applicable tax rates (such as VAT or sales tax) and show the amount clearly as a percentage and as a final figure to be added to the price.

• Total amount due. The final figure is what your client needs to pay, after taxes, discounts, or fees have been added or subtracted. This is the amount you will receive when they complete the transaction.

• Payment methods and terms. Specify how you accept payment (bank transfer, card, PayPal, etc.) and include any relevant account details so the money goes to the right place.

Invoicing layouts and template creation

You now know what needs to be included, but with so much information packed into one document, arranging your invoice so it's clear and easy to read matters just as much. 

Keep your payment terms and due dates prominent and unmissable, ideally near the total amount, not buried at the bottom, or in the small print. Vague terms cause late payments, so be specific: "Due within 14 days" beats "payment expected soon". When adding taxes, discounts, or late fees, show your workings clearly. List the subtotal first, then taxes and discounts as separate line items, followed by the final total. When it comes to the layout group related information logically: your details and the client's up top, itemised costs in the middle, totals and payment terms at the bottom.

Rather than building a template from scratch, consider accounting software like Sage or Xero, which offer professional, customisable invoice templates that automatically calculate totals, taxes, and due dates, and can be tailored with your branding for a consistent, polished look across every invoice you send.

Common invoicing errors

Even seasoned professionals slip up on invoicing now and then. The good news? Their mistakes are lessons you get to learn from. Here are the most frequently made invoicing mistakes and how to avoid them:

• Missing or incorrect client details. Sending an invoice to the wrong contact, department, or address can delay payment significantly and can even damage your business's reputation. Double-check client details against your original agreement or contract before sending to ensure the invoice goes where it’s needed.

• Inconsistent invoice numbering. Skipping numbers, reusing them, or having no clear system makes tracking and accounting a headache. Use a sequential, consistent numbering format across every invoice you issue.

• Vague payment terms. Phrases like "payment due soon" leave room for interpretation and unnecessary delays. Always state a specific due date or clear term, such as "Net 30."

• Unclear descriptions of work. All parties must know precisely what work has been done, what goods have been provided, and what is being paid for. If a client doesn't understand what they're being charged for, they're more likely to query or delay payment. Be specific about quantities, hours, or services provided.

• Forgetting to include tax information. Omitting tax rates or the amount of tax paid can cause compliance issues and confusion with clients, accountants, and even the government. Always include tax calculations clearly, where possible. 

• Not following up on overdue invoices. Letting a late payment slide without a reminder often means it gets forgotten altogether. Set a follow-up schedule and stick to it; a polite nudge after the due date works wonders.

• Sending invoices too late. Delaying invoicing after work is completed pushes back your entire payment timeline. Send invoices promptly, ideally within a day or two of finishing the job, if not the same day.

Invoicing tools you can use for your business

Manually creating invoices works fine when you're just starting, but as your business grows, dedicated tools with integrated systems save serious time and reduce errors. This is where POS (point of sale) systems, like Epos Now, come in handy.

Many of the leading POS systems integrate directly with popular invoicing and accounting software, creating a seamless workflow from sale to payment. In addition to offering built-in invoicing, Epos Now partners with Sage, Xero, and QuickBooks. Business owners and managers can use POS systems and accountancy programs to sync supplier information, purchase orders, customer data, and client data. This means invoices are quicker to generate, more accurate, and all stored in one place.

Invoices generated this way use sales records, complete with accurate itemization, tax calculations, and your branding already applied. It also keeps financial records synced in real time, reducing the risk of discrepancies between what you've sold and what you've invoiced.

For growing businesses, this kind of automation isn't just convenient, it's a serious time-saver!

An invoicing system to use time and again

Invoicing might not be the most thrilling part of running a business, but getting it right pays off, literally. From knowing what to include to laying it out correctly and integrating your template, a professional invoicing process keeps your cash flow healthy and your client relationships smooth.

Whichever invoicing system you set up for your business, the goal stays the same: clear, accurate, timely invoices. Put these tips into practice, and you'll spend less time chasing payments and more time focusing on trade itself.