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How to Write an Invoice: a Checklist for the Self-employed

16 Dec 2021

Whether you’ve just started your small business or you’re an old pro at being self-employed, being able to write an invoice is an essential skill. An invoice is a complicated document and any errors could mean that you’ll run into problems getting paid and paying your taxes. 

With more and more people working from home, sole traders and limited companies have become much more prevalent [1]. For businesses like these, invoices are an integral part of their day-to-day operations.

Running your own business is stressful enough and your invoices shouldn’t add to that. With this guide, we’ll walk you through each step and let you know exactly what to do. 

What is an invoice? 

Before we get to writing an invoice, it’s important to understand what this document is and the purpose it serves. While they may seem intimidating, their function is relatively simple. In short, an invoice is a legal document that bills a customer or employer for goods or a service rendered. 

While this may sound similar to a receipt, the two forms are completely different. While an invoice is a request for payment, a receipt is a record of a completed transaction [2].

You can use several different types of invoices depending on the money involved, the industry, the payment terms, and how you as a self-employed person prefer to be paid. Let’s explore all the different options: 

  • Proforma invoice - when a payment is needed in advance, you may decide to issue a proforma invoice. These invoices are designed to act as a preliminary intent to provide a good or service before they’re delivered [3]
  • Interim invoice - these invoices are used by companies to bill a client in small increments over the course of a large project. Interim invoices are typically paid out weekly or monthly and are sometimes called progress bills [4].
  • Recurring invoice - This very simple invoice is one that is sent to a recurring client on a routine basis. Often there will be very little differences between the invoices [5].
  • Collective invoice - When a business is issuing several smaller invoices to the same client for different services or goods, they may choose to compile them into a collective invoice. This makes it easier for the client and the business by streamlining multiple invoices into a single document [6].
  • Credit invoice - even with professional invoices, there can be an error that requires a refund. Credit invoices act as a record of a refund and often feature a negative amount to be paid to the client rather than the issuing business [7].

As a small business that sends invoices, it’s important that you know the differences between all the different types. Before you write your invoice, ensure you have a good understanding of what invoice will be best for you.

Writing your invoice 

The hardest part of writing your invoice is starting from scratch. While they can be complex documents, once you have a general template, you’ll be able to bill your clients quickly and professionally. 

It’s important to understand every aspect of your invoices as these form the basis of your business’s financial records. Once you’ve gone through this guide, make sure to do your own research and ensure that your invoice is fully up to your country’s legal standard. 

For a standard invoice, you must include the following sections: 

  • Title - include the word “INVOICE” as your title. This sets it apart from other documents you may send to a client such as a receipt or quote. 
  • A unique identification number - each individual invoice you send out must have a unique number that differentiates it from other invoices. While the number can be anything you choose, we would recommend numbering sequentially (1001, 1002, 1003 etc.) to make it easier to manage for both you and your client.
  • Your company name and address - your invoice must include your business name, it’s mailing address, and contact details in case the client needs to contact you over a question or issue. If you are a sole proprietor, this can simply be your legal name and home address. 
  • Your client’s business name and address - it’s important to include your clients’ names and addresses for the same reasons as stated above. 
  • Service or goods description* - You should always include a clear and concise description of the goods or services that you’re billing the client for. This is to ensure that your clients know exactly what they’re paying for. 
  • The date of delivery* - Always include the date on which the goods or services were delivered to the client. This is known as the supply date and is often within 30 days of the invoice date. 
  • The amount to be paid for the goods or services* - If you are billing for multiple items or services, you should list the prices for each individually. 
  • The total amount to be paid* - Finally, include a total tally for the entire amount to be paid to you by the client. If applicable, you should also list the amount of tax or VAT.
  • Payment terms - For your security, it’s best to include terms of how and when your client should pay you. Make sure to agree to the terms with your client before you accept the job so that there is no confusion. 
  • Payment methods - This is the most important part of the invoice. List each way the client can pay you. It is up to you how you would like to be paid but generally, this would be by including your business’s bank details for a direct deposit. 

Business management made easy 

Running your own business is a lot of hard work and long hours. While writing an invoice can become like second nature, managing your business is always offering new challenges. 

The Epos Now Complete System is designed to make your life easier by streamlining your processes and helping your business excel. 

Get in touch today and see how we could help you. 

*These items are usually formatted together in an embedded table. This keeps the invoice tidy and easy to read.