UK
  • Singapore
  • Hong Kong
  1. Osome Blog UK
  2. Invoice Best Practice for SMBs in the UK

Invoice Best Practice for SMBs in the UK

You may think that creating an invoice is something so basic but all business owners had to learn what it is and how to create their first invoice once!

When you feel like you are drowning in invoices and other paperwork that it’s taking time away from you actually growing your business, don't worry, you don’t have to carry it all on your shoulders. We offer affordable accounting in the UK and everything is done online, with your documents stored on the cloud and accessible anywhere.

Invoicing Best Practice: Why It Matters

When you invoice according to best practice, you’re looking after yourself and your business - now and in the future. Doing it well means making it clear and easy for payments to be made and keeps your business tax-compliant. It’s a must-do!

Invoicing also ensures a healthy cash flow, which is the lifeblood of any SME. Delayed payments due to unfinished, incomplete or incorrect invoices stop that cash from flowing which adds financial pressure and stress. We can help.

Tips To Improve Your Invoicing

  1. Make the time

Prioritise, don’t procrastinate. Book time in your calendar and treat the time you spend on invoicing as you would any normal client meeting. Set up a process (automated or manual) to complement the structure of your operations, whether it’s a dedicated day per month or a weekly time slot.

  1. Make it clear

Include all the necessary details and related information to make sure your invoice leaves no room for confusion.

  • An identifiable & trackable invoice number
  • Contact details (yours & theirs)
  • An itemised list of goods/services & their costs
  • Date & terms of payment
  1. Make it easy

Different clients, suppliers and companies may have different ways of working or processes that streamline their payments. Check if those systems affect you, whether it’s prerequisite vendor registration or compliance forms, so your invoice is primed for them to pay easily.

  1. Make it simple

Make your payment methods easy so the money owed to you can get to you fast, safely and with minimal fees or transfer charges. Online payment platforms could be a good route for e-commerce SMEs. Consider what payment transfer method suits your business by asking the experts for advice.

  1. Make it smart

There are loads of templates online, including ones easy-to-search on programmes like Microsoft Word or Google Docs. To go a step further for customisation, there are services that make designing and generating invoices automatically easy and personal. Finally, follow the regulations and keep a record.

  1. Make it top-of-mind

Your invoice is your responsibility. Manage communication and keep it top-of-mind if there are unusual delays (even the best intended inboxed get clogged up sometimes) Reach out respectively for confirmation it’s been received and processed.

Invoicing: Where To Start?

Start by knowing exactly what an invoice is and what sets it apart (hint, we’ve unpacked it below with a few comparisons). An invoice is a proof that you (as a business owner) sold something and are owed money for whatever that “something” is - whether customised porcelain water bowls for puppies or a fancy-dressed fairy that entertains a kiddies party. This “instruction to pay” features formal and useful details to get that payment underway.  

INVOICE: PURCHASE ORDER: RECEIPT:
An official request for payment (sometimes also called a proof of transaction) A written intent to buy goods and services (think of something like an e-commerce cart) Confirmation or tangible proof payment’s been made (cue the Stevie Wonder hit)

Invoicing: What To Include?

In short, you’ll need to include the following:

  1. Invoice number
  2. Your company name
  3. Date & Terms of Payment
  4. Postal Information & Address

Invoice Number

Get this right from the word go ‘cause invoice numbers form a key part of bookkeeping and accounting records for your biz. Establish a simple numbering system (as simple as sequential, for example?) and from there, assign every invoice a unique invoice number to keep track.

It’s not only important when it comes to tax season. It also makes things a lot more straightforward if you need to chat confidently about a particular invoice with a client or find it quick-sticks. Name and save them in a way that helps you search and locate them easily, no matter where they’re stored, for example:

  • Invoice number: 2982; 2983; 2984 (sequential & purely numerical)
  • Invoice number: INV02982; INV02983; INV02984 (sequential with letters)
  • Invoice number: LDN02982; SG02983, HK2984 (district or location related)
  • Invoice number: FullValet02982; DeepClean2983, Vacuum2984 (service-specific)

Company Name

Including your company name aka the most important element in your invoice is step one of creating an invoice. These professional details reflect who you are and validate the brand that’s sending this official instruction to pay. Your brand.

Date & Terms of Payment

Payment Terms

Small businesses typically adopt 3 types of payment terms depending on your cash flow needs, and your relationship with your client.

Include the date you issued your invoice so your customers know exactly when it was created, along with how long they have to contractually fulfil the payment due. These “payment terms” or “terms of payment” are the dates by which the payment should ideally be done or the period of time it is expected (or both). Sometimes these are agreed with upfront but they can be specified on an invoice-by-invoice basis.

Postal Information & Address

Your and your client’s details. Everything down to postcodes can be included. Other contact details like landline, a mobile number can also be mentioned if you think they’ll be useful.

Include a “Bill to” section. In there, include the same details you know to be important or necessary about the client you’re sending your invoice to. Nothing more (we don’t need to be creepy) nothing less (save your clients’ time by including all the information needed for them to pay you).  

Goods Or Services (Listed) & What You Charge

Neat line items are the best format for this section. Numbered or bulleted if they’re a little more complex or if you know that it’s important to unpack details where necessary.

Add item codes, SKU codes and model numbers if necessary. Include price and quantity of units like the number of hours (although this is up to you and your contract). A few more pointers for this section are to detail the VAT sum if it applies, along with any pre-agreed discounts, and of course the overall total due.

Examples:

Selling products:

DESCRIPTION MAN HOURS PER HOUR COST DISCOUNT % VAT % EXCL. TOTAL TOTAL INCL.
Customised rainbow bowls 2 70 Loyalty customer -25% 10% 105 94.5
Water & Nibble combo 1 55 N/A 10% 49.5 49.5
Selling services:
DESCRIPTION MAN HOURS PER HOUR COST DISCOUNT % VAT % EXCL. TOTAL TOTAL INCL.
5th birthday party (live entertainment) 3.5 40 p/h N/A N/A 105 94.5
5th birthday party (props, prizes)

Prizes: x3

Balloons: x20

Prizes: 3.5

Balloons: 0.75

Balloons: Buy 20, get 10% N/A 16 16

Invoicing: Do Looks Really Matter?

Think of this as an extension of your business’ brand and while you may not be looking for romance, you’re going to want to build lasting relationships. So yes, the impression you leave in the context of business matters. Make an effort to present your invoices consistently and professionally. That means laid out legibly, well-structured and well, all we’ve covered in this article.

There’s also a lot that could inspire a little creativity if that’s what you’re after. Here are a few links to tools or free platforms with simple logo-creation.

Invoicing: All this Paperwork Really Needed?

Your invoices serve as a record of all your business sales and that means a direct link to your obligatory tax and accounting duties. This work may be a burden to you as sums, calculations and numbers may not be for everyone but taking that paperwork off your shoulders while you focus on growing your business, hey that’s 100% what drives us.

So if you like the sound of zero paperwork, why not dump all your document woes into our hands. We’d be honoured to accept your biz-related accounting and bookkeeping duties.

Here’s a final reminder of how sticking to best invoicing practices adds value so you can:

  • Get paid
  • Get paid on time
  • Get paid on time, on your terms
  • Get paid on time, on your terms, so your cash flow doesn’t suffer
  • Get paid on time, on your terms, so your cash flow doesn’t suffer and you stay tax compliant

Tip

Do it right, keep it reasonable and straightforward. We’ll do the same when it comes to managing your paperwork, even when it comes to accounting for your e-commerce business!

Share this post:

Tips to run your business smarter.
Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

You might like it

Running My Business

How the Increase In National Insurance Contribution Rates Will Impact Your Business

After making it through the pandemic, how will the new Health and Social Care Levy (HSCL) affect your bottom line? Many small businesses will feel overwhelmed. But you can take control by understanding the immediate changes and preparing for the future consequences for your business.

E-commerce

The Ultimate Website Design Guide for E-commerce

If you’re looking to improve your e-commerce page and improve sales, you might want to learn the fundamentals of how to design a good website.

Incorporation

A Guide for EU Companies Expanding to the UK: What You Need To Know

Things might have changed after the transitional period, but that doesn’t mean expanding to the UK is not possible. In this guide, we will show you some of the things you need to know when you are planning to expand your business to the UK

Running My Business

Should I Close My Company or Make It Dormant?

Choosing between closing your company for good and making it dormant is a huge decision to make. Before taking that step, get to know what the consequences are for each decision. We’re here to help.

E-commerce

Shopify Plans And Prices Analysis: Which Is The Best?

When you start an online business, you will definitely require a platform like Shopify for you to perform basic business operations. This article helps you to see which Shopify plan is best for the stage of the business you’re at.

Entrepreneur's Bootcamp

Tips To Maintain a Compliance Calendar

The repercussions of missing crucial deadlines extend beyond non-compliance and can even include hefty fines, lost revenues and opportunities, as well as decreased productivity.

E-commerce

How Amazon Sellers Can Better Manage Inventory To Improve Sales & Cashflow

Brand owners and sellers of all scales struggle to seek a well-balanced supply chain. Additionally, Amazon has its own inventory management rules, which makes everything even tougher.

E-commerce

10 Best Hosting Providers for E-commerce in 2021

If you are looking to sell online, the right e-commerce hosting provider can make all the difference. However, with a variety of options out there, choosing the best provider can be confusing.

E-commerce

What an Invoice for E-commerce Businesses Needs To Have

For business owners who own and run an online store, you probably already know that invoices must be sent to your customers for the services you provide or the goods you sell, as a form of purchase proof.

Incorporation

How New Company Owners Should Prepare Financial Statements

After you register your company, you may want to start thinking about your company’s finances such as monthly income, expenses and taxes because UK company owners need to submit their company’s annual accounts to Companies House.

Incorporation

What Are the KYC or Know Your Customer Checks In the UK When Opening a Company?

KYC checks are needed for the authorities to combat money laundering and terrorism financing. You might unwittingly partner up with clients who are using their business relationship with your company to launder money or facilitate other nefarious projects.

Brexit

OSS or IOSS? VAT One-Stop-Shop Rules for E-commerce in the EU

Since July 2021, the European Union’s (EU) existing VAT rules have been replaced by two new alternatives: the One-Stop-Shop (OSS) scheme, and the Import One-Stop-Shop (IOSS) scheme.

Tips to run your business smarter. Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

We’re using cookies! What does it mean?