A Guide for Effective Invoicing
What is an invoice and why do I need one?
An invoice is a document that shows the goods or services you’ve provided to a customer and how much they owe you. Sending a clear invoice as soon as possible after completing the work can help you get paid faster.
This guide explains what information if helpful to include on an invoice, along with some common mistakes that can lead to payment delays.
What should I include in my invoice?
Every business has their own, unique invoicing needs, but below are some suggestions of what to include in your invoice which may help avoid a late payment:
- You should include your company name, email address, phone number, and business address.
- If there are any questions about the invoice, this information will be used to contact you, so make sure it’s accurate and up to date.
- You should include details of the business you’re invoicing so it’s clear who the invoice is for.
- It’s always a good idea to check with your contact whether the invoice should be sent to a specific department, such as finance or accounts payable, or uploaded to a system or portal.
- If you are VAT registered, you should include your VAT number.
- This helps show how much VAT has been charged and makes tax reporting easier.
- Clearly label the document as “Invoice”.
- This helps avoid confusion with quotes, estimates, or other documents.
- This is the date the invoice was created and sent.
- It helps determine when payment is due based on the agreed payment terms.
- Every invoice should have a unique invoice number.
- This makes it easier for both you and your customer to track and reference the invoice if there are any issues.
- A PO number is a reference provided by the customer to you, and should ideally be issued to you prior to work commencing or services being provided.
- Not every business will issue them, but if a PO number has been issued, make sure it’s included on your invoice. This helps your customer match the invoice to the work completed and can speed up payment.
- Clearly describe the goods or services provided, including quantities, rates, and costs.
- If the work involved several tasks or deliverables, it’s good to list them separately so it’s easy to understand what is being charged. It’s worth remembering that the person reading the invoice might not be the same person who commissioned your work, so it’s important to make it clear for most people to understand.
- Payment terms explain how long the customer has to pay after receiving the invoice.
- Make sure these terms are agreed in advance, ideally in writing. Including them on the invoice helps avoid misunderstandings and lets the customer know exactly when payment is due. You can find guidance on the role of contracts on our website here: Contract Guide – Small Business Commissioner
- Include your payment details, such as:
- Bank name
- Account name
- Account number
- Sort code
- Double-check these details before sending the invoice to avoid payment problems.
- You might also want to consider requesting they reference the payment in a specific way, for example having the payment reference be your invoice number
Top tips
- Keep your invoice clear, simple, and easy to understand.
- Include all the information needed for your customer to process payment.
- If you’re unsure about anything, speak to your customer and ask questions.
- Send your invoice as soon as possible after completing the work.
- Always double-check your details before hitting send.
Other guidance
Examples from real cases
Make sure your invoice reaches the right person
The person you’ve worked with isn’t always responsible for processing payments. Larger organisations often have separate finance or accounts teams, so it’s worth checking where invoices should be sent.
Case study:
The OSBC received a complaint from a small business that was struggling to get paid after completing work for their larger client.
After investigating, it became clear that the invoice had been sent to the business contact but had not been passed on to the finance team. Once the invoice was forwarded to the correct department, payment was made that same week.
Should I include a Purchase Order (PO) number?
A PO number is usually issued by the customer at the start of a project or order.
Not all businesses use PO numbers, but if one has been provided, make sure you include it on your invoice. If you haven’t received one and are expecting one, you should ask for it as early as possible, as missing PO numbers can often delay invoice processing and payment.
Case study:
The OSBC received a complaint from a small business that had an outstanding invoice of over £12,000 but still hadn’t received payment.
After reaching out to the respondent business, we were advised that the small business hadn’t included the PO number on the invoice, so the respondent business couldn’t confirm what the invoice related to. The invoice was reissued with the relevant PO number, and payment was received later that month.
Clearly describe the work you’ve done
A vague description can make it difficult for your customer to approve the invoice.
Where possible, include details such as:
- What was delivered
- The dates or period covered
- Quantities supplied
- Individual charges
Providing clear information helps the customer verify the work and process payment more quickly.
Case study:
The OSBC received a complaint from a small business that had an outstanding invoice of over £5,000 but still hadn’t received payment.
After reaching out to the respondent business, they advised that it wasn’t clear what the invoice related to, and the description of the services provided was very vague. After confirming the details of the services provided, the small business reissued their invoice with more information included, and the full payment was made.
Provide details of your payment terms
Different businesses can have different expectations about payment times.
To avoid disputes, agree payment terms before starting work and make sure they’re included on the invoice. Clear expectations help maintain good working relationships and reduce the risk of late payment.
Case study:
The OSBC received a complaint from a small business that had an outstanding invoice of over £121,000 but still hadn’t received payment.
After reviewing the documentation, it was noted that the invoice provided by the small business didn’t have a due date or payment terms on it. After reaching out to the respondent business, they confirmed that the invoice hadn’t been paid as finance team were originally waiting on confirmation of when the due date was. After confirming this with both parties, the invoice was settled in full. oice with more information included, and the full payment was made.