You’ve made the sale, delivered the product or service and now it’s time to get paid. While issuing your first invoice can be a real high, it is important that it has the relevant information that makes it easy to understand, has the right details for tax purposes and leaves no doubt in the mind of your customer on how to pay you.
Here are 10 quick checks that you must follow to cover all the details required for the preparation of an invoice:
1. Details of your business: You need to create invoices that include all the details of your business such as name, phone number and email address. This will make it much easier for your customers to raise questions and contact you when in doubt. It will also give the customer’s accounts team a clear way to process and file your payments.
2. Details of the Company being sent the invoice: To ensure that your customer’s company receives your invoice, you should include a contact name and the other details of the firm. This will help reduce any confusion when you are sending multiple invoices to different customers and call out your customer who will acknowledge payment. It will also simplify the process and let you know who to follow up with in case payments are delayed.
3. An invoice reference / invoice number: Your business must create a unique reference number for every invoice. You will now be able to account for invoices that are created and dispatched. This will help you in reducing the error of duplication. Add a letter before the number invoice to distinguish your clients.
4. Date of transaction of the goods and services: The date of the transaction is essential for your business to know when you sold goods and services to your customers. This is most essential for VAT invoices and are known as Supply dates.For VAT invoices, ensure that include the VAT Registration Number; and either:
- The VAT rate and final amount of VAT charged or
- The VAT amount and VAT rate charged per product
5. Invoice date: This is the date that you enter when you create your invoice for the customer. The invoice date may not be the same date on which the transaction of the goods and services occurred. This is because this is the date on which the invoice is written and credited for goods and services.
6. Details of the products or services provided and their costs: You must add all the details in the description that you are invoicing. This can be done by listing each product and service, its break up and the final cost.You need to provide a clear description of what you’re invoicing for. This will be a line by line list of each product or services you’ve provided the customer, together with the cost of each. Your description is the heart of the invoice and it should be clear to allow your customer to make prompt payment.
7. Total amount of the invoice: You should ensure that the total cost of all products are products and services are covered and all discounts are mentioned as per the agreement. This is final amount that you enter and is payable by the customer.
8. Invoice Payment Terms: These are all terms and conditions that you consider when creating an invoice. These are the terms that are mutually agreed upon by your customer and your business.
9. Details of invoice payment details: You can make it easier for your customer to understand and make their payments by furnishing all the payment details. This should include account details that include bank name, account name, account number and sort code. For cheque payments, you only need to provide a payee name and address to which the cheque needs to be sent.
10. Customer’s purchase order number: Add this number to your invoice to easily identify your purchase order. This will help you track all purchases for future records and help you identify the particulars of the purchase with this number on the invoice.
These ten steps will ensure that you cover all the details that are required to be included in an invoice. By creating an invoice that is easy for a customer to understand and enquire, you will be able to process and receive payments quickly. Put these in place and then, when it comes to payments, you’ll be on the right track to have smooth regular payments from your clients and customers.