Working as a self-employed and/or freelancer is hard work. To get paid on time, you need to send an invoice to your clients in the correct format and in a timely manner. By not sending invoices in specified time and correctly can result in a long delay in getting paid. This can be detrimental for self-employed individual’s cash flow. It will also have an impact on their earning. To avoid this, you must send an invoice in a correct format.

Why Self-Employed Should Send Invoices

An invoice is a document issued by a business, which is sent to clients. It outlines the price for the product/service and quantity delivered. An invoice is not the same as a receipt, which is a proof of payment.

By law, you need to give an invoice (bill) to your customer for the product or a service you are selling, if both of you are registered for VAT (business to business transaction).

To help you grow your small business, Grow in Cloud enables you to send 5 free invoices a month to your clients. You can send invoices to both VAT and Non-VAT registered businesses.

invoice

Note, any business which has a turnover of more than £85,000 must register themselves for VAT with HMRC (This is applicable to UK businesses only).

Download Invoice Template for Self-Employed

We have put together an invoice guideline which will help you get paid on time and assist with record keeping.

Invoice Number

You should have an invoice numeric system in place. This will help you with managing better cash flow, preparing annual accounts and make it easier for you to pull out records, if needed. If for some reason the invoice is void and you have to cancel the order, then keep a record of this logged on a file.

Name

As a self-employed person, you can have a trading name for the business or do business under your name. If you are trading under a business name, ensure you include both your name as well as the trading name on the invoice.

VAT

As stated above, if your business has more than £85,000 turnover, you must charge VAT to customers. Make sure this is clearly stated on the invoice. The VAT amount should be 20% on the amount you charge clients for work/service. For example, if you are charging £300 for a one off service, the VAT amount will be £60 pounds.

It is important to state the VAT amount separately on the invoice. This is so that customers can see the breakdown of the price.

Invoice Issue Date

To avoid any confusions and payment disputes, clearly state the issue date of the invoice. The issue date will help you to manage your cash flow better, as you can see the issue date and chase up clients for payment if required. Unless you agree a payment date. The customer must pay you within 30 days of getting your invoice for the goods or service.

Description Of Service

Always put a description of the services you are offering in the invoice. For example, if you designing a website, write down:

“Designing 5 pages Website using WordPress” in the description section.

 Invoice Due Date

This is very important for success of your business! We suggest you discuss payment terms with your clients prior to taking them on board. Some businesses will ask you for 30 days (which is maximum legal requirement) to clear the invoice.

However, it is not uncommon to get paid in 2 weeks or even on the day. Make sure you clearly state the due date on the invoice.

Reference

It is always best to ask your customers if they want you to quote a reference on invoice. Some businesses may ask you to put the order reference number or quote the service you are offering. For instance, if you are offering SEO services, type:

“SEO Work Client Name” as a reference on the invoice.

This will help their accounts department to get the budget allocated for the project.

Payment Details

Make sure you include your bank details (or how you want to get paid) in every invoice. This is essential to get paid and on time.

Invoice Record

You must keep copies of the invoices issued. This is good practise and can be helpful if you resolve any payment disputes that may arise. Having a simple and easy-to use system in place can be extremely helpful and can save you a lot of time.

On average Grow in Cloud users save 18 hours a month which means they spend less time on admin work such as sending out invoices and more time on doing what you love!

Fasten your bookkeeping by creating online invoices/finance reports with QuickBooks. Try out QuickBooks cloud accounting on a Citrix XenDesktop cloud to get anytime anywhere access. Never obstruct your cash flow by sending timely invoices.

 

Related Posts:

How To Avoid Late Payments For Invoices 

Online invoicing – Is it really a cost effective move? 

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