To invoice as a sole trader, you need to outline the services you provided, the price you’re charging and how the client should pay you. The invoice notifies the client that payment is due for the products and services that you’ve performed.
If you’re new to the world of setting up your own business, we’re here to break everything down for you.
What’s an invoice?
An invoice is a document recording the goods or services provided, the cost of these items, and the terms of payment. Think of it as a bill you’d send to clients to get paid. However, invoices are more than a request for payment. They’re also important for maintaining your records, tracking payments, and providing legal protection by serving as proof of the agreement between buyer and seller.
If anything goes wrong, you need to make sure that you have correct and accurate invoices to back you up.
What do I need to include on an invoice?
The invoice you send as a sole trader should reflect your brand and should be customised with your business logo, colours and fonts. It’s important to be prompt when sending your invoice so you’re paid ASAP. You can use an automated system to send the invoices, such as Xero or Xero Go, or send it via email to ensure that both you and the client have a copy of the invoice.
As a sole trader, your invoice must include:
- a unique identification number
- your business name, address, and contact information.
- your name and any business name being used.
- an address where legal documents can be delivered to you if you use a business name.
- the company name and address of the customer you’re invoicing.
- a clear description of what you’re charging for.
- The item description should be detailed and provide a full account of your product and service.
- the date the goods or service were provided (supply date).
- the date of the invoice.
- the amount(s) being charged.
- The payment terms must be defined and make sure your client is aware of them. If you offer different payment options, include them on the invoice.
- VAT amount if applicable.
- The methods of payment – usually including your bank details.
- the total amount owed so the recipient knows how much to pay and how.
What bank details are needed on an invoice?
One of the most common payment methods is through bank transfers. If you’re opting for bank payments, include the following details on your invoice.
- Full bank name
- Account name
- Account number
- Invoice reference number
In addition to the bank details, you can also add payment terms such as “payment expected/appreciated by the end of 14 days”.
At the bottom of the invoice, you may also want to be polite and thank the customer for their business and offer other products or services.
Being kind and appreciative not only helps you get paid faster but also allows you to maintain good relations with clients. However, it’s also important to develop a tactful follow-up plan to get paid when the customer fails to pay the invoices. Some software will generate automatic chasing emails, but you’ll need to keep an eye on overdue bills as part of your credit control measures.
If you haven’t already, this is a good time to think about making sure you have a business bank account set up.
If you’re looking for help with your invoices, contact us today to arrange an appointment.