How to make an invoice

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If you’ve set up your own business, knowing how to create an invoice correctly is crucial to ensuring you get paid, as we explain.

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What to do to get paid

Getting paid when you work for an employer is something that usually happens automatically, without you needing to do anything other than count down the days to pay day.

But if you’re a small business, getting paid by another company or client can be an entirely different matter. That’s where invoicing comes in.

This guide explains everything you need to know about creating invoices and what to do if you don’t get paid.

Why it’s important to invoice

Whether you’re a sole trader, freelancer, small business or limited company, invoices are a vital part of doing business.

Not only will they help you to get paid on time, but every invoice you send is also a tax document that proves your income.

HMRC requires businesses to keep records for up to six years, and self-employed individuals should keep evidence of sales, income and expenses for five years. 

An invoice will help you to keep track of your payments and the amount owed, which in turn will help you when you come to file your tax return, ensuring you pay the correct amount of tax.

There’s also a legal benefit to invoicing – if a company or client doesn’t pay you, your initial invoice can act as legal proof an agreed service was carried out, which you may need if you take further action. 

How do invoices work?

An invoice is a bill that a business sends to a client, customer or company asking for payment for goods or services they have provided.

An invoice will usually include a description of the goods or services, along with the payment amount, payment terms and payment method.

Invoices are different to receipts that acknowledge a payment, and purchase orders which shows intent to buy goods and services. 

It is important to set aside some time each day or week to do your invoicing, otherwise you can quickly forget to do it, or lose track of which invoice was due when.

If your business regularly sends large numbers of invoices, consider using invoicing software such as that from QuickBooks and Zoho to save time and create batch invoices.

Choose the best business bank account for your company with features including no set up fees.

How to write an invoice

Your invoice should clearly state the word ‘Invoice’ at the top. It should then include the following information:

  • A unique identification number

  • Your company name, address and contact information 

  • The company name and address of the company/client you’re invoicing

  • A clear description of what you’re charging for

  • The date the goods or service were provided

  • The date of the invoice

  • The amount being charged

  • VAT amount if applicable

  • The total amount owed

If you’re a sole trader, your invoice should also include:

  • Your name and any business name being used

  • An address where any legal documents can be delivered to you if you are using a business name

If your company is a limited company, you must include the full company name as it appears on the certificate of incorporation. You must use VAT invoices if you and your customer are VAT registered.

To give you a clearer idea of how an invoice should be laid out, it’s worth looking at templates online, such as those from or Freshbooks

How to send an invoice

Invoices should be sent to the company/client once the goods or services have been provided.

Traditionally, invoices came in paper form and were either handwritten or typed, and either hand delivered or sent by post. These days, many invoices are electronic and sent via email.

You can attach your invoice to the email as a downloadable PDF, so that your client can save, print or upload the invoice to their accounting software.

Make sure you include a description of your business and invoice in the subject line and body of the email. Send the email to both the person who authorises the payment and the person who processes it, where applicable.

What happens after you send an invoice?

If you have previously agreed a payment date with your client, this should be stated on the invoice. Common invoice timeframes for payment are 14, 30, 60 or 90 days.

Otherwise, the customer must pay you within 30 days of getting your invoice. All being well, your invoice will be processed and the funds will be transferred into your bank account (or via another chosen method of payment) within that timeframe.

Depending on the type of business you run, you may want to issue a payment receipt once you’ve received payment from your customer. This can confirm the full payment of the invoice, giving your customer peace of mind that they’ve paid the correct amount. 

Chasing invoices

Woman doing paperwork at home

Getting invoices paid on time is crucial for running your business. Unfortunately, it doesn’t always happen that way. If you’re concerned about late payments, you can try to deter them by including interest terms in your agreement.

Under the Late Payment of Commercial Debts Act 1998, small businesses are allowed to charge up to 8% interest plus the Bank of England base rate on late payments, but it’s important to make this clear to your customers from the start to avoid any disagreement.

If your payment hasn’t gone through on time, you’ll need to chase it up. It’s not rude to do this – you’ve done the work so you’re entitled to payment.

As a first step, send a polite reminder by email a day or two after the payment was due, reattaching your invoice.

If you get no response, try emailing again. If you still have no luck, you’ll need to pick up the phone to ask if your client received the previous emails and if there is an issue with the payment. 

Make sure you keep records of your correspondence, including who you talked to, the date and the time as this can prove useful if you need to take things further.

What to do if you don’t get paid

If you’ve chased several times and your payment still hasn’t been met, you can make a statutory demand to ask for payment of what you’re owed, so long as the debt is not more than six years old.

To do this you will need to fill in a statutory demand form and deliver (serve) it to the company or client that owes you money. They then have 21 days in which to respond. If they don’t, you can take the client to court.

You’ll have the option of trying to wind up a company that owes you £750 or more, or start bankruptcy proceedings against any individuals that owe you £5,000 or more.

Alternatively, if the value of the claim is less than £10,000, you may be able to submit a small claim which will be allocated to the small claims track. For claims of up to £100,000, you can also use the Money Claim Online service.

Note that the process for making a claim in Scotland and making a claim in Northern Ireland works slightly differently.  

Another option is to use a mediation service. This will usually be quicker and cheaper than going to court and will involve an impartial individual helping both sides come to an agreement.

It can be worth speaking to a solicitor or legal adviser to work out which option is best for your situation. 

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