30 Day Blogging Challenge
As a beginning business owner, one of the most important things to get over is your delicacy around money. If your business is to survive, it is important that you get paid.Some businesses start out with accounting software, and invoicing can be a part of that – set up a template, push a button and the invoice is automatically sent. However, when you do not have fancy software, but just your own laptop and a spreadsheet, what then?
I need to say at the outset, that I am not an accountant and that I am not able to offer tax advice. All I can do is walk you through what I have done as a sole trader and freelance business owner.
The day your business has a new client can be a very special day! Birds sing, rainbows sparkle, the sun shines…but now what? Some people ask for a deposit upfront, but that’s a topic for another day. You have delivered the service or the product, now it’s time for payment. You’ve been looking forward to this day, but now it’s finally here, it feels a bit…indelicate… to ask for something as sordid as money. It might be the reason that you have set up business and done the work, but for some reason, approaching the subject of money seems wrong.
No it isn’t! The client has approached you because they had a need and you were able to fulfil that need. They expect to pay you and you expect to get paid. So you need to produce an invoice.
Generally you will produce an invoice at the end of an expected length of time (ie monthly) or at agreed intervals during a longer project. The price should have been agreed at the start of the project or work and preferably written into a contract (another blog post!). Everything is expected, you just need to send that invoice at the right time. Some businesses have a particular day they invoice, while others just remember to send them at the right time.
So what do you need on an invoice?
In the UK, it is the law that you must supply your customer with an invoice. You may be able to find an invoice template on your word processor that you can adopt and adjust to fit your needs. If you are not able to find a template, then you can design your own, using your word processor.
Your invoice should include:
A unique identification number or code – this can include the initials of the company and the number of the invoice (001, 002 etc)
Your company name, address and information on how to contact you, possibly including email and phone number
The name and address of the company of the customer that you are sending the invoice to
A description of what is being charged for
The date the goods were provided
The date of the invoice
The amounts being charged and a total
VAT if needed
Sole traders must also include their name and business name and an address where legal documents can be delivered when using a business name
You should also include how long the customer has to pay the invoice and ways to pay, for example, BACS information.
You can also head the invoice with your company logo, if you wish.
The UK Government suggests that if there is no date by which a customer has to pay, then they should pay within 30 days. It has to be said that many larger companies try to stretch that date out.
The person issuing the invoice sets their own payment terms, including deposits or payments upfront.
Always send your invoice as a PDF so that it cannot be changed.
I always check a customer is happy with their service, before issuing an invoice.
How do you feel about invoicing? Is it something that you are comfortable with? Have you had any problems with invoicing customers?