When you operate a small business, one of the most critical things that you need to do is to send out invoices to your customers for work that you have carried out or products that you have supplied. It sounds obvious, but the fact is that until you have sent your customer an invoice, you are not going to receive any money.
However, when you do send an invoice there are certain things that it should contain and which a lot of small business people don’t really understand. You may be a gardener, run an ironmongers, a small engineering company, or manufacture picture frames, but you haven’t really got to grips with all of the “paperwork” side of running a business, and you may well find it tedious. Nevertheless, it is vital that you get invoicing right if you want to get paid on time.
Your invoices must be in the right format and contain all the necessary information in a clear and unambiguous way. Your invoice needs to be headed “Invoice” and have a unique invoice number. That number can begin with 0001 for your first invoice and you can just carry on from there for the life of your business. Some people prefer to number invoices by the month. It doesn’t really matter.
It needs your company name and address or your trading name if you are a sole trader. If you are a limited company, you should show the company registration number and registered office if different from your trading address. You are not required to show the names of the directors, but if you do, you must show all of them.
You also need to have a contact link or a way to contact you if there is a query. You need the invoice dated and it must have the customer name and address on it. Add the description of the goods or services and the date of supply, together with the price of each item.
Next, you need to have the total amount payable and – most importantly – your payment terms. You could simply say “payment due within 30 days”, or better still “payment due by” and show the actual date. Add the purchase order number and how the invoice should be paid.
If you are registered for VAT, you also need your VAT number. You have to show the price of each item excluding VAT, quantity of each item, amount of discount if any, VAT rate for each item with zero rated or exempt clearly marked, and the total amount payable including VAT.
You should also include the ways in which you accept payment, which could be by BACS so you would need to show your bank name, sort code, and account number, or maybe you accept PayPal so would show your PayPal email address.
If you accept payments from overseas, you will also need an IBAN – International Bank Account Number – a BIC (Bank Identifier Code), and a SWIFT code for transactions from the US and Canada. These will probably be on your bank statement, but if not, your bank can supply them.
If you accept credit card payments, you will need a merchant account and an ecommerce payment gateway for online payments.
That’s it. That is everything you need. All you need to do now is to send out your invoices. The sooner you do that, the sooner you will get paid. However, note that many companies have a monthly payment run, usually at the end of the month, but not necessarily. You will need to ask for their cut-off date in order to get into their payment run, because otherwise your invoice will not be processed until the next month.
Of course, you can make all your invoicing so much easier if you use the Sage 50cloud accounts software. With this you can create invoices and send them online and you can include a Pay Now button on the invoice itself so that your customer can click on it to make payment. You can accept payments from overseas, and the system is linked to Stripe so you can take credit card payments.
It does take a little while to understand everything that Sage has to offer, which is why at Total Training Solutions we offer courses for Sage training in Manchester. The courses cover various topics included with the software such as processing supplier invoices, credit notes and payments, managing the sales ledger, posting bank payments and receipts, and error corrections, as well as protecting your data. Further courses enable you to learn things such as stock control, VAT returns, credit control, and more.