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Is your customer invoicing accurate?

2019
28
JAN

InvoicingThe majority of businesses will need to provide their customers with an invoice for the goods they have bought or the services they have received.  The only exception is likely to be retail businesses such as those selling online or on the High Street as their customers pay before they receive the goods.

Many businesses now produce invoices straight from their accounts software where they can be entered straight into the accounts and emailed to the customer.  However there will still be many businesses hand writing their invoices in a duplicate book or using an Excel or Word template. 

The format of the invoice you raise and how it is presented to the customer will vary from business to business. It doesn't matter how you produce your invoice as long as you provide it to your customer promptly, it accurately sets out what you are charging them for and contains all the information you are required to include on the invoice.

If you are VAT registered you will need to include some additional information but all invoices should include the following basic information:

Your details - your name and address and a contact number for any queries.  Invoices which do not show who provided them makes life very difficult for a bookkeeper or anybody trying to keep their accounts organised.  

Your customer's details - their name and address.  This ensures the customer knows the invoice is for them and if you and they are VAT registered it must be addressed to their business so they can claim back any VAT due.  

The date - every invoice must have a date on it.  If there isn't a date there is no clue as to when it should be recorded in the accounts and definitely no indication of when it should be paid by. A VAT registered business must have a date on their invoice which is known as the tax date.

A unique number - each invoice should have a unique number so that it can be tracked and not confused with an invoice for another customer.  If you need to amend an invoice you should credit the original and create a new invoice with a new number - if you provide a customer with two invoices with the same number but different amounts it will confuse them and confuse your records even more.

Detail - your invoice should show clearly what you are invoicing for.  It enables the customer to see what they are paying for and for their bookkeeper to know what has been purchased so it can be correctly allocated in the accounts.

Amount - the amount due should be written clearly so that your customer is in no doubt how much is due.  If several amounts are recorded ensure these are totalled correctly at the bottom.

VAT - If you are VAT registered you must show the net amount due, the VAT amount due and the total amount due as three separate figures.  You must also ensure your VAT number is included on the invoice.

Payment terms - always include these on the invoice so your customer knows when you expect to receive payment.  It would also be useful to include your account details for BACS payments or if you send an electronic invoice from your accounts software you could add a link for them to pay directly by card.  

The invoice you produce is your record of the sales you have made and is used in your accounts both for recording your income and ensuring you have received payment (and the right amount) from your customer. That invoice is also used by your customer in their accounts to record as a purchase and as a record of the outstanding bills they need to pay.  So it is important that the invoice from your business is prepared well both for your own benefit as well as your customer's benefit.

A presentable accurate invoice sent to the correct contact promptly is an indication of a company with efficient processes and organised accounts.  Following up if your invoice hasn't been paid within your payments terms is also important, firstly to ensure the customer does have the invoice and also to remind them that you do need to be paid for the goods they have had or the service they have received.

A business which doesn't send its invoices promptly may find they forget to invoice everything which is due.  Invoicing irregularly could also mean your cash flow will suffer because if you don't invoice you won't have any funds coming in.  In addition your invoicing will take more time the longer you leave it because you will find it harder to remember all the components to include and you will have more invoices to do at one time.

Invoicing is just one aspect of your business that your customer sees and it is important that it remains accurate, efficient and under control in order to maintain your business reputation.

Related Tags:  Bookkeeping |  Customers |  Invoicing | 
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Old Sarum, Salisbury
Salisbury
Wiltshire
SP4 6QX

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