How to Write an Invoice: A Simple Guide for Small Businesses and Freelancers
An invoice must include: your business name and address, your client's name and address, a unique invoice number, the date issued, a clear description of what was supplied, the amount, and your payment terms and bank details. If you are VAT-registered, you must also include your VAT number and show VAT separately. Send invoices immediately on completion — delays in invoicing directly cause delays in getting paid.
- What must a UK invoice include?
- Setting your payment terms
- Free invoice templates and software
- How to chase overdue invoices professionally
- VAT invoices: the additional requirements
What must a UK invoice include?#
A standard invoice must include: your business name and contact details; the client's name and address; a unique invoice number (start at 001 or INV-001 — sequential numbers help with record keeping); the issue date; a description of the goods or services supplied, with quantities and unit prices where applicable; the total amount due; your payment terms (e.g., "Payment due within 14 days"); and your bank details or payment instructions. If you are VAT-registered, it becomes a "VAT invoice" and must also include your VAT registration number, the date of supply if different from the issue date, the net amount, the VAT rate, the VAT amount, and the gross total.
Setting your payment terms#
Your payment terms tell the client when they need to pay. Common terms: 7 days (immediate work, smaller amounts), 14 days (standard for freelancers and small businesses), 30 days (standard in B2B), and 60 days (common in larger corporate supply chains). Shorter terms improve your cash flow — invoice at 14 days rather than 30 unless a client specifically requests otherwise. You can also offer an early payment discount (2% off for payment within 7 days) to incentivise fast payment. The Late Payment of Commercial Debts Act 1998 entitles you to charge statutory interest (8% above the Bank of England base rate) on overdue B2B invoices — mention this in your terms as a deterrent.
Free invoice templates and software#
You do not need paid software to create professional invoices. Google Docs and Microsoft Word both have free invoice templates. Wave (wave.com) is completely free accounting software that generates professional invoices and lets clients pay online. PayPal Business invoicing is free. For a paid option, FreshBooks, Xero, and QuickBooks all produce professional invoices and let you set up automatic payment reminders. If you use accounting software, every invoice you create is automatically recorded in your accounts — removing a manual step. Using software with online payment links (card, PayPal, Stripe) typically gets you paid 3–5 days faster than invoices that require a bank transfer.
Data-backed guides on AI, eCommerce, and SME strategy — straight to your inbox.
How to chase overdue invoices professionally#
Set up a simple chase sequence and stick to it: send a payment reminder 7 days before the due date (friendly: "Just a reminder that invoice 042 for £850 is due on [date] — please let me know if you have any questions"); on the due date if unpaid, send a brief follow-up email; 3 days after due, call the accounts team or the person you worked with directly (phone chasing is 3–5x more effective than email); 7 days overdue, send a formal overdue notice mentioning that statutory interest is accruing. Most late payments are paid on the first phone call — the client often simply forgot. Systematic chasing, not awkward confrontation, is the solution.
VAT invoices: the additional requirements#
If you are VAT-registered, every invoice to a VAT-registered business must be a full VAT invoice. This means: your VAT registration number; the date of supply (tax point — this is when the VAT obligation arises, often the same as the invoice date but sometimes the date of delivery); the net amount (excluding VAT); the applicable VAT rate (20%, 5%, or 0%); the VAT amount; and the gross total. Simplified VAT invoices are allowed for transactions under £250 — these can omit the customer's name and address. Keep copies of all VAT invoices you issue and receive for at least 6 years.
People also ask
What is a valid invoice in the UK?
A valid invoice includes your business name and address, the client's name and address, a unique invoice number, the date, a description of what was supplied, the amount, and payment terms. VAT-registered businesses must also include their VAT number and show VAT separately.
How do I invoice as a self-employed person?
Create an invoice with your name or business name, your address, the client's details, a description of the work, the amount, and your bank details. There is no requirement to register a company or use formal software — a Word document or free template is fine. Keep a copy of every invoice you send.
Can I charge interest on late invoices?
Yes. Under the Late Payment of Commercial Debts Act 1998, you can charge statutory interest of 8% above the Bank of England base rate on overdue B2B invoices. You can also charge a fixed debt recovery cost (£40 for invoices under £1,000). State these rights in your payment terms on the invoice.
How do I create a VAT invoice?
A VAT invoice includes everything on a standard invoice plus your VAT registration number, the net amount (ex-VAT), the VAT rate, the VAT amount, and the gross total. Most accounting software generates VAT invoices automatically once you enter your VAT number.
Our team combines expertise in data analytics, SME strategy, and AI tools to produce practical guides that help founders and operators make better business decisions.
Get paid faster with automated invoice reminders
AskBiz tracks outstanding invoices and sends payment reminders automatically — so you spend less time chasing and more time earning.
Start free — no credit card required →