A step-by-step guide: How to make an invoice

When you’ve set up your business and sold products or services, you need to send out invoices to your customers. But how do you make an invoice?

Knowing what information to include in your invoice can be difficult, even if you’ve been running your business for a while. 

This guide will cover the following topics to give you some clarity about invoices:

• What is an invoice?
• A step-by-step guide on how to make an invoice
• How to send an invoice
• How Countingup can help with invoice management

Invoices are bills that companies and sole traders send to clients or customers asking for payment for products or services. Typically, an invoice includes a description of the items you’re charging for, payment terms, and other important information. 

Businesses need to keep information about sales and income for tax and accounting, and invoices are crucial for those records. 

However, invoices are not the same as receipts (which acknowledge payment) or purchase orders (which notify intent to buy goods and services).

Below you’ll find a step-by-step guide that tells you how to make an invoice that includes all the elements and information you and your customer or client need.

The first step is to make sure your invoice looks professional and clearly lists your business information. Be sure to include your business name (even if it’s just your own name), address, company phone number, and email address.

A key way to add a professional touch to your invoices is to include your logo (if you have one) in the header and design it using your company’s colour scheme. 

If you don’t have a set colour scheme, you can pick colours that you feel represent your brand and use those for future invoices.

You should also make sure it’s clear that the document is an invoice. Simply adding the word ‘invoice’ at the top of your document is usually enough to make it stand out to your client.

You need a reference number to keep track of your invoices and make sure you don’t create any duplicates. This reference is called a unique identification number (UIN), and is a requirement from HMRC on self-employed invoicing, so you must keep record for tax purposes.

You can use numbers that gradually increase as you send out more invoices and add letters in front of the number to separate your different clients or customers. 

Say you have a client named John Smith and the invoice you’re sending to him is his seventh. In that case, the UIN could be ‘JS07’ or ‘JS-07’.

The important thing is choosing a numbering system that works for you, and staying consistent to avoid confusion. 

Next, you need to make sure you’ve listed your client or customer’s information. Include the name of the business (if applicable) and your point of contact, along with the address, phone number and email address for your contact.

It’s usually a good idea to confirm who the best contact person is with a new client before sending your first invoice. 

One of the most vital steps to creating an invoice is making sure it clearly specifies when and how you expect to get paid. 

For freelancers and small businesses, it’s common to use a 30-day billing cycle. This means that if you send your invoice on June 1st, the payment is due by July 1st.

You should also include payment methods you accept, such as debit or credit card, PayPal, Klarna, or bank transfer. If you charge late fees, you need to make it clear when and how you will charge them.

It’s good practice to discuss your payment terms with your clients or customers before they sign on or make the purchase to avoid any surprises or confusion.

Make your invoice as clear as possible by including a detailed list organised by item type. While the descriptions don’t have to be long, make them detailed enough for your customers or clients to know what they’re paying for.

The easiest way to organise the products or services might be in a table that includes:

• Services provided or products sold
• Date 
• Quantity or hours
• Rate or price
• Total amount
• If applicable, include the VAT amount too.

Note that VAT invoices need more information, which we’ll explain more about below.

This final step is not necessary, but including a short thank you note at the end of your invoice adds a personal and friendly tone. It could help you stand out from other impersonal invoices your client or customer might receive.

The information you need to include on VAT (value-added tax) receipts depends on the VAT service or product you’re requesting payment for. In general, they need the same information as standard invoices, plus:

• Your VAT registration number
• The tax point (when you sold the product or carried out the service) if it’s different from the invoice date
• VAT rate and total VAT charged
• If different items have different VAT rates, show this for each one

We also have guides that tell you what is VAT and how much is VAT.

The quickest and easiest way to send your invoices is by email, attaching an un-editable PDF (to prevent fraud) of your invoice. Include a clear, brief description of your business and invoice in the subject line and email text.

Keep in mind that different customers or clients might have different procedures for processing invoices. Therefore, it’s a good idea to check with them and decide on a method that works best for them. 

After you’ve sent an invoice, you could give your customer a phone call to see if they received it and nudge them if they delay the payment. Countingup has an embedded feature that notifies you about unpaid invoices, so you never miss a payment.

With your business current account and accountancy software in one app, Countingup automates your financial admin so that you can focus on what you do best. 

And with our expense reminders and automated invoicing tool, you can get paid faster, save time everyday and have complete confidence in your records.

Download the Countingup app from the App Store or Google Play Store and sign up for free.