Invoicing is a vital part of most client-based businesses. Without the ability to create and send invoices, they would be unable to receive payment. Learning to create an invoice is essential if you operate a client-based business, such as a consultancy or a contracting company. 

This article will show you how to create a contractor invoice and look at why invoicing is important. We’ll cover a range of topics, including:

  • An introduction to invoices
  • Why invoicing is important for contractors
  • How to create a contractor invoice
  • How Countingup can make invoicing easy

An introduction to invoices

An invoice is basically a request for payment. After a company provides products or services to an individual or organisation, it will send an invoice listing the products or services and how much they cost. The buyer then has to pay the amount on the invoice.

According to UK law, a customer or client has 30 days to pay an invoice from the date they receive either the invoice or the goods they’re purchasing. 

When you’re sending an invoice, it’s good practice to keep a copy of the invoice for your own records, as well as sending one to the customer. This is a simple job if you use digital invoices, as you can easily save a copy to your device before emailing out the invoice. 

Another reason for keeping copies of invoices is that they’re technically legal documents — they serve as a contract between you and the customer. Once you send an invoice and the customer receives it, they are required to pay. So it’s handy to have copies of invoices in case there are any issues receiving payment.

Why invoicing is important for contractors

Invoicing is a major part of any contracting business for several reasons. The obvious one is that many companies would not be able to continue running without a steady stream of customers paying invoices. This is only one of their purposes, though.

Measuring success 

By comparing past invoices to present ones, you can measure the success of a business over a certain period. Invoices contain information about how much you are charging for your services and what services you can provide. 

If you notice an increasing number of invoices and an increase in the amounts they list, it’s likely your business is becoming more successful.

Legal protection 

Invoices can protect you from legal trouble and lawsuits, as they provide a record of work you provide to a client. A detailed invoice will include all the work you’ve done for a client, how long you spent on each task, how much you charge for each task and the timeframe for completing the work.

An invoice also works as a binding document, as you are legally owed money for the work you do, or the customer can face legal consequences.

How to create a contractor invoice

Invoice information

You should clearly label any invoice as such, with the word ‘invoice’ being at the top of the page. All invoices need to have a reference number, and VAT invoices specifically must also have an identifying number, with each new invoice having a sequential number (Invoice 001, 002, 003, and so on).

Business information

It’s a good idea to include as many contact details for your business as you can on an invoice, but there are a few pieces of business info that are mandatory on an official invoice:

  • Your company’s name
  • Your company’s registered address
  • Limited companies must include their company registration number
  • Your VAT number

It’s wise to put the client’s details down too if they’re a business, like their business name and address.

Itemised list

It’s a common invoicing mistake not to provide an itemised list of what you’re charging your client for. Try not to only list a general term for the service provided, even if that service involves lots of small tasks. 

Make sure to break everything down into its individual parts and list the cost of each. This can help with both your and the client’s accounting in the future.

Payment date and invoice date

It’s vital to include a specific date on the invoice as the due date for payment. Clients frequently use a lack of a payment date as an excuse for late payment. You must also include the invoice date, which is when you make the invoice and officially record the transaction.

Prices and payment method

Since an invoice is essentially just a request for payment, a crucial part of creating one is working out how much to charge on your invoice.

As well as listing prices, it’s a good idea to include the method of payment you prefer. For example, some contractors prefer to receive payment in cash, while others require an electronic bank transfer. The method itself can be anything, as long as you remember to put it on the invoice for your client to see. 

How Countingup makes invoicing easy

The Countingup app allows you to make an unlimited number of customised invoices, all for free. You can also add your company logo to your invoices and even receive notifications when clients pay the invoices.

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also instantly share your bookkeeping with your accountant without worrying about duplication errors, data lags, or inaccuracies. Seamless, simple, and straightforward! 

Find out more here.