What must an invoice include and what are the details that you should show? Whether you are a sole trader or you are trading through and running your own company, this is something that you should be aware of from the outset. Therefore, we will take a look at what needs to go on an invoice for independent contractors and consultants, before your clients can make payment.
Please note, it is quite common for some agencies and end clients to self-bill contractors for their time. Furthermore, in this scenario, it is not a requirement for your company to create an invoice for your contractor work. Instead, as part of this process, you will need to complete timesheets and send these to the agency or client.
If your client is not operating the self-bill system, it will be important when you bill your client to raise a contractor invoice. This should contain all of your business information and contact details such as company name, address, phone number, e-mail address. It should also include how your client can make payment to your company. What’s more you should send your invoice with bank details included. If you do not show this, it could delay payments to your company.
Above all, to comply with current laws, you will need to ensure that you include the relevant details when you invoice your client. There are also extra rules if you register for VAT (as most contractors do). Our VAT guide also gives an overview of what to expect, when you are registered for VAT.
Please have a read of our article covering tax tips for contractors. This includes many more tips when running your own business.
What needs to go on an invoice -if you are VAT registered
The basic details
Let’s consider what must an invoice include if your business is VAT registered. The details required for your contractor invoice, in no particular order, are:
1) The word `invoice.’ If you are charging for your professional time, you could show the words `professional invoice’.
2) A unique invoice number –these will be sequential –the first contractor invoice could be number 001, the second one could be number 002, etc. If you use a unique identification number approach it is both logical and a straightforward referencing system.
3) The date of the invoice.
4) Your business name, address, and contact information.
5) Your VAT registration number.
6) The name and address of your client.
7) A clear description of what your charges are, e.g., 35 hours at `x’ rate per hour. The charges should include any expenses that you are to recharge.
8) The date when you provide the goods or service the supply date.
9) The due date for payment.
10) The amount(s) that you are charging.
11) The VAT amount if relevant (at 20%).
12) The total cost of the invoice. This is the final sum of your charges plus VAT and is the total amount owed.
If you are recharging expenses
You may be able to recharge expenses that you agree in advance with your customer or client. If this is the case, you will need to add these in after stage 10) above on your VAT invoices to your client or customer.
The expenses will also need `netting down’ before you recharge them. Please see our other article that covers recharging expenses. This explains how the `netting down’ process actually works.
It is advisable to show your payment terms on your invoice. It is also a good idea to mention that your company will appreciate quick and prompt payment.
Per HMRC guidance, unless you agree a payment date, the customer must pay you within 30 days of getting your invoice or the goods or service. You also have the right to charge interest for late payment, but you can choose not to.
Therefore, the law assumes that a standard thirty-day payment period exists if there are no other payment terms that are stated.
Should I put my bank details on an invoice? This is your choice however it is advisable to show how your client can send the payment to your business bank account. This will include your business sort code and account number. Please also make sure that you request electronic payment.
Creating your invoice and sending it on to your client
There are many computer programs that you can create your invoice on nowadays. These include Word, Excel, PowerPoint and many others. However, to give it a more professional look, you could covert your document to PDF format.
Some digital platforms such as FreeAgent also allow you to create your invoice on their platform which can save time.
When you send your invoice on to your client or customer you could send it through the normal post. However, nowadays it is much quicker and less costly to send this via e-mail.
If you are using an online system for your company’s record-keeping, this may also let you produce your invoices on the site.
What’s more, if it does, the system will show all of the correct invoice details for your small business. It will do all of the calculations for you. Indeed, this will include your chargeable time, the expenses that you are recharging, and it will work out the VAT too for you. The online system may also allow you to email the invoice directly to the client. Doing this will be a time saver and it will let you track your invoices online and see which ones are currently outstanding.
If you are dealing with a customer or client for the first time, it would be wise to take down details of their accounts department. It would also be wise, should the need arise, to follow through and make sure that you receive the payment in due course.
Finally, if you need a contractor invoice template or free invoice templates, please send a message on the contact form and we will be happy to provide this.
Link to Contractor Advice UK group on