Preparing invoices is a process which many businesses will need to do, for their own and their customer’s records. Invoices vary in their content and style and there is no set standard.
What is an invoice?
An invoice is a document which is sent by a business to its customers for goods or services supplied. It states the amount to be paid and the due date. An invoice is not the same as a receipt, which is an acknowlegement of payment.
The customer should check the invoice against any purchase orders and delivery notes and the calculations on the invoice should be agreed.
An invoice can either be issued on paper or electronically.
When do I need to issue an invoice?
When most retail sales are made, the customer cannot recover the VAT charged and the retailer is not required to provide an invoice, unless the customer asks for one.
However, if your business is VAT registered, then whenever you supply taxable (standard or reduced rated) goods or services to another VAT registered business, you must provide a VAT invoice.
What information must I put on an invoice?
The following bits of information needs to be included:
The details of the business issuing the invoice
Name of business, address, telephone number, email etc.
VAT registration number
If the business is VAT registered, their unique VAT registration number must be shown.
Customer’s name and address
This must be unique and must follow on from the last invoice (in sequential order).
Account and your ref
The account is the business’s reference for their customer. You ref relates to a purchase order (a reference could also be included for a delivery note).
A clear description of each type of goods or services required
The unit price, quantity, rate of VAT and rate of discount should be shown clearly for each item. Also show the amount payable (excl. VAT) for each iem and the currency.
Net price, VAT and total price including VAT
The net total of all goods or services supplied. The VAT added (e.g 20%) and the total amount payable by the customer.
These are the items under which the invoice has been issued.