So, you need a self-employed invoice, but you have no idea where to start or what it should even look like.
Perhaps you’re new to self-employment and you’re formally being paid for the very first time. Or it could be the case that you’ve been self-employed for a while and you’re a little worried you’re not doing your invoices correctly.
We’ll be walking you through how your self-employment invoice should look, complete with a trusty template to keep you on track.
Read on for the full guide or go straight to your preferred section:
- What needs to be in my self-employed invoice?
- When should I send the invoice?
- Self-employed invoice template
- What if my client isn’t paying at all?
What needs to be in my self-employed invoice?
We’re sure you know what an invoice is, but there are certain elements you should be including in your invoice:
- Business name
- Business address
- Contact information
- VAT number (if you have one, that is)
- The customer’s name, address and contact details
- Invoice number
- Invoice date
- Description of work
- Amount owed
- Payment terms – the deadline for customer payment and how they can pay you, what happens if payment is missed
- ‘Errors and omissions expected’ statement
One more thing – invoices sent by email should be presented in PDF format as they’re easier to open. The email message you send alongside should be polite and professional.
“Don’t put your contact details in tiny lettering or fancy font; make them easy to read,” said Amy Knight, small business expert a NerdWallet UK. “If the person paying the invoice has any queries, you want them to be able to reach out quickly. An email address that’s hard to read could potentially lead to a late payment.” Double-check their company details to ensure the invoice reaches the right person or department, especially if you are dealing with a larger company.
On that note, avoid using nicknames, even if the person you’ve completed the work for is a friend or relative.
It might not be obvious at first, but it’s worth giving your invoice number some thought. “There’s nothing wrong with starting with 001, but you may find it helpful to add some letters to help you match up payments to specific projects, and some business owners include the date in thei invoices,” said Knight. “For new business owners and newly self-employed professionals worried about appearing inexperienced, this makes it less obvious to your client that you’re new to invoicing. For example, if you completed a web design project in March, you invoice number could be WD-2503001.”
She adds that you should also spend some time thinking about a numbering system that will help you make sense of invoices in the future. If you plan to take on multiple clients, consider incorporating letters into your invoicing system to make it easier to track payments from different customers.
The supply date is when the goods or services were provided, as Knight points out, while the invoice date is when you issued the invoice, so put today’s date if you’ll be sending it today. Both dates are legally required and are essential for record-keeping and payment scheduling. For sole traders working on digital projects, the supply date could be the date you completed the work, or the date you handed it over to the client.
Before you hit send, double-check everything, Will Kogan, general manager at Franklin Parcel, told Small Business. “It’s easy to miss things like the wrong totals or contact info, and a small mistake can delay payment. A quick checklist can really help with that.”
You must clearly state your payment terms so everything goes as smoothly as possible. “Whether it’s seven days or 30 days, make sure your client knows exactly when payment is due. And, if you charge late fees, don’t forget to mention that upfront. It’ll help avoid any surprises later,” said Kogan.
“For small businesses, getting into a rhythm with your invoicing makes all the difference. If you can, consider using invoicing software – it’ll save time and reduce mistakes, but always keep a backup manual record just in case.”
Some bank accounts even come with digital accounting software. Knight advises that, if you haven’t yet chosen accounting software, make it a priority to check the rules around Making Tax Digital. This will soon require all businesses, including small traders, to use HMRC’s online system to declare their income and expenses.
When should I send the invoice?
Getting the timing right maintains the balance between keeping your client sweet and maintaining steady cashflow.
When you invoice often depends on your business and what kind of work you do. Most businesses invoice after the work is complete, such as freelancers offering services.
If you sell products, you’re more likely to invoice at the point of sale, as you’ll know if you’ve bought products in the past.
Those who offer subscriptions, such as a tech or software service, will bill at around the same time every month or year, depending on what they offer.
The nature of the work you’re billing for will also be a factor. If it’s an expensive project, it might be better to bill your client up front or you may have agreed a billing date with the client in advance. Alternatively, long projects can get paid progressively throughout the life of the project.
Polite follow-ups might be necessary if they’re taking their time to pay up. Oh, and if a client gives you a partial payment, send them an updated invoice straight away.
Self-employed invoice template
For those new to invoicing, using an existing template ensures you don’t miss out on information that could stop you getting paid promptly.
Check out our free template below, which you can tailor to your own business and billings, adding your own branding and logo.
What if my client isn’t paying at all?
Late payments are still a major issue, especially for smaller businesses. Realistically, you should be paid within 30 days, but unfortunately this is fanciful thinking for some businesses.
“Unfortunately, late payments are a problem for thousands of small businesses, so don’t let an omission on your part give bigger businesses an excuse,” Knight told Small Business.
Some businesses offer a discount to customers who pay within a shorter time frame, as a way of encouraging prompt payment, she said. For example, ‘10 per cent off if payment is made within seven days.’ “Use this strategy cautiously, and don’t offer discounts unless there’s plenty of room in your profit margin,” she said.
Keep a record of all your outstanding invoices so that you know when you’re due to be paid. If it reaches a critical point, send a letter to the client before you take action.
For more, read our article on How to tackle late payments to your small business.
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