When you create an invoice to send to your client or recruitment agency, you should ensure that you include all the necessary information to comply with various regulations and minimise the chance of errors being made by the accounts department.
This advice applies if you invoice your agency or client directly. Many agencies now have self-billing arrangements, which automatically invoice the client on your behalf once your timesheets have been validated.
If you’re an umbrella company contractor, the umbrella will raise any invoices on your behalf – again, unless a self-billing arrangement is in place.
What should you include on your invoices?
You should include the following details on any invoices from your limited company (we assume your company is VAT-registered).
Unsurprisingly, you must first include the word ‘INVOICE’ at the top of the document.
Unique invoice number (this must be sequential)—You may designate a three-letter code or other identifiers for each client for your records.
Invoice Date.
Limited Company Name.
Business Name (if not using the Limited Company Name).
Limited Company Registration Number.
VAT Registration Number.
Limited Company Address.
Further contact details, e.g. email address and phone number.
Client / Agency’s Name and Address.
A concise description of the services you provide to the agency/client.
If necessary, break down the services provided into units, e.g., 37.5 units (hours) @ £40 per hour.
Date when the services were supplied.
The total amount charged for services.
VAT charged (at 20%).
Total amount charged (including VAT)
Your business bank account details for electronic settlement (sort code and account number).
A client reference or Purchase Order (PO) number is typically required.
Include payment terms on your invoices
Many contractors include payment terms on all invoices, including late payment information.
Although the agency or client typically dictates payment terms, we recommend you include a sentence stating your rights to charge interest on late payments under the Late Payment of Commercial Debts (Interest) Act 1998.
Small businesses typically provide 30-day payment terms (the default term), but contractors often have 7 or 14-day terms.
Ensure that you have the correct details for the accounts department before you submit your invoice, and politely chase up payments which haven’t been received promptly.
Some more contractor invoicing tips
Company logo and looking professional: Although not legally required, adding a logo and professional design can enhance the presentation of your invoice.
Use accounting software: Most accountants recommend using FreeAgent, which is excellent. It allows you to send out invoices easily and check payments via bank account integrations.
Use a very old-fashioned template: You can access our very basic Word / PDF contracting invoice template here.
