When you sign a contract with your recruitment agency or end client, it will specify how much you will be paid and how the client should be invoiced.
These days, many recruitment agencies have self-billing arrangements in place. This means that when the client has approved your timesheets, the agent automatically invoices the client on behalf of the contractor.
The details of your own limited company or umbrella (if you work through one) are automatically included on the self-billing invoice. Make sure your details are up-to-date, and let your agent know if anything changes.
If your agent or end client doesn’t use self-billing, you must create and submit an invoice yourself.
What to include on an invoice if you’re a limited company contractor
Certain fields must be included on every invoice issued by your limited company, and extra information is required if you’re also VAT-registered.
The invoice must be marked as such (‘INVOICE’).
Invoice date.
Unique invoice number (which must be sequential if your company is VAT registered). Even if your company is not VAT registered, this is worthwhile as it will help you maintain your accounting records and avoid confusion.
VAT number (you can only charge VAT if you have a reg. number).
Your full company name, address, contact information (email, phone, etc.)
The client’s company name and address (ideally, include a contact name).
Detail all work done, and the supply date of the services.
The rate charged per unit (for contractors – the hourly or daily rate, plus how many of each unit).
Once the agency has received your timesheet and invoice, you should be paid electronically within typically 7-14 days later (this will depend on your contract terms).
There shouldn’t be any problems, but if the unlikely happens and payment is late, ensure you get on to the accounts department right away (or to your umbrella company’s administration team if you don’t work via a limited company).
When you start any new contract, make sure you know a) who the client signatories are for your timesheets, and b) who to contact in the agent or client’s accounts department. Knowing these details upfront could save you a lot of time and potential stress.
Download a simple MS Word template
Feel free to use the limited company (VAT registered) invoice template we used here at Contract Eye in the past (before switching to online accounting). We used this exact template in the early 2000s! It’s simple, but it works.
There are dozens of excellent online invoicing apps—some are free, and others are integrated into paid-for software.
FreeAgent is a complete online accounting solution (which most contractor accountants recommend, too). Invoicing clients is just one of many features – it also synchronises with your bank account to quickly find out if you have any late payers. It includes a 30-day free trial, so it’s worth a try. We’ve used it for years at Contract Eye.
There are many alternatives to FreeAgent, including Xero, Quickbooks and Freshbooks.
You can also create an instant invoice online (for free) at sites like Zoho, Invoice Generator, and many more. Just do a Google search for more options.
A note on electronic invoicing (e-invoicing) for public sector clients
If you’re contracting directly with public sector clients, many now require electronic invoicing (e-invoicing), so your accounting software must meet specific standards. If you use accounting software, this shouldn’t be an issue. It’s also unusual for contractors to work directly with public sector organisations – almost all use recruitment agencies to source contractors.
What happens if the agent of client doesn’t pay on time?
If the recruitment agency or client delays payment beyond the contractually agreed terms, you can charge statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998. This is currently set at 8% above the Bank of England’s base rate, plus a fixed debt recovery fee, depending on the invoice amount.
In reality, many contractors are reluctant to enforce this right, as the balance of powers between contractor and agent in unequal. However, you should always include this right on any invoices. If you do suffer late payments, read this practice advice.
