ClearSky’s contractor invoice masterclass

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Learning how to invoice clients correctly is the number one task contractors should master. Failing to get your paperwork out on time or including incorrect information could cause serious delays in being paid.

While this is obviously bad for the cash flow of your business, it also creates the impression that you might not be as professional as you claim to be. This could seriously damage your chances of securing further assignments with the client.

To help, we’ve created this handy guide on how to efficiently manage your invoice system and make sure you get paid accurately and on time.

Include the right information

It may seem like a no-brainer but you should first of all include the word ‘invoice’ at the top of the document. This should be accompanied with a unique reference number and the date of issue.

You should also include the name of your company so that the client knows exactly who they are paying, along with contact information in case there is a problem. In addition, it is a good idea to have a contact name for whoever deals with your account so the invoice will be sent to the right place.

Furthermore, your business bank account details (sort code and account number) should be visible so that your client can settle up electronically.

To ensure you don't miss anything off your invoice, using an invoice template like the one Contract Eye have on their website here can help.

Make it clear

Your invoice should leave clients under no illusion about the work you have carried out for them. It is therefore essential to include a concise description of the services provided, breaking it down into units if necessary.

It is also important to include the total amount to be charged, and whether it is inclusive or exclusive of VAT. Remember that your company could qualify for the flat-rate scheme, allowing you to pay less tax to HMRC. For more information, please click here.

Outline payment terms

Make sure your clients are fully aware of the deadline for when you need to be paid. It is also a good idea to provide information about what will happen if funds are not received on time.

Although payment terms are usually dictated by the client, it is a good idea to include a statement outlining your rights to charge interest on overdue invoices. This helps set out your expectations right at the beginning, thereby clearing up any possible confusion at a later date.

Chase up overdue invoices

Many small businesses commit the cardinal sin of failing to keep on top of overdue payments. As mentioned earlier, this can have serious repercussions on your cash flow.

Keep track of which invoices have been settled and which are still outstanding, and make it your priority to deal with the overdue ones as soon as possible. Make sure to have a reminder notice on standby to send when the deadline passes and follow through with the terms and conditions outlined in the original document.

Have your say

Are you a Limited company contractor? How do you invoice your clients? Do you have any pearls of wisdom to share? Join in the discussion on Twitter, or leave a comment below.

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