A guide to invoicing when you’re self-employed

What's an invoice? How do you generate one? Here's everything you need to know.

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For many self-employed individuals, having stable finances and reliable cash flow are integral to being able to maintain their small business or side-hustle. For this reason, invoicing is probably one of the most important things to master.

What’s an invoice?

An invoice is a document issued by a business owner to clients that outlines charges of goods produced or services rendered. Essentially, an invoice acts as a legal document, establishing an agreement to pay between the buyer and seller. It details the charges, establishes an obligation to pay, and can be issued before or after a service is completed.

Why do I need invoices?

Invoices are crucial for maintaining solid financial and accounting records, and are especially important to small businesses. For the most obvious reason, they are important because you need to invoice clients to get paid. Invoices act as a legal agreement between a seller and buyer and establish a formal intent to pay by creating a sales record that cannot be erased or cancelled.
If you are a VAT-registered business, you are also legally obligated to invoice clients and keep record of your financial history.

What to include in an invoice?

The information to include in an invoice varies based on the nature of the business or services. However, here is some core information that should be included in an invoice:

  • Invoice or reference numbers
  • Your details
  • Customer details
  • Date of the invoice
  • Details of services and the amount charged
  • Date amount should be paid by
  • Acceptable payment methods

If you have a VAT-registered business, you will also have to include the following details:

  • Unit price
  • Rate of VAT charged
  • Total amount payable excluding VAT

How to create an invoice

Depending on how you go about it, there are several ways that you can create invoices. You could make one manually following templates available online and send them out via mail or email. However, this can be time consuming and you could make mistakes or even forget to send them out.

Nowadays it is simpler than ever to create and send invoices, especially given the number of different accounting software and services available, like ANNA Money and Xero. These generate invoices for you and also take away the hassle of chasing payments. These programmes are great because they can:

  • Take away the need to manually create invoices and input information
  • Reduce the risk of mistakes in invoicing
  • Solve the problem of potential forgotten or overlooked invoices
  • Chase late payments for you

Although these kinds of software are very useful, it is important to note that they can be costly. For a small business, justifying the financial cost of getting a premium accounting service can be difficult, so pricing is something to keep in mind.

The ANNA Money business account comes with a debit card, invoice generator & receipt app

ANNA

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24/7 customer support

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Software integration
Invoices are crucial for keeping solid financial and accounting records. To invoice your company’s clients you can always do it the old-fashioned way and create them manually, using templates and sending the invoices out via email. It can be time-consuming though, and the last thing you want is making a mistake while creating them. To avoid that, choose a digital bank that offers accounting software and services that automatically generate invoices you can send to your clients. One such company is ANNA Money which can help you save time and avoid the stress of chasing payments.
  • Ability to connect other provider accounts to the ANNA app through Open banking
  • 24/7 support through the app aiming to give a response within 10 mins
  • Fast set-up
  • Invoice and expense services within the app
  • No seperate fees for account activities solely the monthly fee
  • No credit or overdrafts available
  • Still require a traditional bank account for majority of your business financial needs
  • No cash and cheque deposits
  • Cannot be used in web browser
Account fee £0
UK ATM Charge Free up to £100 per month
Account software integration platforms Coming soon
UK transfer charge £0
Additional cards
Additional card fee
Credit check Soft search with no impact on credit score

How to get invoices paid on time

One of the most frustrating parts of being self-employed is having to wait on customers to respond to invoices and pay you. But though it can be awkward hounding customers for payment, the following tips can help ensure that your invoices are paid on time and you get the money you’re owed:

  • Use an automated software to chase late payments
  • Request a deposit before starting any work
  • Clearly state non-negotiable payment due dates
  • Set up penalties for late payments

Compare business bank accounts

Data indicated here is updated regularly
Name Product Account fee Bank transfers Accounting integrations Non-Sterling transactions Overdraft Account management Key benefits
Starling Business Account
Free
Free
Xero, FreeAgent
Free

Min. 18 months trading to apply
App, Online
Add the new Business Toolkit onto your free Starling account, and get the first month free of charge (RRP £7pcm)
Tide
Free
£0.20
Free if both accounts are with Tide
Xero, QuickBooks, FreeAgent, ReckonOne, Kashflow and Sage
Free
App
Free spending abroad and at home in any currency, instant payment alerts, automatic categorisation
Amaiz
£9.99 per month
Free in first month
Free Starter plan available
£0.20
FreeAgent, Xero, Sage, Reckon One, Kashflow, QuickBooks
1%
0.5% in Europe, 1% elsewhere
App, Online
ANNA
Free
Free up to a max. balance of £5,000 (or up to £500 paid in per month)
Free
2 free transfers per month and unlimited free transfers to Anna accounts
Coming soon
Free
App
Earn 1% cashback for paying with your ANNA card in selected categories. Enjoy premium benefits free for the first 6 months.
Cashplus business
£69
First year's annual fee refunded.
£0.99
Free transfers in first 3 months
FreeAgent, Xero
2.99%

On invitation
App, Online
First year's annual fee refunded.
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