What is an invoice and how does invoicing work?

An invoice is a dated document recording a transaction between a seller and a buyer. Types of invoices may include a paper receipt, a bill of sale, debit note, sales invoice, or online electronic record.

In the event where goods or services are purchased on credit, the invoice should specify the terms of the deal and provide information on the available method of payment.

​You are required by law to give your customer an invoice (or bill) if both you and the customer are VAT registered (i.e. for a business to business transaction) and you sell a customer a product or a service.

Invoicing is essential for small businesses. They are the business documents that enable companies to be paid for their services. A popular way to get started with invoices are to use invoice templates.

What is an invoice used for?

Invoices serve an important purpose for both the business sending it and the client receiving it. For small businesses, an invoice helps expedite the payment process by giving clients a notification of the payment that is due. For clients, invoices provide an organized record of an expense with itemized details, and can help with record keeping. Invoices are essentially used as a source document for business accounting and are extremely helpful for recording all the sales transactions a business makes with its clients.

Summary of what invoices are used for:

  • To request payments within a set timeframe from your customers/clients
  • To effectively track inventory
  • To record business revenue for tax returns and to stay on top of your sales
  • To help forecast future sales by using the data

How do you invoice clients?

Create a professional invoice using an online invoice template, setting reasonable payment terms to reflect your current cash flow position and when you require to be paid. One of the simplest ways to invoice your client is to attach the invoice to an email, especially if this has been the general method of communication between parties.

It can help to agree payment terms with the client before the work is carried out so this is confirmed in advance. If you don’t receive payment from a client by the invoice due date, you’ll have to reach out directly to the client about the overdue payment and politely remind them to make sure the payment is processed. If you continue to experience problems with getting your invoices paid on time, then our invoice finance service might be the best solution for your business.

What to include on an invoice:

Make sure your invoice includes all the details your clients will need to pay you, including your business name, the invoice due date and the total amount due.​ You should send your client an invoice as soon as you’ve completed work on a project, this way the details of the work will be front of mind and this is a good way to make sure you receive payment as quickly as possible.

An invoice must state it is an invoice on the face of the bill. It typically has a unique identifier called the invoice number that is useful for internal and external reference. An invoice should also include contact information for the seller in case there is an problem relating to the payment.

Payment terms should be confirmed on the invoice, as well as the information relating to any discounts, early payment details or finance charges assessed for late payments. It should also show the unit cost of an item, total units purchased, handling, shipping, and associated tax charges, as well as clearly stating the total amount due.

Summary of what to include on an invoice:

  • Your client's contact information
  • Your business contact information
  • An invoice number or unique reference
  • Payment terms
  • List of services
  • The total amount due

Have you thought about Invoice Finance as a cash flow solution for your business?

Invoice finance allows you to release cash quickly from your unpaid invoices.

As your lender, we can release up to 90% of your invoices within 24 hours. On payment of the invoice from your customers, we will then release the final amount minus any fees and charges. There are different types of invoice financing options available to businesses depending on the situation and the level of control they require in collecting unpaid invoices.

We are an invoice financing company who offer a solution whereby payments are collected on your behalf managed by our team of expert credit controllers so you can focus on running your business. Our Confidential Invoice Discounting solution is offered to businesses who want to maintain their own credit control processes, therefore this remains strictly confidential so your customers are unaware of our involvement.

Get in touch

Contact our friendly UK advisors on our freephone

0808 250 0859

8:45 - 17:15 - Monday to Thursday &
8:45 - 16:45 - Friday

The benefits of invoice finance companies such as Novuna Business cash flow

  • Boost your cash flow without having to wait up to 120 days for your customers to pay you

  • Release up to 90% of the invoice straight away, and the final 10% when the invoice is settled

  • Access funds within 24 hours from initial appointment with our revolutionary digital onboarding process

  • Benefit from our in-house credit control processes, allowing you to focus on running your business, instead of chasing clients for payment

  • Six month trial period followed by a rolling contract

Want to understand more Cash Flow Finance terms?

Our Cash Flow Resource Hub has been set up to help SME's with cash flow finance advice, tips and resources to help with their cash flow position.

We explore ways you can begin improving your cash flow situation and start getting your business on track to positive cash flow.

What our customers say

Let's talk

Please complete this form and one of our friendly advisors will call you back.

Approximately how many invoices do you raise each month?
How old is your business?
Back to top