How to Write an Invoice for Freelance Work

Invoicing is a crucial aspect of freelance work. Handling the process correctly and having the right systems in place ensures you get paid for your services on time while helping you to maintain a professional relationship with your clients and not falling foul of HMRC’s rules and regulations. Whether you’re new to freelancing or looking to refine your invoicing process, this guide will help you create effective invoices and help get you paid on time! 

What Is An Invoice? 

An invoice tells the customer what they need to pay, when payment is due, and how they need to pay you.  It also helps the business keep track of what it’s owed.

An invoice for freelance work typically doesn’t need to be signed by both parties, as it primarily serves as a formal request for payment rather than a legally binding agreement. However, some clients may require a signed contract or agreement outlining terms, conditions, and payment details before work begins. 

Should I Add VAT to My Invoice?

One common question freelancers ask is whether to add VAT (Value Added Tax) to their invoices. The answer depends on your business VAT registration status. 

• If your annual turnover exceeds the VAT threshold (currently £90,000 in the UK), you must register for VAT and charge it on your invoices.
• If your turnover is below the threshold, you can voluntarily register for VAT. This can be a good move if your clients are VAT-registered businesses because they can reclaim the VAT you charge.
• You should not add VAT to your invoices if you are not VAT-registered.

You can register for VAT at https://www.gov.uk/register-for-vat. 

Charging VAT:

• Once registered, you need to include your VAT number on your invoices.
• Clearly show the VAT amount as a separate line item.
• Specify the VAT rate (standard, reduced or zero rate).
• Indicate the total amount inclusive of VAT.
• You will also need to include the date of the invoice and a description of the goods or services provided.

Example of VAT Calculation: If you charge £1,000 for your services and the VAT rate is 20%, your invoice should show:

• Service fee: £1,000
• VAT (20%): £200
• Total: £1,200

Overseas Clients

VAT is only chargeable on customers inside the UK and Northern Ireland. If you’re doing business overseas, you should not add VAT to these invoices. You may need to register for VAT in an overseas territory, however, and you should discuss this with your accountant.

What Does a Freelancer Invoice Look Like?

Creating a professional and clear invoice is essential for getting paid on time and maintaining strong client relationships. Here’s what a standard freelancer invoice should include:

1. Your Information:

• • Business name (or your name if you’re a sole trader)
  • Address
  • Contact details (phone number, email)
  • VAT number (if applicable)

2. Client Information:

• • Client’s business name
  • Address
  • Contact person (if applicable)

3. Invoice Details:

• • Invoice number: A unique identifier for your invoice. This can also be added to the subject line of your email when you invoice. 
  • Invoice date: The date when the invoice is issued.
  • Due date: When the payment is expected (typically, this can be anywhere from immediate payment, to 30 days from the invoice date or more). 

4. Service Description:

• • Detailed description of the services provided.
  • Dates when the services were performed.
  • Hourly rate or fixed fee for each service.
  • Quantity (hours worked, units provided, etc.)

5. Financial Details:

• • Subtotal: The total amount before taxes and discounts.
  • VAT amount (if applicable).
  • Discounts (if any).
  • Total amount due.

6. Payment Terms:

• • Preferred payment methods (bank transfer, PayPal, etc.).
  • Bank details (account number, sort code, IBAN, BIC/SWIFT for international payments).
  • Payment terms (e.g., payment due within 30 days of the invoice date).

7. Additional Information:

• • Late payment policy: Specify any late fees or interest charges for overdue payments.
  • Notes: Any additional notes or instructions for the client.

Example Freelancer Invoice

Click Here To Download

How to Chase Payment on Invoices

An invoice is the first step to getting paid, and with our invoice template above, you’re providing all the important information including when the invoice needs to be paid. 

But in some instances, there can be delays in getting paid, which is when you need to take the following steps. 

• Contact the customer a few days before the invoice is due for payment to check they have everything they need to make the payment.
• If the invoice date has passed, follow up with the client and politely remind them of the payment terms on the invoice. 
• According to the UK Government, a payment becomes late 30 days after invoicing if no prior terms have been agreed upon. They also suggest that small businesses charge up to 8% interest plus base rate on late payments. 
• If you’ve still not been paid, speak to them on the phone outlining the situation. 
• If payment or confirmed payment dates in writing still haven’t been agreed 30-60 days after the initial payment date, then it’s time to consider legal action. This includes the small claims court, letters from your solicitor/lawyer regarding possible legal action and employing a debt collection company that will likely take around 25% of the debt fee as their payment. It’s important to note you can transfer any debt 
• A series of letters from you 7, 14 and 21 days after the payments are due can prove effective. The 7 day letter would be polite and friendly; the 21 day letter would threaten legal action. 

Creating clear and professional invoices helps ensure you get paid on time and will give you more credibility as a freelancer. You could even go one step further and add a note to say thanks for working with us. 

At 360 accountants we can help you to keep accurate bookkeeping and accounting records including invoicing. Contact us on 01482 427360 for more information.