What is an Invoice?
An invoice is a commercial document issued by a seller to a buyer, listing the products or services provided and requesting payment.
An invoice is a formal payment request sent from a seller to a buyer after goods are delivered or services are rendered. It serves as a legally binding record of a transaction and includes essential details like the seller's information, buyer's details, description of goods or services, quantities, prices, payment terms, and due date.
- In the UK, invoices are crucial for:
- Tax purposes: HMRC requires businesses to keep invoices for at least 6 years
- VAT claims: VAT-registered businesses need valid VAT invoices to reclaim VAT
- Legal protection: Invoices serve as evidence of agreed transactions
- Cash flow management: Professional invoicing helps you get paid faster
A valid UK invoice must include your business name and address, customer details, unique invoice number, date, description of goods/services, and the amount due. If VAT-registered, you must also include your VAT number and the VAT amount.
Examples
A freelance designer sends an invoice after completing a logo project
A plumber invoices for emergency repairs after fixing a leak
A consultant bills for monthly advisory services
Related Terms
Proforma Invoice
A proforma invoice is a preliminary bill sent before goods are delivered or services are completed, showing the estimated costs and terms.
Credit Note
A credit note is a document issued by a seller to reduce the amount a buyer owes, typically for returned goods, overcharges, or discounts.
Purchase Order
A purchase order (PO) is a commercial document issued by a buyer to a seller, authorizing a purchase and specifying the items, quantities, and agreed prices.
Remittance Advice
A remittance advice is a document sent by a payer to inform the recipient which invoices are being paid by a specific payment.
Put This Into Practice
Create professional invoices with Experi. Our software handles invoice and more - so you can focus on your business.