Business owners need to issue invoices regularly. Being a sole trader you are responsible for every aspect of your business operation. Creating a beautifully designed invoice is time-consuming and tedious. You need to mention the price and service details and need to clarify the payment terms as well. Invoice is a vital financial tool that requests customers to settle down the payment. You must ensure that the invoice is filled with all the necessary details.
Being a sole trader you are liable to represent all the details regarding the business transaction accurately in this commercial instrument. Nowadays, you can opt for invoice templates from various online software to make your task easy. In case you are perplexed about this entire process, worry not! Here we are with invoicing guiding for you. Check this out for more information!
Why should a sole trader use a professional invoice?
The requirement list doesn’t remain the same for every customer, and therefore their choices vary. Satisfying the demands of the clients is the essential part of business operation for a sole trader. An invoice reflects your professionalism towards your work, and therefore, you must prepare a professional invoice to hold up your reputation among your clients. The invoices for sole traders should be flexible and understandable and should also be less time-consuming. Clearly outline the work done and the amount charged to make it easy to use for your customers.
What to be added in sole trader invoices?
Your job completion is followed by the payment process. But what proceeds your payment forward? It is the invoice created and issued by you. You may think that it is all about entering the price and job list with a date and signature in an invoice. Well no! It’s not complex, but it is not that simple. Invoice binds legally both parties and authorizes the business transaction. Therefore, it is essential that being a sole trader you must prepare it efficiently to avoid any flaws.
Check out the below list to know what vital information must be included in an invoice of a sole trader.
- Though the client is aware of this financial document, adding a header with the word ‘Invoice’ emphasizes more on its purpose.
- Now add the following data, which are absolutely necessary for a professional invoice:
- Invoice number
- Invoice date
- Clients as well as your business name
- Business address or communicating address for both yours as well as clients.
- Add the phone number, email address, fax number, and other communicating details of your and your client’s as well.
- Next comes, your business registration number. Do not forget to add this number if your business is registered as this authenticates your business identity.
- A job list is a must-have part of an invoice, be it for a sole trader, or any other business enterprise. Add the description of the product delivered or services offered for a clear understanding.
- Also, mention the prices for the corresponding services/products offered to the clients.
- The date of products should also be mentioned in the invoice.
- Do not forget to mention the tax details. As some of the goods or services provided are liable to taxes.
There is some additional information that often goes with the above list. Check the below section to know more:
Mention your payment terms and conditions in the invoice so that your clients are aware of your policies. The payment terms include:
- Payment due date: Mention the due date for payment separately so that it is clearly visible to avoid chances of missing out on this.
- Payment method: Try keeping it as much flexible as possible to avoid payment delays from the customer’s end.
- Late fee policy: Clearly state the amount that would be added for late payment.
- Early payment discount: Being a sole trader you must keep your cash flow steady and smooth. You can introduce a rebate for a certain amount of money to your clients if they pay before the due date. This way you can avoid payment delays and maintain a strong bond with your clients.
- Bank details: Do not miss out on mentioning the bank details depending upon the payment method you mention.
You can add images with your invoice to show your customers what their products should actually look like.
Note: This is specifically for product-based businesses, and this is not strictly necessary.
If you wish to add any other additional documents you can send them along with the invoice.
Note: Not necessary unless it is highly significant and relevant as well as requested by clients.
How to prepare a sole trader invoice?
Invoice is something that is a significant part of business operation for both beginners as well as seasoned professionals. Sometimes even experienced personnel feels it is complex and troublesome to prepare an invoice properly. You can opt for customized or ready-made templates from online software. But you choose to do it yourself with a touch of creativity in it, make sure you follow the below guidelines. There are various formats available that you can follow. Make sure whatever formats you follow the information should be accurate and should not mislead your customers.
- Create a header and add the word invoice at the top.
- On the right side of the header, mention your business name, address, and contact details.
- Next comes, the contact details of the customer, which to be added on the left side of the invoice.
- Followed by the above details, mention the invoice number, issue date, and the due date of payment. Note: Generate a unique invoice number that makes it easier for you to refer to it in the future.
- Add the service or product list in a tabular format. Mention the price or the service rate also. At the bottom of the table mention the subtotal amount, tax amount (if applicable), and the total due amount. Note: According to various invoice formats, the total amount is mentioned on the left side with a bigger font and in bold, to give it an additional highlight.
- Lastly, mention the payment details at the bottom. Keep a note section to mention additional information. If you have received a deposit from the clients, do mention it in the note.
Few more useful tips for sole trading invoice
Besides the above information, here are some additional tips that can enhance your credibility as a business professional. The invoice represents your brand. Implement these additional tips to boost your business reputation a bit more.
- As a sole trader, your invoice represents your brand. Add your business logo and business name clearly such that it appears boldly.
- There is no harm in sending your invoices promptly. You have completed your assigned job in time, and now it’s time to get paid. Do not take much in sending in invoices to make ways for unnecessary delay in payments.
- Your payment terms should be clearly stated in the invoice so that it is noticeable. Make sure you mention the payment method, in case it is different from what your clients expect or want it to be.
- Your description list should be organized and must contain all the required details that your clients may look for. Mention the services offered and the rates charged for each. Do mention the quantity, in case it is a product.
- Sending your invoice through electronic mail or an automated system can ensure that the invoice is sent immediately after job completion. Moreover, your customer is provided with an original copy of the invoice if you send it through email.
- You can not expect all your clients to be equally punctual and loyal about certain business ethics. So it is always recommendable that you tactfully follow up with your clients. In cases you overdue payments give a polite reminder to your clients through an email or a call, to speed up the process.
What bank information to be included in a sole trading invoice?
The most common payment method for business professionals is bank transfer. Even most of the customers prefer this kind of transfer method as it is deemed safe and easy. You need to mention the following details:
- Full name
- Account name
- Account number
- Invoice number for reference
Add a polite note at the bottom by thanking him in advance for the business transaction. Appreciative words in a friendly and polite tone help to maintain a strong foundation. As a sole trader, you can follow the above guide to create your invoice easily. But if you are looking for a more convenient option, you can opt for Billbooks for your business financial assistance.