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Ask any business person, ‘what is the most important business document?’ Unquestionably the answer will be the invoice because without it you won’t get paid for any credit sales that you make. The invoice is a critical component to running any business as it has a major impact on your cash flow and also helps record your VAT.

Yet, many small business owners struggle with raising one. So, what are the details that you must include to make an invoice the fundamental accounting document that it is?

Let’s take a look. Sure, accounting software or a dedicated invoicing application will take care of these automatically but it is important that you understand what they represent.

1. Date

The date that the invoice is issued must be included. This is fairly simple and obvious, just remember to include it if you’re not using a software solution.

2. A sequential number

Also known as the invoice number, this allows for the document to be uniquely identified from other documents in the accounting process. Keeping track of invoice numbers is essential for well managed business finances.

3. Details of the person who supplied the goods or services

The full name, address and registration number of the supplier. If you’re the one raising the invoice for your customer, these are your details.

4. Details of the person who received the goods or services

The full name and address of the person to whom the goods were supplied. If you are raising an invoice, these are your customers details.

5. VAT number of the person whom received the goods or service

If there is a case of reverse charge VAT, you must include your customers VAT number. Also, if you are supplying goods to a customer who is registered for VAT in another country, you must include their VAT number on your invoice.

6. Nature and quantity of goods supplied or nature and extent of services supplied

Remember to include a description of each individual type of good or service you have supplied as part of the transaction. When you use accounting software, the items that you set up as your products will fill this entry easily for you.

In the case of goods, you must specify what quantity of each item your are supplying. Services can be harder to quantify, so remember to specify the extent of the service provided.

7. The date on which the goods or services were supplied

The date which you supplied the goods may differ from the date that the invoice was issued. Therefore we must include this date for accurate record keeping, even if it does end up being the same as the invoice date for a number of transactions.

8. Specifics of goods or services supplied

There are a number of details we must include on invoices about the individual goods and services. The unit price of each individual good or service must be included on our invoices. Any discounts or price reductions that have not been included in the unit price must accompany this.

There are many different VAT rates which apply to different goods and services, depending on what industry you operate in. For that reason, the VAT rate for each individual good or service is to be included. Finally, we must include the amount that we are charging exclusive of VAT, which is what you may know as the subtotal before VAT.

9. VAT payable on goods and/or service

Of course, the total amount of VAT that will be charged for the transaction needs to be on the invoice. This will help us to keep track of all of our VAT obligations to Revenue when it comes time to make our VAT returns and payments.

So, these are the elements that you must include on your invoice, especially if you are not using a dedicated accounting or invoicing software, which will include these details automatically. However, here at Big Red Cloud we encourage you to make sure that you include your payment terms and bank details too. Doing this can help improve your cash flow, by making it easier for your customer to pay you.

Once you have raised your invoice, it’s time to send it to your customer so that you can get paid. There are benefits to invoicing online over sending a hard copy via traditional mail, but remember, whatever sending method you use, you must include these items.

 

Marc O'Dwyer

After completing a Graduate program in Marketing, Marc’s impressive sales career began at Allied Irish Banks, Pitney Bowes and Panasonic where he received numerous Irish and European sales performance awards and consistently exceeded targets and expectations. In 1992, Marc’s entrepreneurial spirit led him to set up his own business, Irish International Sales (IIS). Initially, this company was a reseller for Take 5 Accounts and Payroll software. Within four years, IIS became the largest reseller of Take 5 in Ireland, acquiring four other Take 5 resellers. He also found time to set up two mobile phone shops under the Cellular World brand and a web design company offering website design services for small businesses. In 2001, he bought the majority share in a small Irish software business, Big Red Book. At that time, the company was losing money. The company became profitable within two months, and Marc then acquired a payroll company to compliment Big Red Books Accounting products. In 2003, IIS were appointed as Channel Partners with SAP for their new SME product, SAP Business One. Marc sold his Take 5 business and concentrated on developing this new market for SAP As a result, by 2007, IIS was recognised as the largest Channel Partner for SAP in EMEA (Europe Middle East and Africa). In 2008, the IIS Sales Manager bought the Company from Marc in an MBO. He launched Big red cloud in June 2012, the online version of big red book, to date the company successfully converts 59% of trials into sales and the number of customers is growing rapidly. Marc continues to run both Big Red Book and Big Red Cloud which now support 75,000 businesses. He is a very keen sportsman, having played rugby for 20 years, represented Leinster at under 16 and under 20 levels, and league squash with Fitzwilliam Lawn Tennis Club for 10 years. Marc has competed in 11 Marathons, including the London and Boston Marathons, and has completed several Triathlons and Half Ironman races. He has also completed six Ironman Races in Austria(x2), Frankfurt (Germany), Nice (France) , Mallorca (Spain) and Copenhagen (Denmark)

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