Invoicing 101 Presentation Today, I’m going to talk about one of the most important aspects of your business finances, invoicing, how we get cash into our business. Cash is the life blood of our business and without it we can’t keep the lights on for long. Now I know the words bookkeeping and invoicing can trigger some pretty negative reactions but bear with me, I swear it can be fun and even help to grow your business. So let’s just talk about some of the things that challenge us as small business owners when it comes to invoicing. Time-consuming: Creating and sending invoices can be a timeconsuming task, especially for small business owners who are already stretched thin with other responsibilities. Difficulty tracking payments: find it difficult to keep track of which invoices have been paid and which are still outstanding. Late payments: Late payments can cause cash flow problems for small business owners. It can be difficult to manage finances when payments are not coming in on time. Difficulty calculating taxes: How to calculate taxes correctly, which can lead to errors on invoices and potential legal issues. Difficulty creating professional-looking invoices: may lack the design skills or resources to create professional-looking invoices. Difficulty tracking sales: Small business owners may find it difficult to track their sales and monitor the performance of their business.

Difficulty keeping records: Many small business owners may find it hard to keep accurate records of their finances and sales, which can lead to errors in accounting and legal issues. When you are not on top of your finances, it can feel overwhelming and stressful. We can feel Anxiety: Not knowing how much money you have coming in and going out can cause feelings of anxiety and uncertainty. Frustration: Difficulty keeping track of payments and invoices can lead to frustration, especially if it is causing cash flow issues. Embarrassment: Being late on payments or not having accurate records can cause feelings of embarrassment, especially if it leads to confrontations with customers or suppliers. Overwhelmed: Not having a clear understanding of your finances can make it difficult to make important business decisions, leaving you feeling overwhelmed. Loss of control: When you're not on top of your finances, it can feel like you're losing control of your business and your life. Fear: Fear of not being able to pay bills, not being able to grow your business, or even worse, going bankrupt. It's important to note that feeling this way is normal and that by addressing these issues and getting organized, you can regain control of your finances and reduce stress and uncertainty. So let’s get into it and talk about invoicing, what should go on an invoice, how and when to raise them and some tips to ensure you are paid on time.

What is an invoice An invoice is a document that you send to your customers to request payment for goods or services that you have provided. It's a legal

document that acts as proof of purchase and should include all the necessary information for your customer to pay you.

What should be on an invoice? Now, let's talk about the key components of an invoice. Every invoice should include the following information: • • • • • • •

Your business name and contact information The customer's name and contact information A unique invoice number The date of the invoice A clear description of the goods or services provided The total amount due, including any taxes and discounts Payment terms, including when payment is due and any late payment fees • Your bank details for payment • It's also a good idea to include your VAT number and the VAT amount on your invoice if you're registered for VAT.

Calculating Taxes Calculating taxes to be added to an invoice can seem complicated, but it's actually quite simple once you understand the basics. Determine your tax rate: The first step is to determine the tax rate that applies to your goods or services. In the UK, the standard VAT rate is currently 20%, but there are also reduced rates for certain goods and services. Calculate the tax amount: Once you know the tax rate, you can calculate the tax amount by multiplying the total amount of the invoice (amount before tax) by the tax rate. For example, if your invoice total is £100 and the tax rate is 20%, the tax amount would be £20 (£100 x 0.20 = £20) Add the tax amount to the total: After you have calculated the tax amount, you can add it to the total amount of the invoice to get the

final amount due. In the above example, the final amount due would be £120 (£100 + £20 = £120) Now, let's say you want to work backwards to show the gross amount net. Say you want to market a nice round number and not talk about VAT. To calculate the gross amount net, you need to do the following steps: Take the total amount you want to charge including VAT. Divide the total amount by 1 plus the tax rate For example, if you have an invoice for £120 and the tax rate is 20%, the net amount would be £100. To calculate this, you would divide £120 by 1 plus 0.2. = 1.2. The net amount before taxes would be £100

How to deliver an invoice In the UK, there is no specific requirement for how or when invoices must be delivered to customers. However, there are a few best practices that you should follow to ensure timely payment and to avoid disputes: Send invoices promptly: It's a good idea to send invoices as soon as the goods or services have been provided. This will help ensure that your customers receive the invoice while the transaction is still fresh in their minds and they are more likely to pay on time. Send invoices in a format that can be easily understood and retained: It's a good idea to send invoices in a format that can be easily understood and retained. For example, you can send an invoice as a PDF attachment in an email, or as a hard copy by post. Send invoices to the right person: Make sure that you send invoices to the right person in the customer's organization. This will help

ensure that the invoice is received by the right person and is more likely to be paid on time.

Tools available for invoicing Creating and sending invoices can be time-consuming, but it's important to stay on top of it to ensure timely payment. There are various invoicing software and online tools available to help you automate the process and keep track of your finances. Accounting software: Some accounting software, such as QuickBooks and Xero, include invoicing features. These programs can help you manage your business finances and keep track of invoices all in one place. Microsoft Excel or Google Sheets: For simple invoicing you can use excel or sheets to create an invoice template and use it every time you need to send an invoice. Ultimately, the choice will depend on your business needs, budget, and personal preferences. Some of the above tools offer free trials or free basic plan, which you can use to test them before you decide to purchase a paid plan.

How to address late payment It's important to follow up on any overdue invoices. It's a good idea to set up a system for tracking and following up on overdue invoices. If your customers are consistently late in paying their invoices, it can affect your cash flow and make it difficult to manage your business finances. tips I can give you that will greatly reduce the risk of overdue payments and improve your cash flow? Here are a few things you can do to address late payments: Set clear payment terms: Include a payment deadline on your invoices and make sure your customers are aware of your payment terms before they agree to purchase your goods or services.

Follow up on overdue invoices: Set up a system for tracking and following up on overdue invoices. This could include sending reminders or making phone calls to customers who haven't paid on time. Charge late payment fees: In the UK, you can charge interest on late payments, at a rate of 8% plus the Bank of England base rate. The interest will start to accrue on the day after the invoice due date. Send a final demand letter: If the customer still hasn't paid, you can send a final demand letter. This should set out the amount due, the fact that interest is accruing and that you reserve the right to take legal action if the debt is not paid. Consider legal action: If all other efforts to collect payment have failed, you may need to consider taking legal action to recover the debt. This can include issuing a County Court Judgment (CCJ) or using a debt collection agency. Be proactive: It's important to be proactive in managing your finances, review your credit control procedures, and set up a system for tracking and following up on overdue invoices. It's important to remember that you should always act in a professional and reasonable manner when dealing with late payments. The key is to strike a balance between being firm and fair, and to always keep good records of all correspondence and actions taken in relation to the late payment.

How long should I keep invoices for? In the UK, businesses are required to keep records of their sales and purchases, including invoices, for a certain period of time. The length of time you need to keep records will depend on the type of record and whether you are registered for VAT or not. VAT registered businesses: If you are registered for VAT, you must keep VAT records and invoices for a period of six years from the end

of the accounting period to which they relate. This is because HM Revenue and Customs (HMRC) can carry out VAT inspections and may ask to see records from the past six years. Non-VAT registered businesses: If you are not registered for VAT, you must keep records and invoices for a period of five years It is also worth noting that you should keep any electronic records in a format that can be easily read and understood, as well as being backed up regularly in case of data loss.

Ok that’s all the training you ever wanted to hear isn’t it. If you have any questions please pop them in the chat. I do have an offer for you if your still feeling confused. I have an invoicing and tracking spreadsheet bundle that I can offer to you for just £7 It includes:

Sales pitch for offer bundle Invoice template: An invoice template can be used to create professional-looking invoices that include all the necessary information. This template can include fields for your business information, the customer's information, a unique invoice number, the date, a description of the goods or services provided, the total amount due, and your payment terms. Sales tracking template: A sales tracking template can be used to track the sales you've made over a certain period of time. This can include information such as the date of the sale, the customer's name, the products or services sold, and the total amount of the sale. Tax calculation template: A tax calculation template can be used to calculate taxes that need to be added to an invoice. This can include fields for the invoice total, the tax rate, and the tax amount.

Late payment tracking template: A late payment tracking template can be used to track invoices that are overdue. This can include information such as the invoice number, the customer's name, the due date, and the status of the invoice (paid or unpaid). If you are interested in the bundle drop me a comment below and I can send over the payment and download links.