When I first started my limited company, I thought invoicing was the easy bit. Just slap together a Word doc, list what you did, and email it to the client, right? Wrong. It didn’t take long to realise that getting paid on time has everything to do with how you invoice. One vague line, one missing detail, or an awkward-looking document, and suddenly your client is “waiting for finance to approve it.”
I’ve learned, sometimes the hard way, that invoicing isn’t just admin. It’s a key part of your brand, your legal responsibilities, and your cash flow strategy. Whether you’re a brand-new contractor or you’ve been flying solo for years, this guide will walk you through exactly how to create a proper, professional invoice that gets noticed and gets paid.
What Is an Invoice and Why It’s So Important
An invoice is a formal request for payment. But it’s more than just a billing note—it’s a legally binding document that shows what services you delivered, when, and how much the client owes you. It’s also essential for your company’s accounting records and for staying on the right side of HMRC.
If your invoice doesn’t meet legal standards, a client might be within their rights to delay or even withhold payment. That’s why including the correct information, and formatting it clearly, isn’t optional. It’s part of running your limited company properly.
Key Info Every Invoice Must Include (UK Rules)
Alright, let’s get into the nitty-gritty. If you’re invoicing through your UK limited company, here’s what needs to be on that invoice, every time:
- Your company’s full legal name (as registered with Companies House)
- Your company registration number
- Company’s registered office address
- Your client’s business name and address
- Unique invoice number (this must be sequential)
- Invoice date and due date
- A clear description of the services provided
- The total amount due
- Breakdown of any VAT, if you’re VAT registered
- Your VAT registration number, if applicable
- Payment terms (e.g. “Due within 14 days” or “Net 30”)
- Bank account or payment details
Even if you’re not VAT registered, you still need to show gross amounts and clearly state that you are not VAT registered.
Step-by-Step: How I Create Invoices for ContractorPal Ltd
Let me walk you through how I personally create invoices, because theory is great, but real-life examples are better.
For ContractorPal Ltd, I use FreeAgent (bundled with my accountant’s package), but before that I used Word. The format’s the same either way.
Here’s a simplified version of what my invoice looks like:
ContractorPal Ltd
123 Freelance Road
London, UK
Company No: 12345678
VAT No: GB987654321 (if applicable)
Invoice To:
XYZ Consulting Ltd
1 Corporate Plaza
Manchester, UK
Invoice Number: CP-2025-006
Date: 1 April 2025
Due Date: 15 April 2025
Payment Terms: 14 days
| Description | Quantity | Rate | Total |
|---|---|---|---|
| Consulting Services: March 2025 | 1 | £2,000 | £2,000 |
Subtotal: £2,000
VAT @ 20%: £400 (if VAT registered)
Total Due: £2,400
Please make payment to:
Bank: Starling Bank
Account Name: ContractorPal Ltd
Sort Code: 60-83-71
Account Number: 12345678
Notes: Thank you for your business!
This layout is clear, complete, and client-friendly. Most importantly, it gets paid quickly.
Should You Use Software or Do It Manually?
You’ve got two options: manual or automated.
If you’re just starting out, Word or Excel can get the job done. There are loads of free templates online (including from gov.uk). But as your business grows, consider using accounting software like FreeAgent, Xero, or QuickBooks. These tools generate invoices automatically, track who’s paid, and even send reminders.
For me, switching to software was a game changer. No more worrying about invoice numbers, tax calculations, or chasing payments. It all runs in the background while I focus on delivering work.
Setting Payment Terms That Work for You
When I began contracting, I made the rookie mistake of not including payment terms. One client took 115 days to pay, and I had no leg to stand on. Now, every invoice says “Payment due within 14 days of invoice date”.
Common payment terms include:
- Net 7 – Payment due in 7 days
- Net 14 or 15 – Payment due in 14 or 15 days
- Net 30 – Payment due in 30 days
Be clear and firm. If you want to offer flexibility, that’s fine—but make it your choice, not your client’s assumption.
Charging VAT: When and How to Do It Right
Now let’s talk about VAT, because whether you’re registered or not, it affects how your invoice should look.
First things first: you only need to charge VAT if your business is VAT registered. As of the 2025/26 tax year, the threshold is still £90,000 in taxable turnover over any 12-month period. If you’re under that, you’re not obliged to register (though some contractors choose to voluntarily).
If you are VAT registered, your invoice must include:
- The VAT rate (usually 20%)
- The amount of VAT charged
- Your VAT registration number
- A clear breakdown of net, VAT, and gross totals
And if you’re using the Flat Rate Scheme, you still show 20% VAT to the client, but you pay a reduced percentage to HMRC based on your business type. Be careful though, clients don’t care how much you pay HMRC, they just want to see standard VAT on the invoice.
If you’re not VAT registered, you must not include VAT or mention it in your invoice totals. You should clearly state:
“This business is not VAT registered. No VAT has been charged.”
This avoids confusion and shows your client everything’s above board.
What If You’re Dealing with International Clients?
If you’re contracting for overseas clients, things get a little trickier, but still totally manageable.
When invoicing businesses outside the UK, you generally don’t charge UK VAT, but you must include your company’s VAT registration number if you’re registered. For EU clients, you’ll also need the client’s VAT number and may need to note that the service is outside the scope of UK VAT or subject to reverse charge (depending on whether you’re selling goods or services).
I’ve done work for US and EU companies, and each time I include the client’s business address, country, and add a note like:
“This invoice is for B2B services provided to a company outside the UK and is not subject to UK VAT.”
Currency-wise, always agree on the invoice currency in advance. I usually quote in GBP unless otherwise requested, and if you’re billing in USD or EUR, make sure your invoice software handles currency conversion, or use a reliable exchange rate on the day of invoicing.
How to Send Invoices (and Track Them Like a Hawk)
Once your invoice is ready, don’t just hit “send” and forget about it. How you send it can affect how fast you get paid.
Always use PDF format, it’s cleaner, more secure, and universally compatible. Never send editable Word files.
Use a clear subject line like:
“ContractorPal Ltd – Invoice CP-2025-006 (Due 15 April)”
Include a short, polite message in the email body. Something like:
Hi [Client Name],
Please find attached our invoice for services rendered in March. Payment is due by 15 April. Let me know if you need any further details. Many thanks!
Kind regards,
[Your Name]
Then… track it. If you’re using software like FreeAgent or Xero, they’ll let you know if the invoice has been viewed. If not, use email tracking tools or follow up manually a few days before the due date.
Trust me, chasing payments is never fun. But the earlier you follow up, the less awkward it becomes.
What to Do If a Client Doesn’t Pay On Time
Even with the best invoice in the world, some clients drag their feet. I’ve had it happen more times than I care to count.
Here’s my process:
- Friendly reminder – A short email one day after the due date. Sometimes it’s just been missed.
- Firm follow-up – After 5–7 days, I resend the invoice with a note: “This invoice is now overdue. Please advise on payment status.”
- Late payment fees – You’re legally entitled to add statutory interest (8% plus base rate) and late payment compensation (£40–£100 depending on the invoice size) under the Late Payment of Commercial Debts Regulations. Check our Late Payment Calculator so see how much you can get for late payments.
I rarely enforce this unless the client is completely ghosting me, but knowing it’s there gives me leverage.
If things really go sideways, you can use services like Money Claim Online, debt collection agencies, or even invoice factoring, though I’ve never needed to go that far.
Should You Include Expenses or Bill Separately?
If you’re incurring expenses on a job (like travel, materials, or software), include them on your invoice only if they’ve been pre-approved by the client.
Some clients prefer separate expense reports, others want it on the same invoice. Just make sure:
- You clearly list what each expense was
- Provide receipts if requested
- Clarify whether VAT applies to those items
I usually add a section called “Reimbursable Expenses” under the main service lines, with each item and amount listed. It keeps things clean and transparent.
The Psychology of Invoicing: Looking Professional Pays Off
Here’s something people don’t talk about enough: how your invoice looks affects how seriously it’s taken. A sloppy invoice with typos, weird formatting, or missing info makes it feel optional. A clean, well-branded one tells your client, “This is a legit business, you need to pay this.”
Use your company logo. Use consistent fonts. Align everything neatly. Include your business email and phone number in the footer. It’s subtle, but it builds trust.
And always double-check before sending. A wrong total or duplicate invoice number can delay payment by days—or weeks.
Mistakes I’ve Made with Invoicing (So You Don’t Have To)
Oh boy, where do I start? I’ve made almost every invoicing mistake you can imagine:
- Forgetting to include the invoice date
- Reusing an old invoice number
- Spelling the client’s company name wrong
- Using vague descriptions like “Consulting – March” (no detail)
- Not attaching the invoice to the email 😬
- Forgetting to include bank details (yep, that happened once)
Each one led to delays. Some caused friction with clients. All could have been avoided with a 30-second check.
Now, I’ve got a checklist I run through before sending any invoice. It’s simple, but it saves me so much time and stress.
FAQs: Invoicing as a Limited Company Contractor
1. Can I invoice as a limited company without being VAT registered?
Yes, just leave out the VAT line and state that you’re not VAT registered.
2. Do I need to include my company number?
Yes, it’s a legal requirement for limited company invoices.
3. How often should I invoice clients?
Depends on your agreement—some prefer monthly, others per milestone or project completion.
4. Should I ask for a PO (purchase order) number?
If your client uses them, definitely include it on your invoice—it speeds up processing.
5. What file format should I send invoices in?
PDF is the gold standard—professional, secure, and uneditable.
6. How do I number my invoices?
Use a sequential system like INV-2025-001, INV-2025-002, and so on. It helps with tracking and compliance.
Invoicing Is Part of Your Brand
When you’re running your own limited company, invoicing isn’t just about getting paid, it’s part of how you present yourself to the world. A well-crafted invoice shows you’re professional, organised, and serious about your work. It builds confidence with clients and reduces friction when it comes time to settle up.
So take it seriously. Automate what you can. Format it properly. Track every invoice. And remember: every pound you earn starts with a good invoice.