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If you sell a customer a product or a service, you need to give them an invoice (bill) by law if both you and the customer are registered for VAT (a business to business transaction). An invoice is not the same as a receipt, which is an acknowledgement of payment.

The invoice must include certain information such as:

• how much the customer needs to pay you
• when the customer must pay you

You and the customer also have certain obligations on payment.

Your invoice must include:

• a unique identification number
• your company name, address and contact information
• the company name and address of the customer you鈥檙e invoicing
• a clear description of what you鈥檙e charging for
• the date the goods or service were provided (supply date)
• the date of the invoice
• the amount(s) being charged
• VAT amount if applicable
• the total amount owed

Sole trader invoices

If you鈥檙e a sole trader, the invoice must also include:

• your name and any business name being used
• an address where any legal documents can be delivered to you if you are using a business name

Limited company invoices

If your company is a limited company, you must include the full company name as it appears on the certificate of incorporation.

If you decide to put names of your directors on your invoices, you must include the names of all directors.

VAT invoices

You must use VAT invoices if you and your customer are VAT registered.

These include more information than non-VAT invoices.

Your right to be paid

You can set your own payment terms, such as discounts for early payment and payment upfront.

Unless you agree a payment date, the customer must pay you within 30 days of getting your invoice or the goods or service.

You can use a statutory demand to formally request payment of what you鈥檙e owed.

Charging interest for late payment

You have the right to charge interest for late payment, but you can choose not to.

Liability for disputed card payments

If a customer asks their credit or debit card issuer to reverse a transaction, they can reclaim the value of the transaction from you. This is known as a 鈥榗hargeback鈥�.

Chargebacks can be made when:

• the purchased item never arrived
• the item wasn鈥檛 as described
• a customer鈥檚 card was used without their permission to purchase the item fraudulently.

You can be charged up to 120 days after the transaction has been debited or from when the goods or services were due to be received.

Minimising chargebacks

If a customer uses their PIN, you鈥檒l only be liable for a chargeback if the goods are faulty or aren鈥檛 as described.

Where you can鈥檛 accept a PIN, a clear signature will help but there is no guarantee against a chargeback.

For card-not-present transactions, such as online sales, the risks of chargeback will be higher.

Regulation

If you want to set up a business that takes a sum of money from a customer every time they use a service, for example, online trading, you may need to be

If customers pay you in large amounts of cash, your business may need to be registered for an anti-money laundering scheme.

Protecting customer data

You must follow the rules on storing customer data to protect their financial information.