Sole Trader - Invoices

Djabonti

Hi everyone
I have recently started my own business, I get my customers through social media. Its a party accessories business and customers tell me what they want to hire via the messaging systems on facebook etc. 
At the moment all terms are discussed like this then I ask for them to pay via bank transfer. The amounts are only small so everyone is happy to do this. I only accept bank transfer. 
Is it a legal requirement for me to issues an invoice for each customer? If not are there any benefits or reasons I should be issuing invoices instead of doing things as I currently am? 

Any advice is warmly appreciated 

Mistral001

An invoice is a list of services or goods provided and a demand for payment and there is no legal requirement to provide one. 

However it is a good idea to provide an invoice or receipt for every purchase for your records in case there is a dispute with the customer.  

Note  there IS a legal requirement for a sole trader to provide the customer with their own name and address.  An invoice or receipt has to have this on it, so if you are not presently providing customers with your name and address, an invoice or receipt will provide a means of providing them with the details they need.

Djabonti

Perfect, thank you for clarifying 

Sandtree

If you were VAT registered then the buyer can legally demand a receipt for their purchases. If you are not VAT registered there is no legal obligation to provide either invoices or receipts but as mentioned above it can be useful to try and avoid future disputes.

emmajhs83

Hi, I'm new to the forum and I'm not sure if I should be posting my query to this thread or creating a new one and just let me know if this is OK for not.

My husband has recently set up a sole trader business (property maintenance) and I do the admin for his business.  All has been going well so far but we've had a bit of trouble with a client and judging how they've been so far I'm predicting that they won't pay willingly so I'm looking for advice if it's the worst case scenario.

The client has been awkward from the very start (quoting, re-quoting a few times to get costs down, hard to get hold of by phone) but they got my husband's contact details from one of his good clients so he felt he couldn't refuse work.  Since he started work they required, they've phoned him a couple of times to say the work hasn't been done to a standard they expected so he's gone back to correct any work.  I've now invoiced the client as we consider it complete and the client hasn't made contact to say otherwise.  The client was present at the time the work was complete and inspected the work and seemed happy with it.  Now, what happens if they don't pay in a reasonable amount of time or if they refuse to pay?  I don't put any terms and conditions on invoices (however I'm now thinking I need to in future) but we'll go along with the standard 30 days and do payment reminders when invoices haven't been paid after a week.  Can I or shall I charge interest after 30 days or can I take the matter to small claims after 30 days?

Sandtree

Better to start your own thread but we are where we are.

You presumably invoice after the work is done and so its too late then to introduce T&Cs, these need to be presented with the quote so they are accepted inline with the quote. Similarly you could consider some form of job completion sheet, this doesnt prevent future problems with the work being raised but adds towards the evidence that it was a job the client accepted as done etc.

You cannot randomly start adding interest to things where you didnt agree that interest would be payable before the job. The exception to this is if you go to court as then you can apply for statutory interest (8%+BOE base rate for B2B contracts) to be added.

Your T&Cs need to include payment terms, many companies get 30 days to pay invoices and some would struggle a little to pay within a week if they've a finance team with an accounts payable function etc. 

Chasers should commence after the payment terms have expired, if its a long payment term a reminder in the later part of the period is acceptable. You need to decide when you go from sending chasers to sending the letter before action and ultimately taking it to court. 

Poor payment can be a sign of a disorganised client and whilst it causes cashflow issues its not necessarily makes them a terrible client. Issuing proceedings on your client is a shore way to make sure you dont get future business/referrals and if the industry is small, word can get around.

You can take the matter to court whenever you like however the court will consider how reasonable you have been when deciding how to award costs. Court is supposed to be the last resort and they expect you to make reasonable attempts before court to settle the matter. If you posted an initial invoice on Monday and issued court proceedings on Wednesday you may well win the case but almost certainly be made to pay the defendants legal costs.

emmajhs83

Thanks for responding.  I shall be including T&Cs in future quotes.  They have paid a deposit (after me issuing a pro forma invoice) which was paid prior to work being carried out so at least we won't potentially lose the full amount.  I wouldn't involve courts until 30 days is up and when no contact has been made by the client.  I will however resend the invoice (which was emailed) to their postal address by recorded delivery.

martindow

emmajhs83 said:

  I will however resend the invoice (which was emailed) to their postal address by recorded delivery.

Signed for quite often does not update as it should after delivery.  It is much better to save a pound, go to a Post Office to send it first class and ask for a (free) certificate of posting.  If you ever need to show that a letter has been sent, courts accept that delivery is assumed two working days after the date of posting.