Invoicing software for UK small businesses

Invoicing software does three things a Word or Excel template cannot: it keeps the numbering unbroken, it knows which invoices are still unpaid, and it puts every sale into the accounts at the moment you send it. For a UK small business that means fewer errors on the invoice itself, shorter waits for payment and no second round of typing at VAT or year-end time. This page explains what to look for and shows how invoicing works in Nexbal, an AI accounting platform now launching in the UK.

Template, invoice generator or invoicing software?

A template is fine for a handful of invoices a year, and our free invoice generator is quicker still. The case for software starts when you invoice every week, because by then the real work is not producing the document. It is knowing who has paid.

The invoicing cycle, step by step

1. Quote

For anything larger than a routine job, a written quote fixes the price and scope before work starts. Good software turns an accepted quote into the invoice so nothing is retyped. See quotes, estimates and deposits for when a quote binds you.

2. Invoice

The invoice has to contain what the law requires. GOV.UK lists what an invoice must include: a unique identification number, your business name and address, the customer’s name and address, a clear description of what you are charging for, the supply date, the invoice date, the amount charged, VAT if applicable and the total owed. A limited company adds its full registered name; a VAT-registered business must issue a proper VAT invoice showing its VAT number, the rate and the VAT amount.

Software should hold your details, the customer’s details and your standard items, so each new invoice is a matter of choosing the customer and the lines.

3. Send

Email with the PDF attached is the norm for UK small businesses. Send the invoice on the day the work is finished: every day of delay at your end is added to the customer’s payment terms.

4. Remind

Most late invoices are not disputes. They are forgotten, lost or waiting for someone to approve them. A polite reminder shortly after the due date clears the majority. Software that lists overdue invoices and lets you send the reminder from the same place makes this a five-minute weekly job; our guide to the credit control routine gives a timetable and wording.

5. Correct with a credit note

A sent invoice should never be edited or deleted. If the price, quantity or customer was wrong, issue a credit note that refers to the original, then a new invoice. That keeps your numbering complete and the VAT record straight. See what a credit note is.

6. Match the payment

The cycle ends when the money arrives and is set against the invoice. In Nexbal you upload the bank statement PDF; lines the AI can match are posted and the rest are listed for you to review, so the list of unpaid invoices stays true.

Send your next invoice from Nexbal. Join the free 30-day beta.

Your rights when a customer pays late

The software sets the due date; the law sets what happens after it. For business-to-business sales in the UK:

• If no terms are agreed, payment is late 30 days after the customer gets the invoice, or after delivery of the goods or service if that is later.
• You can charge statutory interest of 8% plus the Bank of England base rate on the overdue amount.
• You can also claim a fixed sum for the cost of recovering the debt, which depends on the size of the invoice.

The rules and the current base rate are set out on GOV.UK under late commercial payments.

Worked example

An invoice for £2,000 is 45 days overdue. Assume, for illustration only, a base rate of 4%, making the statutory rate 12% a year:

Few small businesses charge it on a first late payment, but stating your right to do so in the terms on the invoice changes how quickly some customers pay. Late payment penalties covers how to claim.

Invoicing in a foreign currency

If you bill customers abroad in euros or dollars, the invoice is in their currency but your books are in sterling. Two things to check:

1. The exchange rate used for the books. Nexbal converts foreign currency invoices at the daily rate published by the European Central Bank.
2. VAT invoices. Where the supply takes place in the UK and VAT is due, a foreign currency VAT invoice must also show the total VAT payable in sterling. Agree with your accountant which rate to use for that figure.

When the customer pays, the sterling value on the day usually differs from the value on the invoice date. That difference is an exchange gain or loss, explained in foreign currency invoices.

What to look for when you compare

• Speed of a normal invoice. Time yourself raising one for an existing customer.
• Numbering you cannot break. Gaps and duplicates are the first thing an inspector notices; see invoice number sequences and gaps.
• Reminders and credit notes built in, not left to your email and memory.
• Time and projects, if you bill by the hour: hours recorded on a timesheet should reach the invoice without a spreadsheet in between.
• One system or two. A stand-alone invoicing tool still leaves purchases, the bank and the year end to be done elsewhere. Invoicing inside an accounting system records the sale once.
• Price for what you use. Compare the plan you would need rather than the cheapest one advertised. Nexbal’s plans are on the pricing page.

Electronic invoicing in structured formats is also on the UK agenda; our guide to preparing for UK e-invoicing follows what is planned.

Invoicing in Nexbal

Nexbal is launching in the UK as a beta, free for 30 days. For invoicing you get:

• Quotes, invoices, credit notes and reminders sent as PDFs by email
• Sterling or foreign currencies, converted at daily ECB rates
• Projects and timesheets, so billable time is recorded where the invoice is raised
• Every invoice in the accounts as soon as it is sent, with reports that include margin and liquidity
• Receipts and bank statements handled in the same place, with AI-prefilled entries that you approve

Join the beta and send your first invoice today.