As a freelancer you are your own finance department, so invoice software should save you time on three jobs: sending a clear invoice quickly, chasing late payers politely, and keeping records that make your Self Assessment painless. This guide is written for freelancers and sole traders. If you run a larger business, see our guide to invoicing software for UK small businesses.
What a freelancer's invoice should show
- Your name or trading name and your address
- Your client's name and address
- A unique invoice number, and the invoice date
- A payment due date and your payment terms
- A description of the work and the amount
- Your payment details
- Your VAT number and the VAT charged, if you are registered. Registration becomes compulsory once your taxable turnover passes £90,000 in any 12 months
Features worth paying for
- Fast invoice creation from saved templates and client details
- Deposits and stage payments, useful for larger projects
- Automatic reminders before and after the due date
- Online payment links on the invoice itself
- Expense capture, so receipts are stored for your tax return
- Recurring invoices for retainers
- Multi-currency support if you have overseas clients
- Reports and export, such as income by client, that your accountant can use
Free or paid
Free plans for freelancers usually cap the number of clients or invoices, and may leave out reminders and recurring invoices, so check the current limits on the provider's own page. Many freelancers outgrow a free tier once they want reminders, deposits or a bank feed. At that point it can be cheaper to use an accounting package that includes invoicing than to pay for a separate app.
Tax and records
As a sole trader you record your income and expenses and report them on Self Assessment. Keep your records for at least five years after the 31 January submission deadline for the tax year. If your income is above £50,000, Making Tax Digital for Income Tax now requires digital records and quarterly updates, and the threshold falls to £30,000 in April 2027 and £20,000 in April 2028, so choose software that can grow into it. Our guide to small business accounting software with payroll explains the options.
Getting paid on time
Test before you commit
Send two or three real invoices through the trial, including one with expenses or a deposit. Check how the reminder emails read, whether the invoice looks professional on a phone, and whether your data exports in a format your accountant can use. Count what you will actually pay at your volume of invoices once any free period ends, and make sure the software can handle VAT if your turnover is heading towards the threshold. Moving later is possible but fiddly, so it is worth testing properly now.
When a business customer pays you late, the Late Payment of Commercial Debts Act lets you claim statutory interest of 8% a year above the Bank of England base rate, plus fixed compensation of £40, £70 or £100 per invoice depending on its size. Put payment terms on every invoice and in your contract, and ask new clients for a deposit. If you bill by the hour, track your time with time tracking software for small business.