The best invoicing software for a UK small business is the one that produces a compliant invoice in a minute and chases the late ones for you. Most of the value sits in those two jobs, so judge any invoicing app for small business use against them before you look at templates or branding.
What a UK invoice has to include
If you are VAT-registered, a VAT invoice must show a unique sequential number, your business name and address, your VAT number, the invoice date, the customer's name and address, a description of what you supplied, the price and VAT rate for each item, the total before VAT, the total VAT and the total payable. Your software should enforce these fields rather than leave them to memory. GOV.UK sets out the rules on what a VAT invoice must include.
Getting paid: the Late Payment Act
Under the Late Payment of Commercial Debts (Interest) Act 1998, a business that is paid late by another business can claim statutory interest at 8% a year above the Bank of England base rate, plus a fixed sum for each overdue invoice. This applies even if your contract doesn't mention it, though not to consumers.
| Size of the overdue debt | Fixed compensation per invoice |
|---|---|
| Under £1,000 | £40 |
| £1,000 to £9,999.99 | £70 |
| £10,000 or more | £100 |
As an illustration, assume a base rate of 4%, so the interest rate is 12% a year. A £2,000 invoice paid 30 days late would carry about £19.73 of interest plus £70 compensation. The debt includes VAT, so a net £950 invoice is £1,140 with VAT and falls in the £70 band. Good software lets you add late-payment wording to your terms and send reminders on a schedule.
Quoting and invoicing software: features that save time
- Quote to invoice in one click. Quoting and invoicing software should turn an accepted quote into an invoice without re-typing
- Recurring invoices. For retainers and subscriptions, with automatic sending
- Automatic reminders. Polite chasers before and after the due date, so you aren't doing it by hand
- Online payment links. A card or bank-transfer link on the invoice shortens the time to payment
- VAT and Making Tax Digital. Correct VAT rates, and a clean hand-off to your accounts
Free plans, and small versus medium business
Invoicing software for small business free plans usually limit the number of clients, invoices or users each month, and may add the provider's branding. Check the current limits on the provider's own page. A free plan is fine for a sole trader sending a few invoices; once you need recurring invoices or payment links, you will probably be on a paid tier.
Invoicing software for medium business needs more: several users with different permissions, approval steps, purchase orders, multiple currencies and a proper link to your accounting system. At that size, invoicing is usually a module of your accounts package rather than a separate app.
Choosing
- Send three real invoices through the trial, including one with VAT.
- Check the reminder emails read the way you would write them.
- Confirm invoices export to your accounts without re-keying.
- Make sure you can export your full invoice history if you leave.
For how invoicing fits with your books, see small business accounting software with payroll. If you bill by the hour, pair it with time tracking software for small business. Freelancers can also read our guide to invoice software for freelancers.