Invoicing and Taking Payments


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.


Product labelling

You don’t have to show particular information on the label for every kind of product, but if you include it you must be accurate. There are special rules for some products, and for retailers.

Labels must not be misleading about things like:

  • quantity or size
  • the price
  • what it’s made of
  • how, where and when it was made
  • what you say it can do
  • the people or organisations that endorse it

You must include safety information for products that could be dangerous.


Your business sector

You must follow special rules if you manufacture, distribute or sell:


Rules for retailers

If you’re a retailer, you must display:

  • the price of products – this must be in sterling (pounds and pence) and include VAT where applicable
  • the price of a single item (the ‘unit price’) for products that you sell loose
  • metric measures (like kilograms, centimetres or litres) for unit pricing – except for some products (for example, beer is still sold in pints)

Note: If you don’t follow the rules you can be prosecuted. Talk to your local Trading Standards office if you have questions about how to label your products correctly.


What must invoices include?

You must clearly display the word ‘invoice’ on the document. You must also include:

  • a unique identification number
  • your company name, address and contact information
  • the company name and address of the customer you are invoicing
  • a clear description of what you are 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


VAT invoices 

You’ll need to include additional information for VAT invoices.

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


Limited company invoices

If you’re a limited company, the invoice must also include:

  • the full company name as it appears on the certificate of incorporation
  • any business name used in your business
  • an address where any legal documents can be delivered to you if you’re using a business name

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


Sole trader invoices

If you’re a sole trader, the invoice must also include:

  • the trader’s name or any business name being used
  • an address where any legal documents can be delivered to you if you are using a business name


Payment obligations

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’re owed. 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 ‘chargeback’.

Chargebacks can be made when:

  • the purchased item never arrived
  • the item wasn’t as described
  • a customer’s 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 won’t be liable for a chargeback unless the goods aren’t as described or faulty.

Where you cannot 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.



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 authorised by the Financial Services Authority.

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 adhere to data protection rules when collecting personal data.