Errors in your invoice template can have substantial ramifications for your business. Especially if they’re not caught right away and end up affecting a large number of invoices. From getting paid by customers to causing complications at tax filing, incorrect or inaccurate invoices can be a nightmare.
An example comes from one of our users who received an invoice from a supplier. However, the invoice was missing the VAT number. When the user went to contact the supplier to point this out, he also realised that the address, and even the full name of the company had not been included on the invoice.
What he discovered was that this invoice was created using an online invoice template. An invoice template that in fact provided all of the required fields, however, the supplier company failed to fill this information in, making their invoice not only incomplete but possibly invalid as well.
What happens when an invoice has basic errors?
We’re all human, so sometimes mistakes occur. Other times, if we neglect to complete the required fields or provide all of the necessary information, it causes mistakes that can and should be avoided.
Why? Because by omitting basic information, it could prevent the user from being able to claim the amount in his VAT return - something that is already tedious enough. This could also affect the issuer of the invoice. But there are a few other potential consequences, which we’ll cover in pointing out some other errors that can negatively impact an invoice below:
7 common invoice errors
- Omitting the VAT number. As discussed above, this can cause unnecessary complications to an already complex yet important process. The exception to this is, of course, if the issuer is not VAT-registered.
- A missing or partial company name. The name of the company (or the full name of the individual if a sole trader) should be included. This means: as it appears on your tax return, and also applies to the name or company name of your customer.
- No address. Not including the company or customer address as it is stated for HMRC, can also lead to undue complications. Not to be confused with the physical address, which might be used for the delivery of products.
- Gaps or repeated invoice numbers. Your invoice numbers must follow a sequential order without gaps or repetition. Gaps in the invoice number sequence imply missing (unreported) invoices which can lead to an audit.
- The date of issue and invoice number don’t match. For example, if an invoice has a lower invoice number but a later issue date than other invoices. This can indicate to the authorities that invoices have been deleted and could cause further investigation if it’s significant or occurs frequently.
- Unclear VAT. If you’re VAT registered, you’re creating VAT invoices that need to clearly state the totals amounts for each VAT rate before the invoice total. It also needs to state the different amounts if there are different VAT rates included for products that fall under the 5% or 0% VAT rates categories.
- Forget the due date. While this arguably isn’t as important as a VAT number on a VAT invoice, forgetting the due date can result in serious problems to your accounting if, for example, a customer doesn’t pay or claims a different due date. For more on the importance of the due date, check out our article ‘Invoice due date: why it’s important’.
