Guides

Straight answers to the questions people actually type, each one with the limits stated. If a guide says a tool here is the wrong choice for your job, that is not modesty. It is the useful part.

• How to write an invoice

  For a UK invoice, record your business and customer details, a unique invoice number, the supply and issue dates, what you supplied, the amounts charged and the total owed. State the payment terms you agreed. A UK VAT invoice needs further details, including your VAT registration number and the tax charged. Requirements differ by country and invoice type.

• Invoice or receipt: which do you send?

  An invoice records a request for payment for goods or services. A receipt records that payment was received. If payment is still due, send an invoice; after it arrives, a receipt can confirm the transaction. Your accounting treatment depends on your business and the rules that apply to it.

• What is a proforma invoice?

  A proforma invoice outlines a proposed sale, including goods, quantities and prices, before the final invoice. Buyers may use it to arrange prepayment or provide transaction details for shipping. Label it clearly: a proforma is generally not a final tax invoice, and the underlying agreement and payment can have separate legal and tax effects.

• How to calculate VAT

  To add VAT, multiply the net amount by one plus the rate as a decimal: at twenty per cent, multiply by 1.2. To remove VAT, divide the gross by the same figure. Subtracting twenty per cent from a gross price is the common error and gives a different, wrong answer.

• How to invoice as a sole trader

  In the UK, a sole trader invoices under their own name and any business name they use. They do not need a company number. Include a unique invoice number, issue and supply dates, customer details, a description, amounts and the total. If you use a business name, include an address where legal documents can reach you. Add VAT details only if registered.

• Purchase order or invoice?

  A purchase order usually travels from buyer to supplier before delivery, recording the requested items, quantities and agreed terms. An invoice usually travels from supplier to buyer to request payment. If you are buying, you issue the PO; if you are selling, you issue the invoice. Payment or advance invoices can change the exact timing.

• Profit margin vs markup

  Margin is gross profit as a share of the selling price; markup is gross profit as a share of cost. With positive profit they produce different percentages: a 50% markup produces a 33.3% gross margin. At break-even, both are zero.

• Quote or estimate?

  A quote presents a proposed price for defined work, often with a validity period. An estimate projects a likely cost when some details are uncertain. State the scope, assumptions and how changes will be approved. Whether either document becomes binding depends on its terms, acceptance and applicable law.

• How to calculate GST

  To add GST, multiply the net amount by one plus the rate. To remove it, divide the gross amount by one plus the rate. Subtracting the percentage from the gross is the common error and it always leaves you short.

• Invoice vs bill

  Usually the same document seen from two sides. You send an invoice; the person receiving it calls it a bill. An invoice tends to imply agreed work and a payment term, while a bill tends to imply an amount due now.

• How to write an estimate

  Write the figure, then write what it assumes. An estimate is a forecast rather than an offer, so the protection for both sides is not the number but the list of things you had to take on trust: quantities you could not measure, conditions you could not see, and work the customer has to do first. An estimate with no assumptions written down is just a price with nothing holding it up.

• What a discount actually costs you

  A discount is taken off the price, but it is paid for out of the margin, and those are very different numbers. An item costing 60.00 and selling at 100.00 carries a 40 per cent margin. Discount it by 20 per cent and the price falls to 80.00 while the cost stays at 60.00, so the margin is now 20.00 on 80.00, which is 25 per cent. A fifth off the price took nearly half the profit.

• Working out what to charge an hour

  Start from what you need to earn in a year, add what it costs to operate, then divide by the hours you can actually bill, not the hours you work. Most people divide by 2,000 and wonder why the year does not add up: holiday, sickness, admin, quoting and chasing payment are all real hours that nobody pays for.

• How to make an invoice in Word, Excel or Google Docs

  Start from a blank document and add your business details, the customer's details, an invoice number, the date, a table of what you supplied with quantities and prices, the total, and how to pay. In Excel or Google Sheets, let formulas do the arithmetic; in Word or Google Docs, check the sums by hand. Then save it as a PDF so the figures cannot be changed.

• The profit margin formula

  Profit margin is profit divided by revenue, multiplied by 100. Gross margin uses revenue minus the cost of the goods sold; operating margin also subtracts running costs such as rent and wages; net margin subtracts everything, including interest and tax. Sell something for 100 that cost 60, and the gross margin is 40 divided by 100, which is 40 per cent.

• How to write a purchase order

  A purchase order is the buyer's written offer to buy: a PO number, the date, the supplier, what you want with quantities and agreed prices, the delivery address and date, and the payment terms. Once the supplier accepts it, it becomes the agreement their invoice is checked against.

• Quotation format, with an example

  A quotation needs your details, the customer's, a quote number and date, a clear description of the work or goods with quantities and prices, the total with any tax, how long the price stands, and your terms. Most quotes that lose, lose on vagueness rather than price.

• What a tax invoice is

  A tax invoice is an invoice that carries the details a registered business needs to claim back the GST or VAT it paid: the seller's tax registration number, the tax charged shown separately, and in Australia a clear statement that it is a tax invoice. Without those details the buyer usually cannot claim the credit.

• What a credit note is

  A credit note is a document a seller issues to reduce or cancel an invoice already sent: for returned goods, an overcharge, a discount agreed afterwards or a cancelled order. It references the original invoice, lists what is being credited, and shows the amount, including any tax being reversed.

The tools themselves

• Invoice Generator: Bill a client for work already done.
• Receipt Generator: Confirm money you have already been paid.
• Quotation Generator: Price a job before you take it on.
• Estimate Generator: An approximate price, clearly labelled as one.
• Purchase Order Generator: Order goods from a supplier, on paper.
• Proforma Invoice Generator: A commitment to invoice, for prepayment or customs.
• Bill Generator: A plain bill, without the invoice formalities.
• Tax Invoice Generator: An invoice with the tax shown the way a buyer can claim it.
• GST Invoice Generator: A GST tax invoice with CGST and SGST or IGST, and HSN codes.
• Credit Note Generator: Reduce or cancel an invoice without editing it.
• VAT Calculator: Add or remove VAT at any rate.
• GST Calculator: GST for Australia, Canada, India and Singapore.
• Profit Margin Calculator: Margin and markup are not the same number.
• Discount Calculator: What comes off, and what is left.
• Salary Calculator: Hourly, daily, monthly and annual, both ways.
• Markup Calculator: Turn a cost and a markup into a selling price.
• Invoice Template: A blank invoice to print or fill in yourself.
• Receipt Template: A blank receipt to print or fill in yourself.
• Quotation Template: A blank quote, with a validity line already on it.
• Purchase Order Template: A blank PO with a number and delivery address.
• Self-Employed Invoice Template: A blank invoice for freelancers and sole traders.
• Estimate Template: A blank estimate to print or fill in by hand.
• Proforma Invoice Template: A blank proforma invoice to print or complete by hand.
• Bill Format: A plain blank bill to print and fill in by hand.