Consultant invoice template

How do consultants usually invoice?

Consultants invoice monthly in arrears against a statement of work, listing the days worked and the dates, or a fixed fee per phase for project work with 30% to 50% on signature. Clients expect 30 day terms and a purchase order number on the invoice, and larger firms will not pay without one. Expenses are recharged at cost with receipts, and VAT is added to the expense recharge as well as the fee.

Consultants in this example give the customer 30 days to pay. Hourly rates run from £75 to £200. A full day is typically £500 to £1,200.

What should a consultant put on an invoice?

Beyond the legal basics, consultants should:

• Quote the statement of work or contract reference and the period covered on every invoice.
• List days with dates, or milestones with the deliverable accepted, rather than a single lump sum.
• Get the purchase order number before you start; it is the commonest reason for late payment.
• Recharge expenses at cost on separate lines and add VAT to them if you are registered.
• State that late payment interest and compensation under the Late Payment Act will be charged.

Every UK invoice, whatever the trade, must also show:

• a unique, sequential invoice number
• your business name and address (and company number if you trade as a limited company)
• the client’s name and address
• the invoice date and, for VAT invoices, the date of supply if different
• a clear description of each item of work or goods
• the amount due and when it must be paid
• your VAT number, the VAT rate per line and the VAT total, if you are VAT registered

Do consultants charge VAT?

You only charge VAT once registered, which is compulsory when taxable turnover passes £90,000 in any rolling 12 months. Below that, show no VAT line and no VAT number. Once registered, these services are standard rated at 20% for UK clients; services to business clients outside the UK are generally outside the scope of UK VAT.

On the Flat Rate Scheme the sector for consultants is usually “Management consultancy” at 14% of VAT-inclusive turnover, with a 1% discount in the first year of registration. If you spend little on goods you may be a limited cost trader and have to use 16.5% instead. The scheme suits businesses with few VAT-able costs; check it against the standard method with the VAT calculator before joining.