Invoice numbers are a legal requirement for every invoice a business sends. They allow for easy accounting and sorting that cannot be overlooked. But do invoice numbers have to be sequential or are stand-alone invoice numbers ok is a question that bothers many. Furthermore, are they hidden benefits to using sequential invoice numbers? Read on to find out.
What HMRC requires
Invoices have a list of requirements determined by HMRC that should be heeded when creating them. Unique identification numbers are stated on the list as a requirement, but there are no stipulations regarding their format. This means that sequential invoice numbers are not a legal obligation. Why then, are they a normal business practice?
The benefits of sequential invoice numbers
Sequential invoice numbers have a variety of benefits beyond looking professional. These benefits make for a much less admin-heavy business overall.
It’s easier to find old invoices
There are a variety of reasons to need access to older invoices on demand. It isn’t uncommon for invoices to be checked for legal reasons. For example, customers might need to query a past invoice and check for mistakes.
Sequential invoice numbers help with all of this by allowing for easy cataloging of invoices. They create a way to see the order of invoices, when they were made, and sometimes even why.
It makes doing taxes simpler
Sequential invoices make it incredibly easy to do taxes or other accounting tasks. The easy cataloging created with sequential invoice numbers makes creating your final accounts quick and simple to do. In the future, all taxes will be done digitally due to MTD, meaning that invoice numbers will likely be sequential anyway.
Making sequential invoice numbers
There are a few ways to make sequential invoice numbers, depending on your preferred sorting method. For more details on types of invoice numbers, check out our blog.
An easy way to create one is by using the date as a beginning. For example, if I wanted to invoice for 02/02/22 under I24, my invoice number might be; I2422020212345. I24 for the start, 220202 for the date, and then a random string following. You can then sort your invoices by date and can find them easily in the future.