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Invoicing for SMEs

Grow London LocalMatching London small businesses to support

Posted: Thu 11th Sep 2025

If you don't issue your invoices promptly, you won't get paid. Sometimes, even if you do invoice promptly, you don't get paid.

While you might not have full control over these terms, there are solid invoicing practices you can put in place to protect your cash flow and your business.

In this article, we explain why invoicing is so important for London's businesses, suggest best practices and give you some useful tools and resources.

Why invoicing matters

Late payments are a frequent problem for small businesses in London. According to the Office of the Small Business Commissioner, a third of payments to small businesses in the city are late, with an average value of £6,142.

At best, this creates uncertainty. At worst, it can cause cash flow issues and force businesses to put growth plans on hold indefinitely.

As a small business owner, you rely on having sufficient liquid cash to cover everyday expenses like rent, salaries and supplier costs.

If you're unable to meet these obligations, you could damage those vital relationships with clients and contractors that allow your business to thrive.

Finally, the stress of chasing payments can be a serious drain on your time and resources, not to mention your mental health, making it difficult to focus on simply running and growing your business.

Best practices for invoicing

You can increase the chances of being paid on time by following these invoicing best practices:

Include payment terms

Even if you can't dictate the length of the payment terms from your client, make sure you include agreed-upon terms on your invoices.

That way, you have proof if you need to seek legal help. You should review and update your payment terms if they're causing cash flow issues.

Make sure all the details are correct

This sounds simple enough, but make sure the contact information, purchase order number, date and client details on your invoices are correct.

If you're still issuing manual invoices, when it's more easy to make mistakes, incorrect or unclear details could delay payment.

Use software to issue invoices

Many small businesses still rely on outdated methods for invoicing their clients, including manual data entry and sending invoices within long email chains. This can lead to errors, inefficiencies and slower payment cycles.

Accounting software can issue error-free invoices with consistent formatting and details, alert you when an invoice is settled and send automatic reminders if you're paid late – which saves you having to waste your time chasing late payments.

On top of that, accounting software (see below) can help you with other financial admin, such as bookkeeping, submitting compliant tax returns and running payroll (usually an added extra).

Keep records

Make sure you keep records of all your communications, so you have evidence that you've delivered work as promised. This could be important if it comes to a dispute.

Even if you use software that issues payment reminders, a gentle nudge from you via email can be more effective than an automated message.

Raise funds against late invoices

If you're waiting a long time for invoices to be settled but you need some cash, you can use invoice factoring – a form of debt finance – to raise cash.

Factoring companies can typically advance you between 70% to 85% of the value of an unpaid invoice. They will then collect the payment and send you the balance minus any fees and interest.

If you want to be confidential about your use of a third-party finance provider, you can use invoice discounting, where you remain responsible for collecting the payment.

Best invoicing and accounting software for small businesses

Here are five of the best accounting software providers that can help you with all your invoicing needs.

Xero

Automated bank reconciliation.
Create quotes and invoices with online payment options via payment links.
Manage bills, purchase orders and supplier payments.

Xero is a popular accounting platform designed for growing SMEs, offering strong integration with over 1,000 third-party apps and over 300 bank connections.

It supports payroll, expense claims and multi-currency invoicing on higher-tier plans, making it ideal for scaling businesses with multiple team members.

Price: from £16 to £59 per month (plus VAT)

Sage

Create and send unlimited invoices.
Submit VAT returns directly to HMRC.
Multi-currency support (on Plus plan).

Sage is one of the UK's longest-running accounting software providers, with nearly 45 years of experience.

Its cloud-based platform connects directly to your bank account for real-time updates, while the built-in AI Copilot helps automate tasks like VAT returns, payment reminders and creating emails.

Price: from £18 to £59 per month (plus VAT)

QuickBooks

AI-powered income and expense management.
Client portal for customers to view, print and pay invoices.
Built-in CRM to manage customer relationships.

QuickBooks is a widely used accounting platform that's tailored to small businesses. It includes standard tools such as invoicing, tax support and expense tracking.

Advanced features like a client portal and built-in CRM help improve customer relationships. Its reporting features are a standout with their multiple customisation options.

Price: from £10 to £47 per month (plus VAT)

Tide

Create and send invoices with automated payment reminders.
Manage banking and accounting in the same app.
Auto and bulk-categorise transactions.

Tide combines banking and accounting in one platform, allowing you to manage all your financial admin in one place.

From real-time reconciliation to VAT filing and profitability insights, Tide is designed to streamline your day-to-day tasks while helping you stay on top of cash flow.

Price: from £5.99 to £24.99 per month (plus VAT)

Zoho Books

Access data and send invoices on mobile.
Automate workflows, reminders and recurring invoices.
Integrates with other Zoho and third-party apps.

Zoho Books is a flexible and affordable accounting solution that integrates seamlessly with the Zoho ecosystem and third-party apps.

With HMRC recognition and Making Tax Digital (MTD) compliance, it's suitable for UK businesses, while multi-currency invoicing and multilingual support make it ideal if you trade internationally.

Price: from £0 to £25 per month (plus VAT)

Support and resources for businesses in London

Getting into the habit of submitting clear, accurate invoices as soon as you've delivered work gives you the best chance of being paid in good time.

That can help you avoid cash flow issues and the associated headaches, both administrative and mental.

With exclusive promotions and money-saving tools, Grow London Local's range of offers can offset some of your worries, so you can dedicate more time to the critical, creative and fulfilling aspects of running your business.

Those offers include a free consultation with chartered accountants and 75% off Xero accounting, which features auto invoicing software.

Grow London Local: Support for London's small businesses

No matter where you're based in London, you'll find relevant support and guidance on business planning, sales and marketing and much more, as well as opportunities to connect with like-minded business owners. Visit Grow London Local now