Invoicing is a crucial part of running a business, and it’s important to understand the fundamentals right from the start. You must take into account the requirements set by the tax authorities, mandatory invoice details, the invoicing method, and also plan ahead for situations where you accidentally send an incorrect invoice or the customer fails to pay it.

Mandatory Invoice Information

Accounting law defines the information that must appear on an invoice, and the VAT act sets even more detailed requirements.

Simplified Invoice Requirements

Simplified invoice details may be used when the total invoice amount does not exceed 400 €, or if it concerns retail sales or comparable sales made almost exclusively to private individuals – regardless of the total amount. A simplified invoice must include:

• Date of issue
• Seller’s name and Business ID (Y-tunnus)
• Quantity and type of goods/services sold
• VAT amount by rate OR VAT base by rate
• For correction invoices: a reference to the original invoice and information on what is being corrected

Full Invoice Requirements

If the invoice exceeds 400 €, is not considered retail sales, or is issued abroad, additional details are required:

• Date of issue
• Sequential invoice number
• Names and addresses of buyer and seller
• Goods/services sold
• Delivery date
• VAT base and unit price
• VAT rate
• VAT amount

Other Useful Invoice Details

Beyond the legally required information, it’s wise to include things such as due date, payment terms, and any billing surcharge.

Due Date

It must be clearly stated when the invoice must be paid. If the invoice is not paid by the due date, the seller is entitled to charge interest for late payment until the invoice is fully settled.

Payment Terms

Payment terms specify the time period between the invoice date and the due date. Common terms for consumers are immediate payment, 7 days, or 14 days. Between businesses, payment terms can extend beyond 30 days. The Consumer Ombudsman recommends 14 days for consumer invoices.

Billing Surcharge

According to the Consumer Ombudsman, a reasonable billing surcharge may be added when the customer chooses a payment method that differs from the standard option. For example, if your standard method is cash and the customer wants an invoice, a surcharge can be added.
However:

• The customer must have at least one surcharge-free payment method available.
• The surcharge must be based on actual costs and cannot be excessive.

Also remember to include your bank account details and reference number!

Invoice Delivery Methods

Invoices can be delivered in several ways. Electronic methods have become very common, while traditional paper mail is increasingly rare.

Email

A very common method. Although email is electronic, an invoice sent as a PDF is not the same as an e-invoice. Email invoices often require manual processing. Still, it is a great method – especially for consumer customers.

E-invoice (B2B)

An e-invoice is fully digital and machine-readable. It is sent from your invoicing or accounting system directly into the recipient’s financial management system, where it can be checked, approved, and paid without manually inputting any data.
E-invoicing is typically used between businesses and is fast, efficient, and reliable.

E-invoice (for consumers)

A consumer e-invoice requires the customer to take certain steps. They must receive a billing notification, set up an e-invoicing agreement in their online bank, and provide their e-invoice information to the company.
It’s convenient for private individuals – though not all consumers are interested in enabling it.

Traditional Mail

The most old-school method is sending the invoice by post. These days, invoicing or accounting software often offers a print-and-send service, so you don’t have to print or mail the invoice yourself.

Unpaid Invoices Require Action

Sometimes, a customer may fail to pay the invoice. In such cases, you need to act promptly.

1. Contact the Customer

Start informally by reaching out and asking why the invoice is unpaid. It may simply be a mistake – perhaps the invoice was lost or forgotten. A quick phone call may resolve the issue.

2. Payment Reminder

If you want to go the official route, send a reminder invoice. You can send it as soon as the invoice is overdue, though it’s often reasonable to wait a couple of days due to possible bank delays. A reminder must state which invoice it concerns and include payment instructions.

3. Collection Process

If the customer still does not pay, you may forward the invoice to a collection agency once at least 14 days have passed since sending the reminder.
You can also handle collection yourself, but doing it correctly requires time and resources.

Incorrect Invoices

Invoicing is precise work, and mistakes can happen. Sending an incorrect invoice isn’t the end of the world because errors can always be corrected.

Usually, the incorrect invoice is cancelled either fully or partially with a credit invoice. The purpose of a credit invoice is not to replace the original one, but to correct it. Both the original invoice and the credit invoice must be kept for accounting.

Never delete an incorrect invoice outright – it could disrupt the legally required sequential numbering. Business clients also need the credit invoice to keep their own accounting accurate.

Invoicing Tips

A few tricks can make invoicing faster and more efficient:

• Use a small-item surcharge. If you use many tiny materials (like nails or screws), invoicing them individually is slow. Charge them as a lump sum.
• Check the invoice carefully. If the invoice does not meet tax authority requirements, the recipient is obligated not to pay it.
• Stick to agreed prices. Nobody enjoys receiving invoices – especially incorrect ones. Always quote prices including VAT to consumers.
• Invoice promptly. The faster you invoice, the faster you get paid. Slow invoicing can also make you seem unreliable.
• Use electronic invoicing. E-invoices are processed faster, with fewer errors, and cannot be lost like paper invoices.
• Avoid long payment terms. Long terms increase the risk of credit losses.
• Monitor payments regularly. If payment is delayed, send a reminder promptly.

Invoicing is generally quite straightforward – especially when using invoicing or accounting software. For example, SimpBooks makes invoicing extremely simple, allowing you to start immediately after registering, with no unnecessary hassle!