Invoices – how to create a correct and professional invoice

As a business owner, you probably send out many invoices throughout the year – and often this is done routinely. However, at Collectia, we find that many invoices contain errors or omissions that either make them legally weak, difficult to account for, or directly invalid in relation to VAT rules. In the worst case, errors on the invoice can make it almost impossible to collect a claim if the customer does not pay.

This guide explains how to create a good and correct invoice, what requirements apply according to the VAT regulation, and why it is so important to get all the details right. At the end, you will find our recommendations – and the option to download a free invoice template.

What is an invoice?

An invoice is a legal document that describes a transaction between a buyer and a seller. It is your formal documentation of what has been delivered, in what quantity, when, and at what price.

For the customer, the invoice serves as proof in connection with complaints, warranties, and documentation of purchases. For the company, the invoice is not only documentation, but also a crucial part of accounting, VAT settlement, and, not least, collection if payment is not received.

An invoice is therefore not just a document. It is a legal basis for your sales, your accounting, and your options for subsequent collection.

Requirements for a correct invoice

Although there are no rules governing the graphic design, there are clear requirements for the content. These requirements are set out in the VAT Executive Order, and missing information may mean that the buyer cannot claim a VAT deduction and that the invoice loses its value as documentation in a debt collection case.

A correct invoice must contain at least the following:

• Seller information: name, address, CVR/VAT number, and contact information
• Buyer's details: name, address, and, if applicable, CVR no.
• Invoice details: invoice number, invoice date, and payment deadline
• Goods/services information: a clear description of what has been delivered, including quantity and unit
• Price information: price per unit, total price, VAT base, and VAT amount

It is important that all information is accurate. A description such as "work performed" is too vague and may cause problems if the customer later disputes the claim.

What happens if the invoice is incomplete?

Most invoice errors may seem minor, but the consequences can be significant:

• SKAT may reject the VAT deduction for the buyer.
• The customer can dispute the invoice because it does not clearly state what has been purchased.
• A debt collection process may be delayed or canceled altogether if information is missing.
• The case cannot be brought before the court if it is not possible to identify the buyer or the delivery.

We often see invoices where the buyer is only listed by first name and city. In such cases, it can be nearly impossible to collect the debt because we cannot document with certainty who the debtor is.

The more accurate and detailed your invoice is, the better you will be positioned in all future processes – from bookkeeping to possible debt collection.

The mistakes we most often see in practice

Many companies believe that their invoicing processes are in order—until a case comes to us and it turns out that the invoice has shortcomings. The most common errors are:

• Missing or incomplete customer information
• No payment deadline
• No clear description of the service
• Incorrect or missing VAT
• Invoices without sequential numbering
• Invoices sent to someone who isn't the right customer
• Use of Word/Excel without correct information about CVR/VAT number.

A good accounting program minimizes the risk of errors – but it requires that the fields are filled in correctly every time.

Our recommendations for a correct and strong invoice

We recommend that you review your invoicing process and ensure the following:

• You always record the customer's full name and full address.
• CVR number is obtained when the customer is a company
• The product lines are described as precisely as possible.
• VAT is stated correctly
• Payment details and payment deadline are clearly stated
• The invoice number follows a sequential order.

If you have many customers or handle a lot of documents, it is a good idea to have your bookkeeper or accountant review the process and ensure that all requirements are met—especially after the new digital accounting requirements.

Example: Good invoice vs. bad invoice

A good invoice clearly documents who the customer is, what has been delivered, and what is owed. A bad invoice does the opposite.

A good invoice contains
– full identification of the buyer
– clear description of the service: “Plumbing service – replacement of water trap, incl. materials”
– dates, prices, and VAT correctly stated
– clear payment deadline
– correct payment details

A bad invoice contains
– only “Anders, Glostrup” as customer information
– a vague item line such as “work performed”
– no payment deadline
– no indication of VAT
– no CVR number
– no invoice number

The difference is enormous – both legally and administratively.

Get help – or use our free invoice template

To make it easy for you, we have developed a free invoice template that meets all requirements. It ensures that you don't overlook any important fields and always send out a correct and professional invoice.

If you would like to avoid invoice management altogether, our invoice service can take care of sending, bookkeeping, and reminders. This gives you more time and ensures that all formalities are handled correctly from the start.

When customers don't pay – Collectia helps you move forward with confidence

Even if your invoice is correctly formatted, payment may still not be received. Collectia can help with the entire process – from reminders and collection notices to out-of-court and judicial debt collection.

A correct invoice is the foundation for all subsequent work. When the documentation is in order, we can help you collect your claim more quickly and efficiently and ensure that you get paid for your work.