How to number invoices
Invoice numbering feels trivial until an accountant or a tax auditor looks at it. The rules are simple, but getting them wrong looks like carelessness at best and hidden income at worst. Here's what's actually required, three schemes that work, and the mistakes to avoid.
The two rules that matter
1. Every invoice number must be unique. In the UK, a valid invoice must carry "a unique identification number."[1] Reusing a number is how two different payments get applied to the same invoice and one of them goes missing.
2. If you're VAT/GST-registered, numbers must be sequential. The EU VAT Directive requires "a sequential number, based on one or more series, which uniquely identifies the invoice."[2] Sequential means no unexplained gaps: a jump from 0007 to 0012 invites the question "where are 8, 9, 10, 11?" — and the honest answer had better not be "cancelled invoices I deleted."
Three schemes that work
| Scheme | Example | Best for |
|---|---|---|
| Simple sequential | INV-0001, INV-0002 | Most freelancers. Clean, obviously sequential, hard to get wrong. |
| Year-prefixed | INV-2026-001 | Anyone who wants invoices grouped by year for bookkeeping. Restart the counter each January. |
| Per-client series | ACME-001, ACME-002 | Agencies billing a few big clients. The Directive explicitly allows "one or more series." |
Mistakes to avoid
- Gaps. If you void an invoice, don't delete the number — issue a credit note or keep a record of the cancellation. The sequence should be explainable end to end.
- Reusing numbers across years or clients without a distinguishing prefix. "001" in 2025 and "001" in 2026 aren't unique unless the year is part of the number.
- Starting from a big fake number to look established. Auditors have seen it; clients don't care; and you just made your own bookkeeping harder.
- Letting the tool pick random IDs. A random string is unique but not sequential — which fails the VAT rule.
How Billfold handles it
Billfold starts you at INV-0001 and, each time you start a new invoice, increments the number automatically while preserving your format — so INV-2026-009 becomes INV-2026-010, and ACME-004 becomes ACME-005. You get clean, sequential, unique numbers without thinking about it, and you can override the number any time.
- UK Government, "Invoicing and taking payment from customers — invoices, what they must include" (a unique identification number). gov.uk
- Council Directive 2006/112/EC (EU VAT Directive), Article 226(2) — a sequential number, based on one or more series, uniquely identifying the invoice. eur-lex.europa.eu