You have landed your first client. The work is done. Now comes the part that actually gets you paid  sending a proper invoice.

If you are new to Xero or have been putting off learning how it works, this guide is for you. We are going to walk through everything from setting up your invoice template to tracking whether your client has actually opened what you sent them.

No jargon. No unnecessary steps. Just a clear, honest walkthrough that works for freelancers, bookkeepers, and anyone studying towards a career in accounting in the UK.

Here’s what we cover:

What Is Xero and Why Does It Matter for Invoicing?

Xero is a cloud-based accounting software used by over 3.5 million subscribers worldwide. In the UK, it is particularly popular with small and medium-sized businesses, sole traders, and accounting practices.

When it comes to invoicing, Xero gives you far more than a basic template. Every invoice you create is automatically linked to your accounts, your payment records, and your bank reconciliation. That means less manual work, fewer mistakes, and a much cleaner picture of your finances at any given moment.

Instead of attaching a PDF to an email and hoping for the best, Xero lets you send a professional invoice with an online payment link built right in. Your client clicks, pays, and Xero logs everything automatically.

The UK government has also been pushing businesses towards Making Tax Digital (MTD), which means digital record-keeping is no longer optional for many businesses. You can read more about MTD requirements on the HMRC website.

What You Will Need Before You Start

Before you create your first invoice in Xero, it helps to have a few things ready. Do not worry if you do not have everything sorted yet  you can always go back and fill in gaps later.

• A Xero account (a free 30-day trial is available at xero.com)
• Your client’s name, billing email address, and company name if applicable
• The services or products you are invoicing for, along with prices
• Your business logo if you have one
• Your payment details or bank account information
• Your VAT registration number, if you are VAT registered (check your obligations on gov.uk)

Even if you are brand new to Xero, the good news is that the platform guides you through most of this during setup. You will not feel left alone.

Step 1: Set Up Your Invoice Template (Do This Once)

Before you send your first invoice, it is worth spending five minutes setting up your template. This is a one-time job, and it makes every invoice you send look clean and professional from day one.

How to Access Your Invoice Settings

1. Log in to your Xero account
2. Click on Settings in the top-right corner of the screen
   
3. Click Invoice Settings
   
4. Click on New Branding Theme or edit your existing Default theme
   

What to Set Up in Your Template

Inside the invoice settings, you will find options to:

• Upload your business logo (JPG or PNG, ideally square or landscape format)
• Set your colour theme and font style
• Choose your payment terms — for example, payment due within 14 or 30 days
• Add a custom invoice footer, which is a great place for your bank details or a short thank-you message
• Preview exactly what your client will see before you send anything

Step 2: How to Create an Invoice in Xero

Now for the main part. Here is how to create a new invoice from scratch in Xero.

Getting to the Invoice Screen

1. From the top menu, click on Sales
   
2. Select Invoices from the dropdown
   
3. Click the blue New Invoice button in the top-right corner
   
   

Filling in the Invoice Details

Once you are on the new invoice screen, you will work through the following fields:

To (Client Name)

Start typing your client’s name in the To field. Xero will search your existing contacts and suggest matches. If your client is new, you can type their name and Xero will offer to create a new contact for them on the spot.

Invoice Date and Due Date

Set the invoice date to today unless you have a reason to backdate it. The due date is calculated automatically based on your payment terms, but you can override it manually if needed.

Getting these dates right matters. Xero uses them to flag overdue invoices and trigger automatic reminders.

Invoice Number

Xero assigns a sequential invoice number automatically. You can change the format in your settings if you prefer a specific numbering system — for example, INV-0001.

Reference (Optional)

If your client has given you a purchase order (PO) number, enter it here. Many corporate clients need this to process payments internally, so it is worth asking.

Adding Your Line Items

This is where you list what you are charging for. Each line item includes:

• A description of the product or service
• The quantity (for example, number of hours or units)
• The unit price
• The tax rate (we cover this in the next step)
• Xero will calculate the line total automatically

You can add as many line items as you need. If you want to give a discount on a particular line, Xero lets you do that too  just click the Discount column (you may need to enable it in settings first).

Applying the Correct Tax Code

If you are VAT registered, you will need to apply the right VAT code to each line. Xero uses a simple dropdown for this.

If you are unsure about VAT codes or whether you need to register, the AAT (Association of Accounting Technicians) has guidance on this as part of their bookkeeping resources.

Checking Your Totals

Before you do anything else, scroll down and check the totals section. Make sure the subtotal, VAT amount, and grand total all look correct.

It sounds obvious, but everyone sends at least one invoice with a typo in it at some point. A two-second check now saves an awkward conversation later.

Example:

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Step 3: How to Send Your Invoice in Xero

Once your invoice looks right, you are ready to send it. Xero gives you a few different ways to do this.

Sending Directly from Xero

The quickest method is to click the Approve & Email button at the top of the invoice screen. This approves the invoice (moves it out of Draft status) and opens an email window.

From here you can:

• Edit the email subject line
• Add a personal message to your client
• CC yourself on the email — which is always a good idea
• Choose whether to include a PDF copy of the invoice as an attachment
• Add the Xero payment link so your client can pay online directly from the email

When your client receives the email, it looks polished and professional. The payment link takes them straight to a secure page where they can pay by card or bank transfer.

Other Ways to Share an Invoice

If your client prefers a different method, you also have the option to:

• Download the invoice as a PDF and send it yourself
• Copy a shareable link and send it via any messaging platform
• Print the invoice if you are working with a client who prefers paper

Step 4: Track Your Invoice After Sending

Sending the invoice is only half the job. Xero makes it easy to see exactly where things stand at any moment.

Understanding Invoice Statuses

Setting Up Automatic Payment Reminders

This is one of the most useful features in Xero, and a lot of people never set it up.

Xero can send automatic reminder emails to clients who have not paid by their due date. To turn this on:

4. Go to Settings
5. Click Invoice Settings
6. Click invoice Reminder
7. Turn on payment reminders and set the schedule — for example, three days before the due date, on the due date, and seven days after.

Once this is set up, you do not have to chase clients manually. Xero sends the reminders on your behalf, and you can still step in and send a personal message if needed.

Marking an Invoice as Paid

When your client pays, you will need to record the payment in Xero unless it has come in through a connected payment method like Stripe or GoCardless.

To record a payment manually:

8. Open the invoice from your Invoices list
9. Click the Add Payment button at the top of the screen
10. Enter the amount received, the date, and the bank account it was paid into
11. Click Add Payment to confirm
    

Xero will then update the invoice status to Paid and reconcile the payment against your bank records when you do your next bank reconciliation.

Handy Xero Invoicing Features Worth Knowing About

Once you are comfortable with the basics, these features will save you a real amount of time.

Repeating Invoices

If you invoice the same client for the same amount every month for a retainer or a regular service you can set up a repeating invoice. Xero will create and send it automatically on your chosen schedule.

To set this up, look for the Repeating option when you are on the invoice creation screen. You can choose the frequency, the start date, and how many times it should repeat.

Quotes That Convert to Invoices

Xero lets you send a quote to a client first and then convert it to an invoice with a single click once the work is approved. This is particularly useful for project-based work where the scope might change before you start.

Attaching Files to Invoices

You can attach documents directly to an invoice in Xero for example, a timesheet, a signed contract, or a delivery note. Your client will be able to see the attachments when they open the invoice.

Online Payment Links

Connecting Xero to a payment provider like Stripe, PayPal, or GoCardless means your clients can pay directly from the invoice email. This typically results in faster payment and less manual chasing.

Common Mistakes to Avoid in Xero Invoicing

Everyone makes a few of these when they are starting out. Here is what to watch for.

• Forgetting to approve the invoice: it will sit in Draft forever and the client will never receive it
• Using the wrong VAT code: this can create problems with your VAT return and may need a credit note to correct
• Not setting payment terms: if you leave the due date blank, clients have no clear deadline to work towards
• Sending to the wrong email: address always double check the client contact in Xero, especially for new clients
• Not following up on overdue invoices: set up automatic reminders so this does not fall through the cracks

Why Xero Skills Matter for Your Accounting Career

If you are studying for an accounting qualification in the UK — whether that is AAT or ACCA practical software skills are just as important as passing your exams.

According to the Association of Accounting Technicians (AAT), employers increasingly expect candidates to arrive with working knowledge of cloud accounting platforms. Xero is consistently one of the most requested tools in job listings for bookkeepers, accounts assistants, and finance administrators.

Knowing how to create and send invoices is just the starting point. The more you understand about Xero  from VAT returns to payroll to management reports the more valuable you become to any employer or client.

If you want structured training, you can explore our Xero training courses

Final Thoughts

Creating and sending invoices in Xero is genuinely straightforward once you know where to look. The process takes about five minutes once you have done it a couple of times, and the tracking and reminder features that come with it make a real difference to how quickly you get paid.

If you have been working through this guide step by step, well done. You now know more about Xero invoicing than most people pick up without formal training.

The next step is to keep building on that knowledge — because in accounting, the more you know, the more doors open for you.