Delivery fees on your invoices
Delivering goods can be expensive. Not only do you have to pay for storage and packaging, but you might also need to cover the costs of postal services, vehicle transport or a third-party company to handle the logistics on your behalf.
Because shipping expenses can add up quickly, many businesses pass on some of these costs to the end customer by charging delivery fees, shipping fees or transportation fees.
This article explores how you should go about charging delivery fees and how you can add delivery fees to your invoices.
If you want to charge delivery fees, you need to think about how much to charge, how to add delivery fees to your prices and how to manage VAT.
When working out how much to charge for delivery, you need to consider how your profit margins will be affected by delivering goods to customers.
Think about how much the goods weigh, how much they’re worth, how big or bulky they are, whether they have an expiration date and whether they’re particularly delicate or fragile. All of these factors will affect how much it costs to store, transport and package your goods – so make sure that you take these factors into account when calculating delivery charges.
The amount you charge for delivery might not cover all of your expenses, but it should offset at least some of the costs incurred by delivering goods to customers.
You can charge delivery fees in a number of different ways. The most common way of charging for delivery is to charge an additional fee on top of the price of the goods you’re providing. This additional fee might be a fixed rate, or it might vary according to the amount it costs to ship the goods.
Another common way of charging for delivery is to set prices that cover your delivery costs. While the products themselves might appear to cost more, you won’t need to charge any extra fees.
Alternatively, delivery fees can be charged separately from your goods in two different transactions. Rather than issuing one invoice that includes both the goods and the delivery fees, you would issue one invoice for the goods and one invoice for delivery fees. This approach is much less common than the other two, and it's normally only used in industries where delivery costs are harder to predict.
If your business is registered for VAT, you need to make sure that you apply VAT to your delivery fees in the correct way. This depends on how you charge for delivery, whether you make the delivery yourself and whether the goods are being delivered to a customer based outside of the UK.
HMRC’s website provides a detailed explanation of the exact rules about VAT and delivery fees.
It’s easy to add delivery fees to your invoices with our invoicing software - SumUp Invoices. There are two different ways to go about doing this:
If you charge delivery fees as an additional cost, then you need to add these fees in a new invoice line. To do this, click on ‘Add line’ and type something along the lines of ‘Delivery’, ‘Delivery costs’, ‘Shipping fees’, or ‘Postage’.
It’s a good idea to provide a bit of information about how the goods will be delivered, such as the name of the courier service and delivery date. You should also make sure that you provide any relevant tracking numbers. You can add this information in the line labelled ‘Description’.
If your delivery fees are included in the prices of your products, you don’t need to add a separate invoice line. Instead, your invoice should make it clear that your prices include delivery fees.
You could add details about the shipment in either the description or the ‘Notes’ section of the invoice.