IBAN (International Bank Account Number)

IBAN solves the problem of every country having its own way to identify a bank account. The UK uses sort code plus account number. Germany historically used a Bankleitzahl plus Kontonummer. France uses a RIB. IBAN wraps each of these formats into a single standard string: a 2-letter ISO country code, 2 check digits, then the country's existing account identifier. So GB22 BARC 2070 0593 1234 56 contains the UK sort code (2070 05) and account number (9312 3456) plus the IBAN wrapper.

The check digits matter. They are calculated from the rest of the IBAN using a mod-97 algorithm, which catches almost every typo before the transfer is sent. Banks validate the check digits on receipt and reject malformed IBANs, so a fat-fingered IBAN in an invoice usually surfaces as a rejected payment rather than money sent to the wrong account.

For an invoice going to a UK or EU buyer paying domestically, IBAN is overkill: the sort code plus account number (or SEPA equivalents) does the job at lower cost and faster settlement. For an invoice going cross-border, IBAN is the only practical format. UK invoices to EU clients, EU invoices to UK clients, and any non-domestic transfer almost always uses IBAN as the seller's account identifier.