Invoicing - something every business owner needs to know how to do, but are you getting it right?

As a business owner, you’re required to provide proof of purchase within seven days and a tax invoice within 28 days of it being requested or having supplied goods and/or services..

Getting your invoicing right will not only save time, but will also help you avoid payment delays as a result of your customers asking for you to reissue a correct invoice. It will also help you create good bookkeeping habits, track your sales, debtors and stock levels.

Here are the key things you need to know about invoicing.

Is it an invoice or tax invoice?

There is often confusion about when an invoice should be called a ‘tax invoice’. How your invoice is labelled comes down to whether you’re registered for GST.

  • If your business is registered for GST, the invoice should clearly state ‘tax invoice’ and show the GST amount included.
  • If your business is not registered for GST, your invoice should state ‘invoice’ and there should be no reference to GST.

It may seem like a minor detail, but if you incorrectly label an invoice as a ‘tax invoice’ or include GST when you aren’t registered for it, this could cause delays in receiving payment. This is because your customer may require you to reissue a corrected invoice before they can authorise/make payment.

Tip: Use the GST calculator to help you work out that element of your invoice.

What else should your invoice include?

It’s good practice to include:

  • your business details, including business name, contact details (postal address, email and phone number) and your Australian Business Number (ABN)
  • your customer’s details, including business name, ABN, delivery address and any relevant purchase order numbers
  • invoice date
  • invoice number
  • amount due (if you’re registered for GST, remember to include GST amount and words ‘tax invoice’)
  • description of goods and/or services provided
  • payment terms (for example, a payment due date or a date you have agreed with your customer)
  • payment options (for example, credit card, direct deposit or cash)
  • direct banking details, including your BSB, account number, bank account name and the reference to be included with the payment so you can identify it.

General invoicing tips

  • If you’re invoicing another business or government agency and your ABN isn’t included, they will be required to withhold the top rate of tax for any payments over $75.
  • If you’re issuing a tax invoice for more than $1,000, you’ll also need to include the buyer’s identity or ABN.
  • The bank account name on your invoice should match how it is listed with your bank (for example: If the account is under your personal name, your invoice should not state your business name as the account name, and vice versa).

Tips when invoicing to larger organisations

Bigger businesses and government departments may have set procedures when it comes to the receipt and payment of invoices. When providing goods and services to a larger organisation, we recommend checking:

  • Their payment frequency/invoice processing cut off times. If a business processes their payment runs on a particular day of the month, providing your invoice ahead of this cut off date can help you get paid in a timely manner.
  • The best place to send your invoice. While you might be dealing with a particular staff member, the business or government agency may prefer that you send your invoice directly to their accounts team for processing.
  • The procurement policy of any state or local government clients to understand their payment procedures to ensure your invoices meet all of their requirements.

More information

The Australian Tax Office has developed voluntary standards relating to the layout of tax invoices and invoices, as well as practical information to help you issue tax invoices correctly.

See our providing credit to customers page to find out more about preparing terms and conditions for payments and customer credit, as well as our tips on debt recovery.

05 March 2024