How To Write An Invoice In Australia

Many business owners are great at making sales and delivering their product to customers. However, one of the areas that many small businesses struggle with is sending out invoices in a timely manner. This is a big roadblock in getting clients to pay for their goods and services on time. Why do so many small business owners struggle to invoice? More often than not, it is simply a matter of time and know-how.

How to write an invoice in Australia

Invoicing can be daunting at first. What should you include in an invoice? How do you write an invoice? How will you keep track of what invoices you have issued? Who has paid? What should your payment terms be? How do clients pay their invoices? What is the best way to manage your invoicing?

The simplest and most time-effective way to ensure that your invoices are complete is to use a template. There are many templates available online. Most cloud-based accounting software programs will have an invoicing feature that once set up makes invoicing rather simple and efficient. Alternatively, you can download our Australian Invoice Template here.

For guidance on what accounting software is best for the invoicing needs of your business, give us a call on 1300 728 875 or drop us a line.

What items do I need to add to my invoice?

When invoicing in Australia, you need to make sure to include there are a number of details. This is crucial if you want to comply with the requirements of the Australian Taxation Office. These are:

Tax invoice identification

You need to include a simple notation on the invoice stating that it is an invoice, along with an identification number for tracking. This enables you to keep track of what invoices you have sent out, which invoices have been paid and how many invoices you have raised. Most commonly, businesses use sequential numbers (i.e. INV0001, INV0002 etc.). You may also choose to include dates or customer identifiers within this structure as well.

Business name and Australian Business Number (ABN) of the seller

It is important that the person receiving the invoice is able to identify who they are paying money to. If you’re invoicing a business, they will need your business name and ABN when entering payments into their accounting system. These details help with data entry and reconciliation, as well as identifying what expenses you most commonly incur.

Date of issue

This is key when it comes to ensuring that invoices are paid in a timely manner. It is important that you have a record of when you sent the invoice. This allows you to follow up payments that are not forthcoming in an appropriate amount of time. It’s also important when reconciling accounts to know when the invoice was raised and paid, as well as knowing what time period the income needs to be reported within.

Details of goods or services, including quantities and pricing

It is essential that businesses are able to keep track of what goods and services they have used and what they have paid for these services. Having clear details on your invoices means that any disputes as to what goods or services were agreed upon versus what goods or services were delivered can be quickly resolved.

Goods and Services Tax (GST) payable

The amount of GST payable can either shown separately or as a total amount. Where there is a mixture of GST applicable and GST-free or exempt items, the GST must be itemised. However, if GST is applied to the entire purchase, it is acceptable to include phrase ‘total price includes GST’ with the total amount owed.

Not sure how to calculate GST? Use our handy GST calculator tool

Differentiation of cost of goods and GST

Unless using the phrase ‘Total price includes GST’, you must include a breakdown and differentiation of costs that outlines the total paid, GST payable and cost of goods/services exclusive of GST.

Name and/or ABN of the buyer

If the invoice total is over $1,000, then you must also include the name and/or ABN of the buyer. However, many businesses include this as a standard. This is because it helps with reconciliation of accounts and chasing up payments for invoices. It is also beneficial to know who your customers are and how they are spending money with you in order to develop your marketing strategies.

For more details on what the ATO requirements are for invoicing, see their guidelines.

How to add GST to your invoice

GST can be confusing, but put very simply, if you are registered for GST then you need to charge GST (10% of total cost) on certain goods and services. You must then pass the GST you have collected on to the ATO with your quarterly BAS. If you are not registered for GST, then you do not charge GST. You are not required to pass GST on to the ATO.

Not sure if you need to register for GST? Read our blog about the advantages of registering for GST.

When quoting clients for goods or services to be provided, it is important to note that most people would expect that the amount quoted would be inclusive of GST. Thus, you should factor in GST when setting your prices if you are registered for GST. If you are quoting on services and then adding GST, then it is important that you make it clear to the client that your prices are exclusive of GST or to state X amount plus GST.

For example, if you were registered for GST and quoted $900 for a job, the client will assume that the cost of the job is $818.18 and the GST you would collect and pass on to the ATO would be $81.82. If you expect the cost of the job to be $900, then you would need to quote $900 ex GST or $900 plus GST to be clear to the client.

If you are registered for GST, when invoicing in Australia, it is common for your invoice to have a columns for price of item, GST and total cost of item. This makes it simple for all to see the breakdown of goods, GST and total cost.

Payment terms and methods

It is also good practice to include payment terms and methods. This makes it clear and simple for clients to ensure that they pay on time and in the right format. When payment details are clear, clients are more likely to pay on time.

A good rule of thumb for payment terms is either 7, 14, 21 or 30 days. These allow the buyer to input data and sync with regular payment cycles associated with their accounts payable processes. Be clear on your payment terms when quoting so that all parties have clear and realistic expectations with regard to how and when payment will be made.

Review your invoice

Before sending out your invoices, it is important to ensure that you have included all fields. You need to ensure that everything is correct and that you have the essentials included in your invoice:

  • Invoice number
  • Business name and ABN
Date of issue
  • Details of goods / services provided
  • Cost of goods and GST breakdown if applicable
  • Name and/or ABN of buyer
  • Payment terms and method

How to send an invoice

For most businesses today, email is the quickest and easiest way to send invoices. However, some businesses may still prefer to receive a hard copy of their invoice either included with the delivery of goods or sent by mail. However you send your invoices out, it is essential that you retain a copy for your own records in an organised manner. This will help for your own reporting purposes. It will also help in case the ATO audits you and requires you to reconcile payments against invoices.

How to invoice as a sole trader

As a sole trader, it is very important that your invoicing process is smooth, efficient and effective in order for your clients to pay you in a timely manner. Most of the time, you will send an invoice if the customer does not pay for the goods and services at delivery. As such, it is vital that customers are very clear on the expectations as to how and when you require payment.

In order to receive payment promptly, your invoicing needs to be regular and as close to the delivery of service as possible. Your invoices should look professional and be clear, concise and uncluttered. Information should be complete and easy to locate, as well as being free of errors.

Create a robust invoicing process

Once you have established your basic invoicing template, you will find that it can become a rather simple, fast and easy process to create your invoices. The next step is to develop a routine where you invoice regularly — be it daily or weekly. This allows you to stay on top of sending out invoices and the process does not become overwhelming.

It might help to have a template saved to your computer. Then, you can keep a folder purely for invoices in order to keep everything in one place. This system also helps with ensuring that your numbers are sequential and ordered.

Many people find that using the invoicing features in their accounting software helps to take the hassle out of invoicing. This helps to keep everything very organised and neat. Many of the accounting software products on the market today make invoicing super simple and are very reasonably priced, saving time for business owners and thus saving them money in the long run.

How can Darcy Bookkeeping & Business Services help with your invoicing?

Our team of expert bookkeepers are highly experienced in creating and raising invoices for clients. We are able to consult based upon the unique invoicing needs of your business and to advise as to the best way for you to manage your invoicing so that you get paid appropriately for the work that your business does for your clients. Give us a call on 1300 728 875 or send us an enquiry to see how we can assist with you’re the invoicing needs of your business.

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