How to invoice

An invoice is a notice of an obligation to pay and a record of purchase. It allows your customers to pay you for the goods or services that you’ve provided and gives your customers details of their purchase. Proper invoicing helps you to protect your business’s cash flow, maintain good records and meet your tax obligations.

There are different types of invoices. Make sure you know which one to use.

If your business is:

• registered for goods and services tax (GST) – you must provide tax invoices
• not registered for GST – use regular invoices (and don’t include the words 'tax invoice').

If your business is registered for GST, a tax invoice shows that GST was included in the price of some or all of the goods and services you sold. When you make a taxable sale of more than $82.50 (including GST), your GST-registered customers need a tax invoice to claim a credit for the GST in the purchase price.

If your customer requests a tax invoice and you’re not registered for GST, your invoice should show there is no GST included in the price. You can do this by including the statement ‘No GST has been charged’ or by showing the GST amount as zero.

Using a standard layout for your invoice will help make it easier for your customers to find important information. If you plan to create a custom design for your business tax invoices, make sure you include the mandatory requirements.

It’s up to you what other features you use, such as:

• business logos
• paper colour
• font style
• advertising.

Your tax invoice must include the following 7 pieces of information to be valid. Depending on the total price of the tax invoice and how you sell, there may be more requirements.

For sales of less than $1000 (including GST), your tax invoices must include:

1. the words ‘Tax invoice’ – preferably at the top
2. your identity as the seller, such as your business name or trading name (contact details are optional, but recommended)
3. your Australian business number (ABN)
4. the date you issued the invoice
5. a brief list of the items sold, including quantity and price
6. the goods and services tax (GST) amount payable (if any). You should display the GST amount for each item separately, or, if the GST amount is exactly one-eleventh of the total price, you can use a statement such as ‘Total price includes GST’
7. the extent to which each item sold includes GST. You’ll meet this requirement if you either:
• show the GST amount for each item
• clearly state that the total price includes GST.

Tax invoices for sales of $1000 (including GST) or more also need to show the buyer’s identity or ABN.

The way you do this is generally your decision. You could choose to send your invoices by:

• post
• email
• e-invoicing
• printable web page
• in person.

Sending your invoices via email can reduce the chance of losing them in the mail and encourage prompt payment.

Regardless of which method you choose, sending the invoice at the time of purchase encourages your customers to pay promptly. Be predictable. If you need to send regular invoices, try sending them at the same time of day so that your customer knows when to expect them.

If your customer requests a tax invoice from you, you must provide it within 28 days of the request. Take this into account when deciding how it will be delivered.

The method that you choose must also meet your record keeping requirements.

By law, you need to keep business records for at least 5 years. Whether you keep printed or electronic records is up to you.

You need to keep all invoices for income you’ve received and payments you’ve made to others. These will help you prepare your business activity statement (BAS), income tax return and other tax obligations.

There are a number of ways to deal with unpaid debts and customer disputes. Find helpful tips and resources on how to deal with not being paid.

Other options to boost cash flow and prevent unpaid invoices:

• Include your accepted payment methods and payment terms on the invoice.
• Offer a variety of payment options and state these on your invoice.
• Be detailed in your item description field. This can help prevent disputes.

If the tax invoice you sent is incorrect or incomplete, it’s not a valid tax invoice. You’ll need to replace it with a complete and correct tax invoice.

If you receive a tax invoice with missing information, ask your supplier for a valid tax invoice. You may also be able to treat the tax invoice as valid where the missing information can be obtained from other documents the supplier has given you.

If your supplier doesn’t respond to your request for a valid tax invoice within 28 days and you can’t find the missing details in other documents from the supplier, you can seek the Australian Taxation Office’s permission to treat a document as a valid tax invoice.