How to create an invoice in 9 steps
An invoice tells your customer how much they owe you for your goods or services, when it's time to pay you and gives them a record of their purchase.
Sending invoices also helps you protect your business cashflow, maintain accurate records and meet your tax obligations, so it’s worth taking a little time to get this process right.
In this guide, we’re going to step you through how to make an invoice, including the best practices to make the process efficient so that you get paid faster.
You can also download your free invoice template here.
Invoice details: what to include in an invoice?
Your invoice always needs to include the seller, the buyer and a description of the goods or services supplied. If you provided a quote, you should also reference those details.
You may also have to show that you collected GST on the sale.
If your business is:
Registered for GST – you must provide a tax invoice and include the words “Tax Invoice”.
Not registered for GST – you only need to provide an invoice and not include the words “Tax Invoice”.
Aim to keep your invoices concise – preferably on a single page – but with enough information so that your customer knows exactly what it refers to. If anything is unclear, it’ll lead to delays in getting paid.
Here are some of the key elements to include when creating an invoice:
customer contact info
your Business name and address
customer or Purchase Order number
your Australian Business Number
the goods or services you supplied
quantity and price of the goods or services
total price before GST
total amount to pay
your payment terms
How to create an invoice (step-by-step)
In this section, we’ll walk through the steps for making an invoice.
But before you raise an invoice, you need to make sure your customer is expecting one.
Sounds obvious, but if an invoice suddenly lands on their desk out of the blue, they may be likely to question it, delay payment and probably feel annoyed.
It’s advisable to cover your invoicing process in your customer agreements, so everything is understood and signed off before delivering any goods or services.
1. Decide how you want to create the invoice
There are a couple of ways to create an invoice.
You could use word processing software to create the invoice manually or use a template.
Alternatively, you could use invoicing software to automate the process, giving you more time to deliver the work and sign on more customers.
2. Create an invoice header with business information
Depending on your GST status, your invoice header needs to include the words “Tax invoice” or “Invoice”. Plus, your business name, address, contact information, and Australian Business Number (ABN).
3. Add a unique identification number
Each invoice should have a unique invoice number, which may contain letters as well as numbers. Using a sequential system is the easiest way to manage this.
For example, you could:
number your invoices sequentially, such as INV0001, INV0002
use a unique customer code, such as MYOB0001, MYOB0002
include the date at the start of your invoice number, for example, 2022-01-001
combine the customer code and date, such as MYOB-2021-01-001.
Choose a system that suits you and remain consistent to avoid confusing clients, as well as making life easier for your own bookkeeping and accounting.
4. Include client contact information
The invoice should also include the name, address and contact information of the client you’re invoicing.
Tax invoices for sales of $1000 (including GST) or more also need to show the buyer’s ABN.
5. Write an itemised list of the goods and services
Next, you’ll need to add an itemised list of the goods and services you're invoicing. List each item on a separate line for clear identification. As well as the description, you should add the quantity and price of each item.
6. Include important dates
There are several important dates that you need to include somewhere on the invoice:
supply date – when you provided the goods/services
invoice date – when you raised the invoice
due date – when you expect payment.
7. Add the amount to be charged
As well as listing the cost of the individual goods and services, you need to add the total amount owed. Any discounts should be applied and subtracted from the total amount.
8. Include applicable taxes
You’ll also have to state the extent to which each item sold includes GST. You can either show the GST amount for each item or clearly state that the total price includes GST.
9. Outline your payment terms
Payment terms are an important part of the invoice that you usually define in your terms and conditions. Your customer should agree to them before you deliver any goods or services.
For example, if your payment terms are 30 days, an invoice raised on 1 September will be due 30 days later, on 1 October.
If you don't let the customer know when you expect payment, it's likely to lead to problems later. Make sure you include the following:
Due date – for example, invoice date plus X days as per payment terms
Payment currency – such as AUD, USD, GBP and so on
Accepted forms of payment – bank transfer, check, credit card, PayPal
Late-payment penalties – late fees of 1% to 1.5% are standard in some industry sectors.
7 best practices when creating an invoice
Paying attention to every detail will help your invoicing and billing process run smoothly while increasing your chances of getting paid on time or even sooner. Here are the best practices to make your invoicing process more effective.
Invoices are part of your overall company communication, so it makes sense to keep it aligned with other documents and include your branding, such as your logo and brand colours. It should appear like a natural part of your ongoing communication with the client.
Make it personal
Where possible, and especially for smaller clients, make the invoice personal and friendly by including your contact’s name. For larger clients, including a contact’s name can help the accounts department check with the right person if they have any questions or concerns.
You can also keep the tone of the invoice friendly by adding a small note of gratitude, like: “Thanks – we appreciate your business”. It’s a small cost to pay for building goodwill into your client relationships.
Offer payment options
Offering multiple payment options makes it easier for customers to pay your invoices, demonstrates your flexibility and increases your chances of getting paid quicker.
Enable payment from the invoice
As well as listing each payment option in the invoice footer, you can add a link to enable direct payment from the invoice using a credit card or bank account. For example, you could include a URL address or a clickable button that links to a payment service.
Invoice by email and request a "read receipt"
You can send your invoices by email, either as a PDF attachment or directly from your invoicing software.
Either way, include a "read receipt" so that you know that the email has been received and read by the client.
If you don’t receive a “read receipt”, you know there’s something wrong and can take action to resend it.
If the client hasn’t paid the invoice when due and says they haven’t received it, you can reference the date and time they read it.
Automate recurring invoices
If you’re sending recurring invoices for the same amount, you can automate the process in your invoicing and accounting software to save you time and ensure your clients receive their invoices on time.
Automate your invoicing with MYOB
With professional accounting and invoicing software from MYOB, you can create and send invoices from any device, so you get paid faster.
MYOB lets you create invoice templates with your logo and brand colours, so you maintain a consistent look and feel with your customer communication. Plus, you can offer multiple payment options and get paid up to three times faster by enabling customers to pay with the click of a “Pay Now” button.
And for those slow-paying customers, you can set up automatic invoice reminders to give them a nudge and keep your cashflow positive.
Download your free invoice template here.