The easy-breezy guide to business invoicing and invoice templates
Whether you're preparing for your first or your thousandth, it never hurts to make sure that your invoices are up to scratch. We've assembled a few valuable pointers to help speed up your invoicing and ensure the invoices you're sending to your clients are the best they can be - there's always room to improve, after all!
We've also included a downloadable invoice template that is as impressive to look at as it is easy to use.
What's wrong with my invoicing?
If you're already a business sending out invoices to your happy clients, there's a very good chance that your invoices are functional, at the very least. There are a few simple ways to elevate your bare-bones invoices to great invoices, though.
When you're swamped with business upkeep, invoices will quickly become your best friend - they clearly demonstrate to customers how much they need to pay and for what.
As well as ensuring you get paid on time, invoices are a great way to keep track of your business's revenue. So, when it comes to tax time, you won't be left floundering.
We've noticed there lies some confusion in what an invoice should be, and how it should be labelled. It should be noted that there are two kinds of invoices:
- Tax invoices are used by businesses registered for GST and will include relevant GST amounts for items.
- Normal invoices are used for businesses not registered for GST.
Tax invoices should be supplied if any of the following apply to your sale:
- The purchase is taxable
- The purchase is more than $82.50 (including GST)
- Your customer requests the tax invoice.
A few simple tax invoice reminders
Invoices need some very specific information to ensure they are a valid legal financial document. Without some of this information, there's a chance that an unhappy ATO representative will eventually follow up (and no one wants that).
There are a handful of things you need to include on a tax invoice to make it legally valid.
The words ‘Tax Invoice’: This is only necessary if the
invoice is a tax invoice. It's easiest if this is at the top of the
- Identifying yourself as the seller: This can be your business’ name or your trade name.
Identifying your customer: List the business name and contact
details of your customers clearly to avoid confusion.
ABN/ACN: Every invoice should include your ABN (Australian
Business Number), or your ACN (Australian Company Number), if you
Date: The date the tax invoice was created.
Description: A brief description of the services or items
sold, including relevant quantities and prices.
- GST: The GST amount of the goods or services (if any) payable. You have the option of displaying GST for each item or within the total price. If you earn under $75,000 you do not need to register for GST.
Optional things to include on an invoice
Although not necessary from a legal point of view, there are a few
things that you can add to an invoice These are for the most part
related to payment details to make sure you get paid on time.
- Due date: you don't want to be waiting months for your invoice payment. Specify when the invoice needs to be paid to ensure you're not left in the lurch financially.
- Deposit: Even if a deposit has been specified previously, it's important to
- Invoice number: this number is a valuable reference, both for your own records and for discussions with customers relating to payment.
- Payment terms: The date of the invoice should be included to ensure the due date of payment is clear.
- Specific items: Businesses should be clear about the items on their invoices to avoid confusion with customers. Don't lump everything in one item - break things down so customers can see what the final cost is exactly made up of.
- Discount, deposit or late fees: Make sure to include a reference to any discounts, deposits or late fees that are involved in the transaction.
- Payment options: You should list your preferred method/s of payment on your invoice. These may include bank transfer, PayPal, credit card, cash or cheque. If you do require a bank transfer, either include these details or include a link so your customer can easily transfer payment online.
Different ways to invoice
Although invoices must contain very specific information, there are no guidelines as to how this information must be presented. This means that how a business chooses to create an invoice with this information in mind is completely up to them.
Although it makes sense for many businesses, invoices also don't have to be sent digitally - an invoice can be given to a customer in person or sent via post, fax, email, or even printable web page.
How you decide to send your invoice is completely dependent on your circumstances, but do make sure to keep in mind the convenience of the customer as well. Sending invoices via fax is certainly not for everyone!
There are as many ways to write an invoice as there are ways to send them, but we've listed the two most common ways below.
Using invoice templates
Invoicing templates are also a good way for businesses to manage their expenses in a simple and efficient way.
The simple layout of invoice templates make them a versatile way to organise your financial statements. Because they contain all of the bits we mentioned in our invoice reminder section, they're also a convenient way to ensure your invoices are valid legal documents. These templates being digital is also huge beneficial for those prone to losing paper invoices
Invoice templates can be found easily online, but can vary wildly in quality. To avoid some of the dodgier examples, we recommend using the template that we've created especially for small businesses. MYOB's smart, customisable invoice template looks great and makes it easy for customers to find the important stuff. Best of all, it's totally free!
Our invoice template makes it easy to:
- Customise an invoice according to your brand, logo and all. Have your business stand out to stakeholders.
- Summarise your financial information so you can see your money at a glance. Make finances easy to understand.
- Calculate and track GST automatically, so there's no need to manually work it out Put time back into your business instead.
Using software to invoice
Software is another common way to create invoices and can offer more flexibility than invoice templates.
Two of the most common pieces of software used to write invoices are Word and Excel. Although basic, the convenience, affordability and low cost mean they're ideal for smaller business.
When things start getting more technical, or if businesses are fed up with manually entering and calculating information, accounting software is the next logical step. Accounting software creates professional invoices to help save time and money and provide consistency.
Using accounting software as an invoice generator it is possible to:
- Monitor invoice activity in real time to remove the guess work from payments. You know when and how you get paid, so there's no more awkward money chasing.
- allows you to know when you get paid so that you don't have to chase up customers.
- Design professional invoices according to your business's particular branding style.
- Create, send and track invoices and quotes from your smartphone wherever you are.
- Get paid directly from invoices with AMEX Visa, Mastercard or BPAY.
Like the idea of streamlining your finances? You can try it yourself for free with a 30 day MYOB Essentials trial.
Want to learn more about STP?
If you're unsure about how STP will affect your business?
Check out the range of resources available on our site.
Invoices and cashflow
Invoices are more than just a way to get your customers to pay you. Close examination of an invoice can give you detailed information about your business and its cashflow.
Think of invoices as telling you the story of your cashflow. Invoices can tell you specifically when people are buying certain products, which will in turn help you decide how to address financial challenges and grow your business in the long run.
For example: If you're new to the tourism industry, keeping track of your invoices will allow you to determine the best times of year for you to to roster extra staff or start or increase advertising specific products - starting a month earlier or later than you originally estimated can save you large amounts of money in the long run.
Invoices provide another great piece of information for businesses: time tracking.
It may be difficult at first working out how to price your goods and services, but gauging how long certain tasks take is an important step in helping you work out these costs. It may also help you decide what areas of your business are time-inefficient so that you can divert time where it can be better utilised.
Demonstrating time on your invoices will also benefit your customer, as they can see how time factors into what they've been charged. Knowing how much your time is worth also helps to them to learn what to expect in the future regarding costs.
For example: Jason is a woodworker. As a side business he decides to make and sell wooden toys. He prices his first toys on his website based on his material costs and the estimated time needed to make the toys.
He makes and successfully sells several batches, but through his invoicing he realises he's paying himself very little per hour due to the time invested. With this in mind, he increases the price of future wooden toys.
A sparse invoice will work from a functional standpoint, but invoicing represents a great opportunity to implement your business branding. This doesn't mean you should go too crazy - simple and legible designs tend to work best for invoice design.
Invoice branding should include your logo and contact information at a minimum. After this, some creative flair is the order of the day - you could use your business’ colour palette across your invoice or use certain brand-oriented fonts. These little touches help customers remember your business when they require similar services in the future.
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