Whether you've only done one invoice or a thousand, it never hurts to make sure your invoices are up to scratch. So here's our complete guide to business invoicing – including a free downloadable invoice template.
What are invoices?
Invoices are digital or paper statements that clearly tell customers how much they need to pay and for what. There are two kinds of invoices:
- Tax invoices – for taxable purchases over $82.50 (including goods and services tax) and are used by GST-registered businesses
- Normal invoices – for purchases less than $82.50 or that are for GST-free products and services
Why invoices are important
Invoices are more than just a way for your customers to pay you. They also help manage your cash flow, track your time and understand your tax.
Managing your cash flow
Invoices can show you patterns in your sales so you can see when people are buying certain products, and what products are selling best.
They can also flag financial challenges and help you prepare for them, like when sales drop or when customers aren't paying on time.
Tracking your time
Invoices can help you track your time and set your prices. By including how long it takes to source, build or provide your products and services on your invoices you can keep a track of what you spend your time doing – and then set your prices to reflect that.
Including your time on invoices also helps to set expectations with your customers. So they know how time factors into the cost and what to expect in the future.
Understanding your tax
Invoices can help you to understand your tax obligations and manage your GST-credits.
By storing and organising your invoices – both the ones you send to customers and any that you get from suppliers – you'll get a clearer idea of how much GST you need to pay and if you qualify for any GST credits.
For more information read our GST guide for small businesses.
What information to include on invoices
Invoices need very specific information to make sure they're a valid and legal document. And the more information you put on your invoices, the happier the Australian Taxation Office (ATO) will be.
The must-have information
- The words 'invoice' or 'tax invoice' should be somewhere clear on the page
- The buyer's identity or ABN
- A brief description of the goods or services you've sold
- The date the invoice was issued
- The seller's name (this could be your business or personal name)
- Your identity, business name or ABN
- The pre-GST price (for tax invoices)
- The amount of GST added (for tax invoices)
- The total cost to your buyer
The nice-to-have information
There's a few more things you can add to an invoice to make them more helpful to customers.
- A due date for your invoice to be paid by
- A deposit amount (if relevant)
- Payment options and details (e.g. Bank transfer, PayPal, cheque or cash)
- An invoice number – this can be useful for both your and your customers' records
- Any discounts or extra fees you're applying to the sale
How to create invoices
Using invoice templates
Invoicing templates are a good way for you to create invoices quickly and efficiently while also keeping things stay consistent. They have all the must-have information fields ready for you to fill in – and they take the worry out of making sure your invoices are legal.
You can find invoice templates easily online, but they often vary in quality. So we recommend using our free and customisable template that we've created especially for small businesses.
Using invoicing software
When your business starts to grow, or if you want to cut down the time you spend on invoices you can invest in dedicated software.
You could get invoicing-specific software that will create, store and send your invoices. Or you can go for accounting software that has an invoicing feature included.
We'd recommend using accounting software (of course we would) as you'll also be able to:
- Design professional invoices using your business' brand
- Monitor your invoice payments, so you know when and how you get paid
- See who's opened and printed their invoices – making those awkward late payments conversations easier
- See how your invoices feed into your bank accounts and cash flow
- Create, send and track invoices and quotes from your smartphone
- Get paid directly from invoices with AMEX Visa, Mastercard or BPAY
How to brand invoices
Once you've got the hang of how to create, manage and send your invoices you might decide to add a bit of business branding to them too. This doesn't mean you need to be artistic or 'out there'.
By adding a few standout features like a business logo, font and colours you can help customers remember your business when they buy from your in the future.
Get more tips and tools to help your business thrive
Demystifying Australian business activity statements (BAS)
If you're an Australian business generating revenue over $75,000, or a not-for-profit generating over $150,000, Business Activity Statements (BAS) should ring a bell.Demystify BAS
All you need to know about GST registration and calculation
Many don't give it much more thought, however - how does GST affect you personally, particularly as a small business owner?Quick guide to GST
A Primer on Fringe Benefits Tax
Employers providing benefits to hard-working employees is a great way to demonstrate appreciation and recognition. If you're thinking of implementing some benefits or perks, you should first consider whether they're subject to Fringe Benefits Tax (FBT).FBT guide