An invoice is a formal request for payment (either printed or electronic) that you send to your customers as a record of the goods or services they have purchased from you.
The invoice outlines how and when payment should be made.
Invoices are an essential part of business transactions; they help you track income, manage cash flow and meet your tax obligations.
When you’re setting up a business, sending an invoice is how you ask for payment for the goods or services you’ve provided.
There are some important things to note about invoicing
Start by setting up customer accounts in a database that enables you to store their contact details and to manage their information and interactions. This will allow you to manage and track payments.
There are different software platforms available that can help you to manage customer accounts and invoicing.
You will need to set up a business bank account so that your customers know where to make their payments.
To produce the invoice you will need details from the customer such as their name, address, phone, email and Australian Business Number (ABN).
Your invoice should outline the product or service supplied and how, and when you require your customers to pay.
Keep all records for at least five years for tax purposes.
There are two types of invoices:
Tax invoices are only used if you are registered for Goods and Services Tax (GST) and must include GST details.
Regular invoices are used by businesses not registered for GST and must not include GST details.
Useful information:
If you are an individual, not a business and you are requesting a payment through an invoice you may be required to complete a statement by a supplier not quoting an ABN.
E-invoicing enables you to invoice digitally through software; it is not just emailing a PDF invoice.
It is a sophisticated software system that eliminates the need for invoices to be printed, posted, or emailed, and it simplifies the exchange and processing of invoices.
How e-invoicing works
What makes e-invoicing possible is a common standard and safe and secure network that allows invoice data to be exchanged between different software or systems.
To start e-invoicing, your software needs to be connected to the Peppol network, which is what ATO approved service providers use to securely deliver e-invoices.
The ATO administers the network but can’t access or view your invoices.
Many small business accounting software providers already offer e-invoicing options.
It doesn't matter which software you and your business partners use to invoice, as long as you're both connected to the Peppol network.
