The poor man's guide to invoicing
By Leon Gettler
Getting the invoicing done is important for any business. Neglect the invoicing and there's no cash flow.
It's important to invoice regularly. Otherwise, you start lagging behind and that creates a cash-flow crisis. Ideally, you should invoice as soon as you complete a job so there's minimal delay in payment.
The Australian Taxation Office has a good guide for standardising invoices. Each invoice should always include the basics: the identity of the supplier (including the name of the business), the relevant ABN, the date of issue, an invoice number, the purchaser's identity or ABN, a description of the goods or services provided and the GST-exclusive price, the GST amount, and the GST-inclusive price for each item. These amounts are then totalled vertically in the bottom right-hand corner.
Business Victoria reminds us that you should also include the payment terms - like whether it needs to be paid within 14 days - and the details for how the payment should be made. For electronic transfer of funds, the invoice should include your bank BSB number, your account number and the name and branch of the bank. As a rule, you should also include your address in case the customer prefers to pay by cheque.
It can be beneficial to offer a small discount in the service agreement for early settlement and apply a penalty for late payments. Make sure you send it to the right person, otherwise it will just get lost in the company's bureaucracy.
Also, check which details the company needs to pay your invoice. Do they need an invoice number or purchase number? Some accounts-payable departments need you to list their address. Set up a process to deal with late payments and finally, don't spend the GST. It's not your money. Keep the GST payments in a separate account.
What's your invoicing like? What processes do you use?
*This article contains general information and commentary only, and is not legal or financial advice, and you agree not to rely upon this article in any way.