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Invoices Made Easy

abn freelance invoice Aug 09, 2023

Invoices Made Easy

In the world of business, invoices play a vital role in keeping track of finances and ensuring smooth transactions between buyers and sellers. Whether you're an experienced entrepreneur or just starting your own business, it's crucial to understand what an invoice is and how it functions. In this blog post, we'll explore the concept of invoices, why they're essential for every business, and what to look for when dealing with subcontractors or suppliers.

What is an Invoice?

An invoice is a detailed document that acts as a bill (in the hands of the recipient) or request for payment between a seller and a buyer. It is a note to say, ‘hey please pay me for this thing or this service’. It provides information about the goods or services sold, including quantity, description, price, and payment terms. An invoice also includes important details such as contact information for both the seller and the buyer, an invoice number, the date it was issued and any taxes that might be relevant (like GST). 

Who Sends Invoices?

Invoices are typically sent by the seller or service provider to the buyer or client. Various types of businesses rely on invoices for their transactions, including:

  • Freelancers: Writers, graphic designers, web developers, and consultants often send invoices to clients for the work they've completed.
  • Small Businesses: Retailers, restaurants, repair shops, marketing agencies, and other small businesses regularly send invoices to their customers.
  • Contractors: Construction contractors, electricians, plumbers, and landscapers issue invoices for their labor and materials.
  • Suppliers and Wholesalers: Businesses selling products to retailers or other businesses send invoices for the goods delivered.
  • Subscription-Based Services: Companies offering subscription-based services, like software-as-a-service providers or membership organizations, send invoices to their subscribers or members.
  • Professionals: Doctors, lawyers, accountants and consultants send invoices to their clients for the services they provide.

Example of a BUSINESS invoice here. You can send these manually or your accounting software may create and send them directly.


Editable invoice template by The Real Thiel

In some businesses, there may not be an invoice sent in advance (like when you buy things online or subscriptions). There should still be a paper trail though, like a copy of the invoice sent after purchase (showing the total and the payment made) and/or a receipt.

Even hobbyists who sell goods or provide services can send invoices, even though they are not technically running a business. A hobbyist is someone who is earning income from an activity or product that is a bit more ad hoc, less strategic, less frequent and at smaller income amounts. They have not registered an ABN. 

Important: Hobbyists should send an invoice AND a statement by supplier form (click here) to their customer. This tells the customer that they are a hobbyist (hence no ABN listed on the invoice) but allows the customer to then potentially include that cost paid as a deduction in their own tax returns. 

Example of a HOBBYIST invoice here.

If you receive an invoice with no ABN and without a statement by supplier form, then usually that expense won’t be tax deductible.  


What should be included on an Invoice?

When creating an invoice, make sure to include the following information:

  • Business Information: Clearly state your 
    • business name, 
    • address, 
    • contact details (phone number, email), and 
    • Australian Business Number (ABN) at the top of the invoice*. 

This establishes your identity as a legitimate business and makes it easy for clients to reach you if needed.

  • Invoice Number and Date: Assign a unique invoice number to each transaction and include the invoice date. This helps with organisation and record-keeping, and it indicates when payment is due. Invoice numbers should be consecutively numbered - like INV-001, 002, 003.
  • Client Information: Include your client's name, address, and contact information on the invoice. This is especially important when dealing with multiple customers or recurring transactions.
  • Description of Goods or Services: Provide a detailed description of the goods or services you provided. Include item names, quantities, unit prices, and any applicable discounts. This level of detail ensures transparency and helps both parties understand the transaction.
  • Total Amount Due: Clearly state the total amount due, including taxes or fees (GST). If there are multiple items or services, list the subtotal before taxes and any additional charges. Break down the calculations to give your client a clear understanding of the total amount.
  • Payment Terms and Methods: Specify the payment terms, including the due date and acceptable payment methods. If you offer various options (e.g., bank transfer, credit card), explicitly mention them. You can also include information about late payment fees or discounts for early payment.
  • GST Information: If your business is registered for GST, include your Australian Business Number (ABN) and indicate whether GST is included in the total amount or if it will be added separately. Otherwise, state ‘“GST not applicable’”.
  • Terms and Conditions: Consider including a brief section outlining your business's terms and conditions, such as refund policies or warranties. This helps set clear expectations and protects both parties in case of disputes.
  • Contact Information: Provide contact details, like a customer service email address or phone number, that clients can use for inquiries or concerns related to the invoice or the provided goods/services. This ensures seamless communication and enhances customer satisfaction.

*OR statement by supplier form attached (if hobbyist).


What to look for in an invoice from a subcontractor or supplier

When engaging a subcontractor or paying a supplier, before paying the invoice,  it's important to carefully review their invoices. You should make sure all of the above dot points are considered, especially the ABN (or statement by supplier form). You can also perform an ABN look up here if you ever need to. 

By paying attention to these elements on invoices from subcontractors or suppliers, you can minimise errors, discrepancies, and potential disputes. This promotes smooth financial transactions and helps maintain healthy business relationships.

Understanding the importance of invoices and how to create and review them is essential for businesses of all sizes. Invoices serve as a record of transactions, ensure timely payment, and contribute to the overall financial health of a business. Whether you're a seller, buyer, freelancer, small business owner, or hobbyist, invoicing knowledge is crucial for maintaining professionalism and organized financial practices.

Now, be sure to send those invoices and chase those payments my friends!



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