Invoicing is a critical part of running a business. Big or small, it is essential for many reasons.
Although invoicing may often be a demanding and time-consuming process, many don’t realise the implications of poor invoicing. If you’re invoicing isn’t up to scratch, not only will your cashflow be dramatically impacted but there may be taxation audit issues if there are no proper record of sales.
An invoice can be a valuable tool for your record keeping. As a business, you are required to provide record of sales. Having invoices is an adequate way to keep record of your sales while also keeping track of the date goods were sold or when services were performed.
What’s required from the ATO
Tax invoices for your business sales must include relevant information to clearly determine the following seven details:
- The words “tax invoice”
- The seller’s identity
- Your ABN
- The date of issue
- Description of the items sold and/or the service performed
- GST amount (if any)
- The extent to which sales include GST (e.g. GST sales vs GST free sales)
Invoicing on time
If you want to get paid on time, you will need to invoice on time.
A late invoice may be questioned, rejected or may come back requesting evidence of goods provided or services performed. Prompt invoicing and clear payment terms will remain fresh in a customer’s mind which means there is less chance of potential dispute and delayed payment.
Ensuring that each and every invoice you send out is paid on time is absolutely vital to managing your cash flow and ensuring that you have a regular, reliable income that you can use to support your business.
Get into good habits by setting yourself time every week (or two weeks the latest) to sit down and invoice. If you’re leaving your invoicing for weeks at a time and only invoicing when you know your expenses are due, you will find yourself in a scramble to get the cash you need.
The Bottom Line
Invoicing is something you want to get right the first time around. Don’t be selling yourself short or leaving yourself exposed to the struggles that come with poor cash flow.
We’re here to help – get in contact with us today with any assistance you need in this area.