How to invoice your clients in 5 steps

Invoicing clients in five steps

To help make invoicing your clients an easy process, here are five simple steps that you can follow.

1. Find out what type of invoice you need

The type of invoice a business issues generally depends on whether it is registered for goods and services tax (GST). Businesses that are GST-registered typically issue tax invoices that show the GST component of the sale. Businesses that are not registered for GST usually issue standard invoices, which do not refer to GST or include the words ‘tax invoice’.

2. Prepare a client services agreement or engagement letter

It may sound obvious, but before you send your client an invoice, it is important to make sure that they are expecting to receive it. If your client suddenly receives an invoice out of the blue, they might not pay it promptly or they may even be annoyed. It’s a good idea to start any new business arrangement with a client services agreement or engagement letter. This is where you set out your invoicing rules, such as your payment terms and how overdue payments are managed. Having such an agreement in place at the start of the relationship helps to create transparency and ensures that everyone has the same expectations.

3. Choose a method for creating your invoices

You may choose to create your invoices yourself using word-processing software, such as Microsoft Word. Another option is to use a template. You can find many different types of invoice templates online or in Microsoft Word or Excel. You could also use an accounting software package, which can generate invoices for you using the information you provided when you created your account.

Whichever method you choose, consider customising your invoices. Adding a personal touch, such as your business logo, brand colours, slogan or an inspiring quote that relates to your business will help to reflect your business’s brand and identity. Given that they are part of your overall company communication, it’s not a bad idea to align your invoices with the other documents you send to your clients.

4. Know what details you need to include

Essential information

The type of invoice a business provides typically depends on whether it is registered for goods and services tax (GST). GST-registered businesses generally issue tax invoices, while those not registered for GST usually issue standard invoices.

The Australian Taxation Office (ATO) outlines several elements commonly included in a valid tax invoice. These may include:

• a title such as ‘tax invoice’ to indicate the nature of the document, or simply ‘invoice’ for businesses not registered for GST

• the seller’s identity, such as a business or trading name

• an Australian Business Number (ABN)

• the date the invoice is issued

• a brief description of the goods or services supplied, including quantity and price

• any GST amount payable, listed separately, or a statement indicating that the total price includes GST (where applicable)

• information showing the extent to which each item includes GST.

These inclusions help ensure clarity for both the business and the customer, and support accurate record-keeping.

Other information

So, we’ve covered the essential information that you need to include to make your tax invoices valid. However, there are other important details that you should have in any invoice that you send to clients. While you should aim to keep your invoices concise (preferably one single page), they should include enough information for your client to know exactly what they are being asked to pay for. This will help to avoid payment delays. In addition to the information above, it is standard practice to include these details in invoices:

• a unique invoice number. This is helpful in case you or your client need to refer to the invoice
• other details about your business, such as your business logo, postal address, website address, email address, phone and fax numbers
• the customer’s details, including:
  • your customer’s contact details: their postal address, email address and phone number
  • the name of the person who ordered the product or service
  • the name of the person responsible for paying the invoice
  • the customer’s purchase order (PO) number or contract agreement dates
• payment details. These usually include:
  • the terms, for example, when the payment is due or a discount for early payment
  • payment options, such as direct deposit, credit card, EFTPOS or cash
  • your bank details, including your BSB and account number, account name, the name and branch of your bank and the reference number that your client needs to include in the transaction description.

5. Send it to your client

Now that you’ve created your invoice, you’re ready to send it off to your client. There are four main ways you can do this: by post, email, online invoicing or e-invoicing.

• Post: This may be a good option for customers who tend to overlook emails or who don’t use email at all. However, the disadvantages are that it is slower and less secure than other methods.
• Email: The advantages of this method are that it is fast, secure and reliable. Invoices cannot get lost en route to the client, provided that you enter their email address correctly.
• Online invoicing: For this method, you will need online invoicing software. You can generate and send the invoice using the software program, and the invoices have built-in payment options. This makes the process of paying the invoice a lot easier for your customer, and it means they are more likely to pay the invoice quickly.
• E-invoicing: Alternatively, if you use accounting software, you can send your invoice directly to your customer’s accounting software, where they will see it as a draft bill awaiting payment. This works even if your client uses a different accounting software package.

Invoicing best practice tips

• Check in with new customers: After sending an invoice to a new customer for the first time, it’s a good idea to call them to make sure the right person has received it, that they know what it is for and that they have all the details from you that they need.
• Send reminders: As the due date for payments gets closer, it’s advisable to send your client a polite reminder, especially if you’ve given them a long time to pay. As a general rule, you should send a reminder if you give clients 14 days or more to pay an invoice.
• Send invoices promptly: To increase your chances of getting paid quickly, make sure you invoice clients at regular intervals or as soon as the order is completed.
• Keep records: Businesses generally maintain records such as invoices for set periods under ATO requirements. These records may be kept in either electronic or printed form, depending on what suits the business. Storing invoices in a secure and accessible location can support effective administration and make it easier to locate information when needed.
• Offer a range of payment options: Making it easier for your customer to pay your invoices by providing a few different payment options means they will be more likely to pay quickly. It also demonstrates your flexibility.
• Show appreciation: Sometimes, a little appreciation can go a long way when it comes to building positive client relationships. Consider including a friendly note of gratitude, such as ‘Thank you for your business’.