How to Grow Your Business with an Effective Invoice Template

If you’ve ever heard the phrase “time is money,” its significance in the world of business could never be more true. Every minute on your business clock presents an opportunity to make money. For many businesses, however, administrative tasks take up too much valuable time— an average of 16 hours per week! The process of creating and delivering invoices can be especially frustrating and time-consuming. And even though this important administrative task is important and keeps your business running, it shouldn’t take up so much of your time. That’s why you should consider using an invoice template.

An invoice template eliminates the hassle of creating invoices whenever you need to. It lets you quickly enter data against an already-created format, saving time and effort.   

What is an invoice? 

An invoice is a document a business sends another business or customers detailing the products or services provided. It’s a sort of bill that serves as a request for payment. It also acts as a transaction record, ensuring both parties are aligned on the goods or services exchanged and their financial obligations. An invoice contains several details, such as: 

• The quantity of goods
• The amount charged
• The payment terms
• The terms of the transaction 

Importance of invoicing

As mentioned earlier, invoices play a crucial role in maintaining accurate records of transactions. This is extremely important for accurate financial recording and organisation, especially if your business deals with many clients. Imagine providing services or selling products on credit but not having a record of these transactions. How would you ask for payment? Imagine having to remember all the details of the transactions off the top of your head when it comes to asking for payment. Invoices make this process easier. They act as a legal agreement between you and your customers. 

Invoicing provides several benefits for your business, such as: 

• Improved cash flow: Well-recorded invoices set clear expectations for when your business expects payment from its customers. This reduces the time it takes for money to flow into your business. When you have a steady flow of income, this translates to improved liquidity, enabling you to meet financial obligations and invest in growth opportunities.
• Reduced debtor days: Effective invoicing contributes to shorter debtor days—the time clients take to settle their bills. With well-structured invoices, you’re signalling your clients about the terms and due dates. This minimises the risk of overdue payments.
• Enhanced customer relationships: Your invoice is not just a payment request; it’s also an opportunity for building stronger relationships with your clients. A well-crafted invoice demonstrates professionalism, attention to detail, and transparency. It shows that you value your clients’ trust and want to make the payment process smooth.

When you have a steady flow of money into your business, shorter debtor days and great customer relationships, your business is more likely to grow. That’s why invoicing is essential, whether you are dealing with 10 or 100 clients.

Invoice vs. tax invoice

Sometimes, you may need to create tax invoices. A tax invoice is a type of invoice that contains detailed information about a taxable sale or supply of goods and services. It’s a legal document issued by a seller to a buyer that outlines the specifics of the transaction, including the amount of Goods and Services Tax (GST). A regular invoice differs from a tax invoice in that a tax invoice shows that the price of certain or all of the goods you’ve sold includes GST, whereas a regular invoice lacks this feature.

So when is your business required to provide tax invoices? There are several circumstances where you may need to provide tax invoices. These include: 

• You make a taxable sale of more than $82.50 (including GST).
• Your customer requests a tax invoice from you.
• You make a sale that is partly taxable and partly GST-free.
• You make a sale on credit or provide a lay-by service.

What must businesses include on an invoice? 

Creating a well-detailed invoice template is extremely important. It’s not just about your business potentially losing income; it’s also about avoiding unwanted issues. For instance, an invoice that doesn’t reflect all the required information will likely raise eyebrows. It may come off as fraudulent, especially with many AI tools increasing the focus on accuracy. 

That said, your invoice template should contain the following information:

• Invoice Title: The word “Invoice” should be prominently displayed at the top of the document to identify its purpose.
• Supplier’s Information:

Legal name or trading name of the supplier

Supplier’s business address

• Recipient’s Information:

Recipient’s name

Recipient’s business address

• Invoice Date: The date when the invoice is issued.
• Description of Goods/Services:

Detailed description of the goods or services provided

Quantity of goods or services supplied

Unit price for each item

• Total Amount: The total amount payable for the goods or services.
• Payment Terms: Clear and concise terms outlining when the payment is due and the accepted payment methods.
• Reference Number: A unique identifier or invoice number for tracking and reference purposes.
• Terms and Conditions: Any relevant terms and conditions related to the sale, including return policies, warranties, and late payment penalties.
• Payment remittance information: Provide payment methods and information such as bank account details and currency.

A tax invoice template contains all the information in a regular invoice template. However, it contains minor differences or additions, such as:

• Tax Invoice title: Instead of the words invoice, you should indicate “Tax Invoice” at the top of the document. 
• Supplier ABN: This is your Australian Business Number (ABN), which is essential for GST reporting.
• Recipient’s ABN: If the recipient is registered for GST, you should include their ABN in the tax invoice template to establish eligibility for claiming input tax credits.
• GST Amount Breakdown: Your tax invoice template should include a section that breaks down the GST amount on each product separately. 
• Total Amount Payable: The final total amount, including any applicable GST.

Invoicing tools and eInvoicing

For invoices to be effective, they must reach your clients on time. You, therefore, need an efficient system that can send these invoices accurately and efficiently. Your business can leverage invoicing tools such as eInvoicing. eInvoicing, or electronic invoicing, is an electronic method of creating, sending, receiving, and processing invoices. This method eliminates the use of paper and saves your business time and money. Examples of invoicing tools include Square, Xero, and Invoice2go.

In an eInvoicing system, invoices are generated electronically within a software application and then shared with the recipient through electronic channels such as email, electronic data interchange (EDI), or specialised eInvoicing platforms. The recipient can then directly import the electronic invoice data into their accounting or enterprise resource planning (ERP) systems.

Quick tips for sending invoices and getting paid

Creating a great invoice template is only the first step. Even after sending the invoices on time, you may still have to deal with delayed payment. So, how do you ensure you get paid on time for maximum cash flow? 

• Set up automated reminders for overdue invoices. This saves time and maintains consistent communication with clients, encouraging them to address outstanding payments promptly.
• Clearly state payment terms on your invoices. Specify the due date, accepted payment methods, and any early payment discounts or late payment penalties.
• Provide detailed descriptions of the goods or services you’ve provided. This reduces confusion and helps clients understand the value they’re paying for.
• Offer a small discount for early payments. This can motivate clients to settle their invoices sooner, improving your cash flow.
• Assign unique invoice numbers to each invoice. This simplifies tracking and organisation, both for you and your clients.
• Regularly reconcile your invoices with your financial records to promptly identify and address any discrepancies.
• Embrace a range of payment methods, such as automated transfers and online transactions, simplifying the payment process for your clients.

How Visory helps businesses get paid

While a well-crafted invoice template is essential for your business’s cash flow and growth, managing them is just as important. At Visory, we understand the challenges of dealing with clients regarding tracking and following up on payments. When you use our services, we help you get paid faster. We do this by handling all your contacts, establishing clear contracts and tracking invoices and payments. This way, you focus on other income-generating tasks that help your business grow.

Contact us today, and let us take care of your Accounts Receivables.