What is an invoice payment?
An invoice payment is a scheduled payment that customers make to businesses for goods and services supplied to them. Businesses can offer a variety of payment methods to meet their business needs and customer preferences.
What should you include on an invoice?
Invoices detail what the customer owes, the products or services rendered, payment options and the due date. However, there are many other details that an invoice should include to ensure the seller gets paid on time, maintains good records and remains compliant with the ATO.
For example, a tax invoice must include the following:
A ‘Tax invoice’ heading
Your business name, contact details, Australian Business Number (ABN)
Date of invoice
List of items sold, including quantity and price
GST amount payable and displayed for each item separately.
Note: Tax invoices of $1000 or more (including GST) also need to display the buyer’s identity or ABN.
You may also want to include:
your business’ logo
Invoice number
purchase order number (if relevant)
payment due date
invoice terms and conditions
remittance details
payment methods
Download your free invoice template here.
Invoice payment methods
There are multiple invoice payment methods, ranging from traditional (like cash or cheque) to online payments. Today some of the most popular invoice payment methods are credit and debit cards, digital wallets and bank transfers via BPAY or direct debits:
Debit or credit cards
Debit and credit cards are convenient and encourage faster payment. The only downside for businesses is the processing fees, which often cost around 2-3% of the invoice’s total balance.
BPAY
Over 60,000 Australian businesses offer BPAY, allowing clients to pay them directly from their online banking accounts. It’s secure and convenient for both parties.
Digital wallet
Digital wallets are cloud-based payment methods that your customers may already use and include Google Pay, Apple Pay and PayPal. They’re convenient for customers and enhance security, as customers don’t have to share their credit card information.
Best practices for invoice management
1. Put terms in writing
Before working with a client, define invoice payment terms in writing. Clearly communicate your pricing and when you require payment.
2. Be consistent
Consistent invoices create a better customer experience as customers are familiar with your invoices and know how to find the information they need quickly. Consider using invoice tools that have customisable templates, so you’ll never forget to include any vital information, and you won’t need to recreate invoices every time you send one.
3. Allow online payments
Many clients prefer to pay online with options like credit and debit cards, BPAY or digital wallets. Online payments are much more efficient for businesses as they’re easy to track and account for. In a best case scenario, you can even get payment within seconds of sending the invoice.
4. Use eInvoicing
All levels of government and many businesses throughout Australia are starting to eInvoice for business-to-government and business-to-business transactions. Australia uses the Peppol system for eInvoicing. When on the Peppol network, invoicing data can be exchanged directly from the seller to the buyer's software system ready for approval and payment. Emails with PDF invoices are no longer required!
5. Automate invoices and past-due notices
You can use software to automate invoicing and ensure a streamlined process. Your software should be able to track payment and send past-due notices if necessary, freeing up your team from admin to take on higher value work.
6. Offer incentives for early payments
Some businesses give clients a discount for early payments, such as 1/10 Net 30. This term means the seller will offer a 1% discount on the invoice price if payment is made within 10 days, otherwise, payment is due in 30 days. Offering an incentive like this can help businesses maintain healthy cashflow.
7. Use invoicing software
Invoicing software helps you generate professional-looking invoices at the click of a button.You can send quotes by email or SMS, and then convert those quotes into invoices with pre-filled GST calculations and customer details.
With invoicing software, businesses can automate the entire invoicing process. You can set up recurring invoices, track invoices and have the invoicing software automatically calculate taxes or processing fees. You can also review analytics, track expenses, store receipts and deposit payments into your bank account automatically.
Simplify invoice payments with MYOB
The manual creation and processing of invoices presents multiple opportunities for delays and errors. A better approach is an automated invoicing system that calculates taxes, sends invoices and collects and reconciles payments.
With MYOB, you don’t have to worry about creating and sending invoices. Once you’ve added a customer to our system, we’ll handle the rest — invoicing, reconciliation and reminders for customers whose payments are past due.
Download your free invoice template here.
We help businesses of all sizes in Australia and New Zealand get timely payments, remain compliant with regulations and uphold the highest standards for customer service. Find out how much easier invoicing can be with MYOB. Start your FREE trial today!
Disclaimer:Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice.This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.
