What is an invoice? Types, inclusions and tips for getting paid

Published Friday 15 May 2026

Table of contents

• What is an invoice?
• What is the difference between an invoice, a bill and a receipt?
• What to put on an invoice
• How to create an invoice
• When to send an invoice
• What are the different types of invoice?
• When does an invoice get paid?
• What is invoice accounting?
• What is invoice reconciliation?
• Make invoicing easier with Xero
• FAQs on invoicing

Key takeaways

• An invoice is a formal document you send to request payment for goods or services. If you're registered for GST, you need to issue tax invoices that meet specific Australian Taxation Office (ATO) requirements.
• Every invoice should include your business name, Australian Business Number (ABN), a unique invoice number, a description of what you provided, the amounts charged and your payment terms.
• Sending invoices promptly and setting clear payment terms, such as net 14 or net 30, can help you get paid faster and keep cash flow healthy.
• Accounting software can automate much of the invoicing process, from creating and sending invoices to matching payments and sending reminders when they're overdue.

Whether you're invoicing for the first time or looking for ways to tighten up your invoicing process, understanding the basics can save you time and help you get paid on schedule. Here's what you need to know about invoicing in Australia.

What is an invoice?

An invoice is a document you send to a customer to request payment for goods or services you've provided. It serves as both a payment request and a record for your business accounts.

Beyond collecting payment, invoices play a key role in your tax records. If your business is registered for GST, you're required to issue tax invoices for sales of $82.50 or more (including GST). The ATO requires you to send these invoices within 28 days of a request from the buyer.

Tax invoices must meet specific requirements set by the ATO, including showing the GST amount and your ABN. Keeping accurate invoices also makes it simpler to prepare your Business Activity Statement (BAS) each quarter.

Invoices, bills and receipts are closely related but serve different purposes. Here's how to tell them apart.

What is the difference between an invoice, a bill and a receipt?

An invoice requests payment, a bill is the same document viewed from the other side, and a receipt confirms that payment has been made. The difference comes down to perspective and timing.

When you send a document requesting payment for your work, that's an invoice. When the person receiving it looks at the amount they owe, they see it as a bill. Once they pay and you confirm the transaction, the document you issue becomes a receipt.

In accounting software, invoices typically sit in your accounts receivable (money owed to you), while bills appear in your accounts payable (money you owe to others). Receipts are proof of completed payment for both sides.

Knowing what belongs on each invoice helps you meet ATO requirements and avoid payment delays.

What to put on an invoice

A complete invoice includes all the details your customer needs to understand the charges and make payment. For tax invoices, the ATO sets specific requirements you need to follow.

Every invoice should contain:

• your business name, ABN and contact details
• the customer's name and address
• a unique invoice number
• the invoice date and due date
• a clear description of the goods or services provided
• the quantity and price of each item
• the total amount, including GST where applicable (if the GST is exactly 1/11th of the total, you can simply state "Total price includes GST")
• your payment terms and preferred payment method

For tax invoices over $1,000, you also need to include the buyer's identity or ABN. Getting your invoice format right from the start saves time and reduces the chance of payment hold-ups. For a detailed walkthrough, see how to make an invoice.

Once you know what goes on an invoice, the next step is putting one together.

How to create an invoice

Creating an invoice is straightforward, especially with accounting software that can automate most of these steps.

1. Choose an invoice template or open a new invoice in your accounting software.
2. Add your business name, ABN and contact details.
3. Enter the customer's name and address.
4. Assign a unique invoice number (most software does this automatically).
5. Set the invoice date and due date based on your payment terms.
6. List each product or service with a description, quantity and price.
7. Add GST where applicable and check that the total is correct.
8. Send the invoice to your customer by email or through your accounting software.

Accounting software can handle numbering, calculations and delivery for you. It can also track whether your customer has viewed the invoice and send automatic reminders when payment is due.

When you send the invoice matters just as much as what's on it.

When to send an invoice

The best time to send an invoice depends on the type of work and your arrangement with the customer. Sending invoices promptly helps keep your cash flow steady.

• Completed work: send the invoice as soon as the job is finished or the goods are delivered
• Large projects: send interim invoices at agreed milestones throughout the project
• Ongoing services: set up recurring invoices on a regular schedule, such as weekly or monthly
• Advance payment: send a deposit invoice before starting the work, especially for high-value jobs

The sooner you invoice, the sooner you're likely to get paid. Delays in sending invoices often lead to delays in receiving payment, which can put pressure on your cash flow.

There are several types of invoice to suit different situations. Choosing the right one can make your process more efficient.

What are the different types of invoice?

Different business situations call for different types of invoice. Here are the most common ones you're likely to come across.

• Sales invoice: the standard invoice you send to request payment after providing goods or services
• Tax invoice: required when you're registered for GST; must include GST details and your ABN
• Past due invoice: an invoice where the payment deadline has passed without the full amount being received
• Interim invoice: used for billing at stages during a longer project, rather than waiting until the end
• Final invoice: the last invoice sent after all work on a project is complete
• Recurring invoice: automatically generated on a set schedule for ongoing services, such as monthly retainers
• Pro forma invoice: a preliminary document that outlines the expected cost of goods or services before a sale is confirmed. It serves as a quote in invoice format, often used for international trade or project scoping
• Commercial invoice: used for international shipments to declare the value of goods for customs
• Credit note: issued to reduce the amount owed on a previously sent invoice, for example when returning goods or correcting an error
• Electronic invoice (eInvoice): a digital invoice sent directly between accounting systems using the Peppol framework, which is supported in Australia for faster, more accurate business-to-business transactions

Once you've sent the right type of invoice, the next question is when to expect payment.

When does an invoice get paid?

Payment timing depends on the payment terms you set on your invoice. Common terms in Australia include 7, 14 or 30 days from the invoice date. Net 30 means the full payment is due within 30 days of the invoice date.

To help you get paid faster, consider these approaches:

• state your payment terms clearly on every invoice
• offer multiple payment methods, such as bank transfer, credit card or online payment
• send invoices promptly and follow up with reminders before the due date
• use eInvoicing to deliver invoices directly into your customer's accounting system

Shorter payment terms, such as net 7 or net 14, can improve your cash flow, especially for smaller jobs. Make sure your terms are agreed with the customer before you start work.

Tracking invoices and payments is a key part of keeping your accounts up to date.

What is invoice accounting?

Invoice accounting is the process of recording invoices in your accounts receivable, which tracks the money your customers owe you. Each invoice you send creates an entry in your books until the payment is received and matched.

A bookkeeper or accountant can help you set up and manage this process. If you're handling it yourself, accounting software automates much of the work by recording invoice entries, tracking outstanding amounts and updating your accounts when payments come in.

Using software to send invoices and track payments means fewer manual entries and less room for errors. It also gives you a real-time view of how much you're owed at any point.

Once payments start arriving, the next step is matching them to the right invoices.

What is invoice reconciliation?

Invoice reconciliation is the process of matching incoming payments to the invoices they relate to. This confirms that you've been paid the correct amount and keeps your financial records accurate.

Here's how the process typically works:

1. Review your bank transactions for incoming payments.
2. Match each payment to the corresponding invoice in your records.
3. Investigate and resolve any discrepancies, such as partial payments or overpayments.
4. Mark matched invoices as paid and update your accounts.

Accounting software can automate this by suggesting matches between bank transactions and open invoices. This reduces the time you spend on manual bookkeeping and helps you spot missed or incorrect payments quickly.

With the right tools, invoicing and reconciliation can run smoothly with minimal effort on your part.

Make invoicing easier with Xero

Good invoicing practices help you get paid on time, stay on top of your tax obligations and keep your cash flow healthy. The right software can take much of the manual work out of the process.

With Xero, you can:

• create and send professional invoices from your desktop or mobile
• set up automatic payment reminders so you don't have to chase late payers
• track which invoices are paid, outstanding or overdue in real time
• reconcile payments to invoices automatically as bank transactions come in

Get one month free or learn more about invoicing with Xero.

FAQs on invoicing

Here are some frequently asked questions about invoicing to help you manage your billing with confidence.

What's the difference between invoicing and billing?

Invoicing is the act of sending a document that requests payment for goods or services. Billing is the broader process that includes generating invoices, tracking payments and managing outstanding amounts. In everyday language, the two terms are often used interchangeably.

Can I send an invoice before completing the work?

Yes. You can send a pro forma invoice to outline expected costs before a sale is confirmed, a deposit invoice to request upfront payment, or an interim invoice to bill for work completed so far on a larger project. These are all common and accepted practices in Australia.

What happens if my invoice doesn't get paid?

Start by sending a polite payment reminder. If the invoice remains unpaid, follow up with a formal demand letter. You might also consider offering a payment plan to help the customer settle the debt. As a last resort, you can refer the matter to a debt collection agency.

Do I need accounting software to send invoices?

You don't need accounting software to send invoices. You can create them using a word processor or spreadsheet. However, accounting software can help by automating invoice creation, tracking payments, sending reminders and keeping your records organised.

What does net 30 mean on an invoice?

Net 30 means the full payment is due within 30 days of the invoice date. Net 14 and net 7 are also common terms, meaning payment is due within 14 or 7 days respectively. Choosing shorter payment terms can help improve your cash flow.

What is the difference between an outstanding invoice and an overdue invoice?

An outstanding invoice is one that has been sent but not yet paid. It may still be within the agreed payment window. An overdue invoice is one where the payment due date has passed and the amount remains unpaid.