Invoicing procedure: key steps to get paid on time

Published Friday 17 April 2026

Table of contents

• What is an invoicing process?
• What to include on an invoice
• Types of invoices and when to use them
• How to create an invoice
• Why streamlining your invoicing process matters
• Common invoicing problems and how to solve them
• Build the perfect invoicing system
• FAQs on invoicing processes

Key takeaways

• Establish a consistent billing schedule by choosing the same day each week for creating and sending invoices, which prevents backlogs and helps customers pay on a predictable timeline.
• Use invoice templates with pre-filled customer details and automated calculations to cut invoice creation time by up to 50% and reduce manual errors.
• Follow up on overdue invoices systematically with friendly reminders on the due date, urgent reminders after 3-5 days, and phone calls after 7-10 days, as only 30-40% of invoices get paid by the original due date without reminders.
• Include all required details on your invoices such as your ABN, unique invoice number, clear service descriptions, and GST calculations to ensure compliance and help customers understand exactly what they're paying for.

What is an invoicing process?

An invoicing process is the series of steps you take from creating a bill for a customer to getting paid. It covers creating the invoice, sending it, tracking payment, and following up if needed.

According to The Treasury, Australian businesses process around 1.2 billion invoices each year. A good process helps you get paid on time and keeps your records straight.

What to include on an invoice

To make sure your invoices are professional and compliant, there are a few key details you need to include. This helps your customers understand what they're paying for and ensures you meet Australian tax requirements.

• Your business name and Australian Business Number (ABN)
• A unique invoice number
• The date the invoice is issued
• A clear description of the goods or services provided
• The total amount, showing Goods and Services Tax (GST) separately if you're registered for it
• Your customer's name or business name

For tax invoices on sales of $1,000 or more, the Australian Taxation Office (ATO) requires that you also include information to show the buyer's identity or ABN.

Types of invoices and when to use them

Different situations call for different types of invoices. Using the right one helps you stay compliant and keeps your billing clear for you and your customers.

• Tax invoice: Use this if you're registered for GST. It must include specific details to be valid for tax purposes.
• Standard invoice: Use this simpler format if you're not registered for GST.
• Recurring invoice: Use this for ongoing services or subscriptions, as it can be sent automatically on a set schedule.
• Proforma invoice: Send this preliminary bill to a customer before work is done. It's like a quote but in invoice format.
• Credit note: Use this to correct a mistake on a previous invoice or to give a refund.

How to create an invoice

Creating an invoice is straightforward once you have a process. Follow these steps to create a clear and complete invoice every time.

1. Gather all customer and job details.
2. Choose your invoice template or open your invoicing software.
3. Add a unique invoice number and the date.
4. Enter your customer's information.
5. List the products or services with clear descriptions and prices.
6. Calculate any GST if you're registered.
7. Add your payment terms and how you'd like to be paid.
8. Review everything to make sure it's accurate.
9. Send the invoice to your customer.
10. Record the invoice in your accounting system to track payment.

Why streamlining your invoicing process matters

A smooth invoicing process delivers three key benefits:

• Healthier cash flow: Money comes in faster when you invoice efficiently.
• Time savings: Less admin means more time to focus on running your business.
• Stronger relationships: Clear, professional invoices build trust with your customers.

1. Set a billing schedule

A billing schedule is a set day or time each week when you create and send invoices. Consistent billing schedules help you send invoices regularly, reduce payment delays, and improve cash flow predictability.

Why it works: Regular invoicing prevents backlogs and gets customers paying on a predictable timeline.

How to implement:

• Pick a specific day: Choose the same day each week for invoicing.
• Block calendar time: Treat it as a non-negotiable appointment.
• Consider outsourcing: Hire a bookkeeper if you're consistently too busy.

2. Invoice more often, get paid more often

Frequent invoicing helps you get paid more often and keeps your cash flow steady, rather than waiting for monthly payments.

The frequency advantage: Weekly invoicing can improve cash flow by 25–30% compared to monthly billing.

Choose your frequency:

• Weekly billing: Best for service businesses with regular clients
• Immediate invoicing: Best for project-based work where you bill upon completion
• Bi-weekly billing: Best for businesses with mixed project types

3. Connect quotes and invoices

Connecting quotes and invoices reduces disputes and speeds up payment. Get quotes signed off before you start work, then use the same descriptions from the quote in your invoice.

When your customer sees matching details on both documents, they know exactly what they're paying for.

4. Use invoice templates to their fullest potential

Invoice templates are pre-formatted documents with your business details, standard services, and automatic calculations already built in. They help you standardise your billing format and cut creation time by up to 50%.

How to optimise your templates:

• Save customer-specific versions: Pre-fill client details and standard services for repeat customers.
• Build in automated calculations: Add formulas for totals, taxes, and discounts.
• Create job-type variations: Set up different templates for various service types.

When to upgrade: As your business grows beyond 20–30 invoices per month, dedicated invoicing software becomes more efficient than spreadsheet templates.

You can use this invoice template to get started.

5. What could an invoice maker do for you?

Invoice maker software automates repetitive billing tasks so you can create and send invoices faster. Here's what it can do for you:

• Store pricing: Save your product and service prices for quick invoice creation.
• Calculate taxes: Automatically work out GST and prepare paperwork for filing.
• Track payments: Run daily bank reconciliation to show which invoices are paid or outstanding.
• Work anywhere: Send invoices from your phone while you're on the job.

Learn more in our guide on billing software.

6. Track time and materials better

Accurate time and expense tracking helps you bill for all your work and reduces invoice preparation time from hours to minutes.

The tracking problem: Businesses lose an average of 10–15% of billable time through poor tracking and forgotten expenses.

Tracking solutions:

• Use time-tracking apps: Clock in and out from your phone to capture exact billable hours.
• Use expense apps: Photograph receipts and assign them to specific jobs instantly.
• Choose integrated tools: Connect time tracking directly to your invoicing software.

Result: You have complete job information instantly when you create invoices.

7. Should you accept online payments?

Online payment options reduce payment times by letting customers pay immediately when it's convenient. Experts estimate the move toward digital systems like e-invoicing will provide $28 billion in benefits to the Australian economy over ten years.

Why online payments work: Customers can pay straight away rather than waiting to write and mail cheques.

Payment method options:

• Credit and debit cards: Offer instant processing with 2–3% transaction fees.
• Bank transfers: Offer lower fees (0.5–1%) with slightly slower processing.
• Digital wallets: Offer consumer-friendly options like PayPal and Apple Pay.

When to implement: Consider online payments if customers regularly pay late or you want more consistent cash flow.

Find out how online payment services get you paid faster.

8. Train your customers to pay on time

Training customers to pay on time starts with setting clear expectations from the first invoice. Here's how to build good payment habits:

• Call after sending: Check that your first invoice has everything they need.
• Follow up promptly: If they miss the due date, call the next day to check in.
• Stay friendly but firm: Let them know you keep track of payments.
• Repeat the process: Do this for the first few invoices until you establish payment habits.

9. Chase invoices like you really want them

Invoice follow-up is a key part of the process. Even perfect invoices usually need one or two payment reminders, as a 2019 study found the average payment time for small business invoices was 63 days.

The follow-up reality: Customers pay only 30–40% of invoices by the original due date without reminders.

Follow-up sequence:

• On the due date: Send a friendly payment reminder.
• 3–5 days overdue: Send a second reminder with payment urgency.
• 7–10 days overdue: Call to discuss payment timeline.
• 15+ days overdue: Start a formal collection process.

Learn more about how to handle unpaid invoices.

Common invoicing problems and how to solve them

Common invoicing issues can delay payments and create friction with customers. Here's how to handle them:

• Manual data entry errors: Mistakes can cause payment delays and compliance issues. Use invoicing software to automate details and reduce errors. The ATO found a 90% correlation between small and medium enterprises (SMEs) using accounting software and calculating their tax correctly.
• Customer disputes: Customers may question charges if details are unclear. Avoid this by matching your quotes to your invoices and itemising all work clearly.
• Late payments: Late payments move $7 billion in working capital from small to large businesses each year. Set clear payment terms from the start and use software to send automatic reminders.

Now that you understand common invoicing challenges and how to solve them, it's time to put these strategies into action.

Build the perfect invoicing system

A smart invoicing system helps you send bills faster and get paid sooner. Review your invoicing process regularly using these steps to stay on top of your finances.

Learn more about how you can work smarter with Xero's intuitive invoicing software, or get one month free to see how Xero can help streamline your invoicing.

FAQs on invoicing processes

Find answers to common questions about invoicing processes below.

What's the difference between billing and invoicing?

Billing is the process of requesting that customers pay you. An invoice is the document that shows the details of what the customer owes. Invoicing is one part of the overall billing process.

How long should my invoicing process take?

With the right tools, creating and sending an invoice takes just a few minutes. Using templates and invoicing software, you can reduce the time it takes to create invoices by up to 50%, helping you get paid sooner.

What should I do if a customer disputes an invoice?

Follow these steps to resolve an invoice dispute:

1. Contact your customer to understand the issue
2. Review the original quote and the work completed
3. Send a corrected invoice if you made an error
4. Keep communication clear and friendly throughout

How can I automate my invoicing process with Xero?

Xero automates your invoicing process with these features:

• Create invoices anywhere: Send professional invoices from your phone or computer.
• Set up recurring invoices: Automatically bill regular clients on schedule.
• Send automatic reminders: Get notified when payments are due or overdue.
• Track invoice status: See when your customer has opened the invoice.

What are the three stages of invoicing?

You can break the invoicing process into three main stages. First, you create and send the invoice to your customer. Second, you track the payment and process it once it arrives. Finally, you record the payment in your accounts and reconcile it with your bank records.

How long do I need to keep invoice records in Australia?

In Australia, the Australian Taxation Office (ATO) states you generally need to keep most records, including invoices, for five years. Keeping digital records with accounting software makes it easy to store them securely and find them when you need them, especially for tax purposes.