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Best Practices For The New Year: Invoicing

By 29 January 2025No Comments

Invoicing is critical to running a successful business, yet it’s often overlooked in the rush of day-to-day operations. 

The new year presents a perfect opportunity to refine your invoicing practices, ensuring smoother cash flow, better client relationships, and fewer payment delays. 

Here are some best practices to adopt in 2025 to make your invoicing process seamless and efficient.

1. Start with a Clean Slate

Before issuing your first invoices of the year, tidy up your invoicing system:

  • Review Outstanding Invoices: Follow up on any unpaid invoices from the previous year to clear your accounts receivable.
  • Update Client Information: Ensure client contact details, ABNs, and billing preferences are current.
  • Refresh Templates: Make sure your invoice templates reflect updated branding, legal requirements, and payment details for 2025.

2. Include All Necessary Details

An accurate and clear invoice reduces the likelihood of disputes or delays. A compliant invoice should include:

  • Your business name, ABN, and contact information.
  • The client’s details, including their name and ABN (if applicable).
  • A unique invoice number.
  • A clear description of goods or services provided.
  • The date the invoice was issued and the due date.
  • The total amount payable, including GST if you’re registered.
  • Your payment terms and methods (e.g., bank transfer, credit card, PayPal).

3. Set Clear Payment Terms

Specify your payment terms on every invoice to avoid confusion and ensure timely payments.

  • Standard Terms: Common payment terms are “7 days,” “14 days,” or “30 days,” but choose what works best for your business.
  • Late Payment Fees: Consider adding a clause about late fees to encourage on-time payments.
  • Early Payment Discounts: Offering a small discount for early payments can incentivise clients to settle invoices quickly.

4. Embrace Automation

Manual invoicing can be time-consuming and prone to errors. In 2025, leverage technology to streamline the process:

  • Invoicing Software: Use tools like Xero, QuickBooks, or MYOB to create, send, and track invoices effortlessly.
  • Recurring Invoices: Automate recurring invoices for regular clients or subscription-based services.
  • Payment Reminders: Set up automatic reminders to notify clients of upcoming due dates.

5. Make Payments Easy for Clients

The easier it is for clients to pay, the faster you’ll receive funds. Offer multiple payment options, such as:

  • Direct bank transfers (include BSB and account numbers).
  • Online payment gateways like Stripe or PayPal.
  • Credit card payments.

Clearly outline these options on your invoices to remove any uncertainty for clients.

6. Track and Monitor Payments

A good invoicing system doesn’t end with sending an invoice—it includes diligent follow-up:

  • Regularly Monitor Payments: Use software or a spreadsheet to track paid, pending, and overdue invoices.
  • Send Follow-Ups: If a payment is late, follow up politely but firmly. A friendly email or phone call often resolves issues quickly.

7. Review and Improve Processes

At the start of the year, evaluate your invoicing practices to identify areas for improvement:

  • Check for Errors: Common mistakes, like incorrect amounts or missing details, can delay payments.
  • Client Preferences: Some clients may prefer electronic invoices, while others might need paper copies—adapt to their needs.
  • Evaluate Terms: Adjust payment terms or methods based on trends from the previous year.

8. Stay Compliant

Ensure your invoicing practices adhere to tax laws and regulations:

  • If GST-registered, include a tax invoice for amounts over $82.50 (including GST).
  • Keep accurate records of all invoices for at least five years, as required by the Australian Taxation Office (ATO).

9. Prepare for Growth

As your business grows, so will your invoicing needs. Invest in scalable systems that can handle increased volume, integrate with your accounting software, and provide analytics to help you forecast cash flow and spot trends.

A Fresh Start for Better Cash Flow

Effective invoicing isn’t just about getting paid—it’s about fostering trust, maintaining professionalism, and ensuring your business thrives. By implementing these best practices in 2025, you’ll set the stage for better cash flow, smoother operations, and stronger client relationships throughout the year.

Make invoicing a priority this year—it’s the foundation of your financial success.