Securing timely payments is essential for maintaining a healthy cash flow. Whether you’re a contractor, sole trader, or business owner, here’s how to ensure the money you’re owed keeps coming in.

When a customer doesn’t pay an invoice, you end up financing the work until it’s settled. This can be especially costly if you’ve already paid for materials or staff. Sending invoices and following up with customers is a critical part of doing business.

 

Creating an Effective Invoice

 

A well-structured invoice is the first step to getting paid on time. Make sure every invoice you send includes the following:

  • Your business name.
  • The customer’s name and address.
  • The invoice number, issue date, and due date.
  • A clear, detailed description of the goods or services provided (e.g., date, quantity, rate, and hours).
  • The total amount due.
  • Your payment details, such as your bank account or credit card payment options.
  • Any buyer’s reference numbers, like a purchase order number, if requested.

Since April 1, 2023, the requirement to use a traditional “tax invoice” has been replaced with a more general requirement for taxable supply information. This new rule sets the minimum records you need to support your GST returns. The way you calculate GST hasn’t changed—only the rules for invoicing and record-keeping have. You only need to provide taxable supply information for supplies worth more than $200, but it’s a good practice to keep these records for all transactions.

 

Promptly Sending Invoices

 

Don’t wait. Send your invoice as soon as the job is complete while it’s still fresh in your customer’s mind. Think about the quickest way to get the invoice to them, whether it’s through a mobile EFTPOS machine in person or electronically using accounting software.

For business-to-business transactions, consider using eInvoicing. This technology sends invoice information directly between the buyer’s and supplier’s financial systems, even if they use different software. This improves accuracy, enhances security, and speeds up the entire payment process. Many invoicing platforms are already eInvoicing-enabled. You can find more information on how to get started at einvoicing.govt.nz.

 

Tips for Getting Paid on Time

 

  • Set expectations early. Discuss cost estimates and payment terms with your customer before you begin the work.
  • Confirm contact details. Make sure you have the correct contact information for the person responsible for paying the bill.
  • Be clear and detailed. Ensure your invoice clearly describes what was provided, when it was provided, the cost, due date, and payment terms.
  • Invoice immediately for small jobs. For a quick job, invoice as soon as the work is done. The longer you wait, the lower your invoice’s priority becomes.
  • Consider phased payments for long-term projects. If a project will take several months, consider breaking the total cost into smaller, milestone-based payments. This helps maintain cash flow and reduces your business’s risk.
  • Offer flexible payment options. Ask your customer if they have a preferred way to pay and offer multiple methods to make it easier for them.
  • Follow up. If the due date is approaching, a quick phone call or email can ensure your invoice doesn’t get forgotten.

What’s one thing you could do today to improve your invoicing process?