What is an Invoice?

Invoice definition

An invoice is a commercial document issued by a seller to a buyer that records and requests payment for goods or services that have been delivered or performed. It is the formal record of a sale and creates a legally enforceable debt — the buyer owes the seller the stated amount under the stated terms.

In the simplest terms, an invoice answers three questions:

• What was sold? Goods, hours of work, deliverables — itemised with quantities and prices.
• What is owed? Subtotal, GST (if applicable), and the total payable.
• When and how should it be paid? Due date, bank details, payment terms.

Every business that sells goods or services on credit terms — meaning the buyer pays after delivery rather than upfront — uses invoices.

What's on a standard invoice

A standard Australian invoice has 12 fields. The first eight are required by the ATO when you are GST-registered; the rest are best practice.

• The header label ("Tax Invoice" or "Invoice")
• Your business name and ABN
• Your contact details (address, email, phone)
• The buyer's name and address
• A unique invoice number
• The issue date
• Line items with descriptions and prices
• The subtotal
• GST (if you are GST-registered)
• The total payable
• Payment terms (e.g., "Net 14")
• Bank details or payment links

See our full invoice checklist for what each field should contain.

Invoice vs receipt — what's the difference?

People use the words interchangeably, but they are different documents.

• An invoice is a request for payment, issued before payment is made. It creates a debt.
• A receipt is a record of payment, issued after payment is made. It proves the debt has been settled.

On smaller cash sales (a coffee, a parking ticket), the receipt is the only document the buyer sees. On credit sales (most B2B work), the invoice comes first and the receipt — if one is issued at all — confirms payment afterwards.

Invoice vs quote vs proforma — what's the difference?

Three preliminary-vs-final document pairings:

• Quote: an offer to do work at a stated price. Non-binding. Used before the buyer commits.
• Proforma invoice: looks like an invoice but is non-binding — used after the quote is accepted and before goods are delivered, often to arrange deposits or letters of credit. See our proforma invoice guide.
• Invoice (tax invoice): the final, binding document issued after goods or services are delivered. Records the sale and triggers GST.

Only an invoice (specifically a tax invoice) creates a debt the seller can enforce and lets the buyer claim a GST credit.

Invoice vs tax invoice

In Australia, "invoice" and "tax invoice" are not synonyms — they are different documents required in different situations.

• Tax invoice. Issued by a GST-registered business when the sale is $82.50 or more (GST-inclusive). Must include the words "Tax Invoice", the GST amount, and the supplier's ABN. Allows the buyer to claim a GST credit on their BAS.
• Regular invoice. Issued when the seller is not GST-registered, or when the sale is under $82.50. Must not include the words "Tax Invoice" or show GST.

See our tax invoice guide for the full ATO requirements.

How an invoice fits into the sales cycle

The typical Australian small-business sales flow:

1. Quote. Seller proposes the work and price. Buyer accepts (verbally or in writing).
2. (Optional) Proforma invoice. Used when the buyer needs to authorise a deposit or arrange a PO before work begins.
3. Work done / goods delivered.
4. Invoice issued. The seller sends the tax invoice or regular invoice within 24 hours of completion. See how to send an invoice.
5. Payment. The buyer pays per the stated terms (commonly Net 14 or Net 30).
6. (Optional) Receipt. Issued only if the buyer requests proof of payment.

Both seller and buyer must retain copies of the invoice for 5 years under ATO record-keeping rules.

Frequently asked questions

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