As well as leaving Australian businesses at risk of non-compliance, invalid invoices are damaging to everything from payment prospects to reputation management. Despite that, invalidation is a surprisingly common issue, and many companies don’t even realise they’re making these mistakes. Unfortunately, even minor invalidations can come back to bite you legally if a customer ever decides to take action.
This is especially worrying for small businesses that could face closure and significant debt for invalidations like tax discrepancies. We’re sure you’ll agree that your company isn’t worth losing over such a careless admin oversight. But what exactly are the invoice validations that you should be most wary of, and what can you do to avoid them? Keep on reading to find out.
1 Missing Details
Missing details, such as a lack of invoice number or payment date, are the most common causes for invoice invalidation. Admittedly, failing to provide these things is unlikely to see you in court, but it can lead to confusion and unnecessary payment delays. Businesses in Australia could also find themselves at the wrong end of the law if they don’t include an Australian business number (ABN) on their invoices, as this is key for taxation purposes. In fact, withholding it invalidates your invoices so much that clients are legally obliged to withhold 47% of your payment for taxation purposes.
To avoid this more serious problem, it’s worth seeking a specific ABN invoice template that makes it harder to overlook this vital step. More generally, putting invoices through at least two checks before sending ensures that you include everything you need for speedy, efficient payments.
2 Incorrect Information
You also risk invalidating an invoice by including incorrect information. The most extreme (and again most legally damaging) example of this in Australia is if a non-GST registered business uses a ‘tax invoice’ label incorrectly. But even seemingly minor mistakes like misspelling business or recipient names can lead to significant delays and even profit loss if bank account details don’t match.
Thorough invoice checking processes are again essential here, but they aren’t the only things that can help. Automated invoicing software, which can eliminate the human errors behind these problems, is also useful for ensuring like-for-like details across all client documents, including guaranteed valid invoices.
3 Calculation Errors
Calculation errors, such as mistakes in the invoice total or unit pricing, can also invalidate your invoice, as well as annoy your customers with numbers that don’t add up. Worse, while this is less likely to happen if you automate, unchecked system glitches can still lead to issues. So, what can you do to avoid it?
Review processes, which should include peer reviews, matching reviews, and regular invoicing audits, are the best way to ensure accurate calculations. Including full price breakdowns on your invoices is also vital, as it ensures instant recognition of pricing discrepancies, as well as increasing client trust in your invoice totals.
Invalidating your invoices is no way to ensure business success, so make sure you avoid these key errors.
