The ultimate guide to invoicing

The complete guide to creating invoices for your business. Discover what you need to include on your invoices and how to get paid on time.

Small business accountant

Cash is the lifeblood of any business; you simply cannot survive without it. Being paid what you are owed is important, but being paid on time is critical to avoid ending up in a dangerous cash flow position.

One option is to use an automated solution that takes payments directly from your invoices, so you get paid on time. Well-formatted invoices can make all the difference to ensuring you get paid quickly, by avoiding complications from incomplete or unclear information.

Ensuring your invoice includes important information creates a good impression with your clients and customers. Unclear invoices or one with errors make you appear unprofessional and disinterested.

Top tip: Create and send invoices directly from your accounting software to easily track what is owed to you.

What should be on your invoice?

If you’re registered as a VAT vendor, you are required to produce a VAT invoice and keep a copy (digital or paper) of all invoices issued, including ones issued in error, or that were cancelled. A VAT invoice must contain additional information to a standard (non-VAT) invoice.

SARS recognises two types of tax invoices:

  • A full tax invoice, where the supply including VAT exceeds R5 000, and
  • An abridged tax invoice, where the supply, including VAT is R5 000 or less.
    • If the supply including VAT is R50 or less, a tax invoice is not required (However, a document such as a till slip or sales docket indicating the VAT charged by the supplier will be required to verify the input tax deducted).

A full invoice must meet these 7 criteria:

  1. The words “Tax Invoice”, “VAT Invoice”, or “Invoice”,
  2. Name, address, and VAT registration number of the supplier,
  3. Name, address and where the recipient is a vendor, the recipient’s VAT registration number,
  4. Serial number and date of issue of invoice
  5. Accurate description of goods and/or services (indicating where applicable that the goods are second-hand),
  6. Quantity or volume of goods or services supplied,
  7. Value of the supply, the amount of tax charged, and the consideration of the supply (value and the tax).

An abridged tax invoice must meet these 5 criteria:

  1. The words “Tax Invoice”, “VAT Invoice”, or “Invoice”,
  2. Name, address, and VAT registration number of the supplier,
  3. Serial number and date of issue of invoice,
  4. Accurate description of goods and /or services, and
  5. Value of the supply, the amount of tax charged, and the consideration of the supply (value and the tax).

International invoices

For invoices issued for a standard rated supply in a foreign currency or a foreign language, you must show the VAT payable equivalent in Rands, if the goods or services are supplied in South Africa (the rate, at which the foreign currency must be converted, is the rate applicable on the date the tax invoice is issued). English translations should also be available for inspection by a VAT officer.

Electronic invoices

In order to send an electronic invoice, the following criteria need to be met:

  • The receiver must consent in writing to receive invoices in electronic format.
  • The invoice meets the checklist criteria mentioned above as set out by SARS and the VAT act.
  • Invoices sent in encrypted form must be in at least 128-bit encryption format.
  • The transmitted electronic document will constitute the tax invoice. Printed copies must be clearly marked “computer generated copy”.

Invoice payment terms

It’s your responsibility to predetermine payment terms with your customers. Make it easy for the recipient to know when to pay by clearly stipulating this on your invoice. In large companies, a separate accounts department may not be aware what terms you agreed with your contact. If you’re a small business or contractor, it’s generally best to avoid complicated payment terms to avoid being misunderstood and having payments delayed.

For the best results simply state: ‘Payment due within 30 days.’

Or use less formal language while still being polite: ‘We appreciate your business. Please send your payment within 30 days of receiving this invoice.’

Common invoice payment terms

Payment in advance (PIA)

PIA means that you require payment to be made in full before goods or services will be delivered. This is often used  when dealing with new clients or customers with a poor payment history.

Net (N)

A common payment term. ‘Net 10’ would mean that the full amount is due within 10 days. ‘Net 30’ would mean within 30 days. ‘Net’ can be abbreviated to ‘N’ such as N10 or N30.

End of month (EOM)

End of month means that full payment is due within the amount of days stated after the month-end that the invoice is issued in. An invoice can be worded as, ‘Payment due 30 days month-end’ or abbreviated to ‘Net EOM 30’. For example, if your invoice was dated 5 April and your terms were Net EOM 30, then the full payment would be due on 30 May.

Month following invoice (MFI)

‘15 MFI’ means that the full amount is due on the first 15th of the month following the invoice date. For example, if your payment term was 15 MFI and the invoice was dated 5 January, payment would be due on 15 January. If the same invoice was dated 20 January the payment would be due on 15 February.


A discount is offered on the full amount if payment is made within the days stated. ‘1/10 Net 30’ or ‘1% 10 Net 30’ means a discount of 1% is offered to payments made within 10 days, otherwise full payment is due within 30 days. If fast payments are important to you, offering a discount for early payment could be the way to go.

Stage payment

A payment plan can be agreed on to offer a portion of the full amount payable in stages. For example, four stage payments of 25% each or two stage payments of 75% and 25%, respectively. Staged payments are often used in large projects, where part payment is made up front and the rest of the payments are made throughout the project in order to manage risk and cashflow.

Invoice payment methods

Include in your invoice the different methods of payment that you accept, together with your bank details to make it easy for your customers to pay you.

Get your free 30-day Sage Business Cloud Accounting software trial to boost your business.

Reduce time spent on admin by up to 80%

Free yourself from admin with easy-to-use features, built around you. Ideal for entrepreneurs, start-ups, and growing businesses.

Sign Up
Small business accountant

Common invoice payment methods

Bank transfer

Bank transfer is one of the most common method of payment. Transfers are typically made electronically, from one account to another, either online or by mobile. It can take up to three working days for payments to clear.

The Immediate Interbank Payment is becoming popular as it means that money paid into your account will clear as soon as it is transferred.

On your invoice include:

Name of your bank: My Bank

Branch code: 00-11-22

Account number: 01234567


If you have customers abroad and want to receive international payments, then your bank can provide you with codes to do this. International Bank Account Number (IBAN) is the international version of your bank account number and allows you to receive international payments.

A Bank Identifier Code (BIC) or Society for Worldwide InterBank Financial Telecommunications (SWIFT) codes identify your specific bank. You will need this alongside your IBAN payment. Most banks use BIC but SWIFT is needed for payments from the US and Canada. Both numbers can usually be found on your business bank statement or by asking your bank.

On your invoice, include:


IBAN: GB00 AAAA 0000 0000 0000 00


Credit or debit card

If you want to accept card payments, you will need a merchant account and a card reader. Online payments require an ecommerce payment gateway and merchant account. For remote payments over the phone, you need an online virtual terminal and a merchant account.

Due to the cost of operating a merchant account, credit card payments are only cost-effective if you are expecting to take a significant amount of payments by card.

Be aware that a customer can issue a ‘chargeback’ to reverse a credit card transaction by claiming the item didn’t arrive or was not as ‘described’. A chargeback can be made up to 120 days after the payment transaction was made.


Accepting cash payments is an option for small businesses dealing with the public but most business-to-business invoices cannot be paid in cash. Cash is the least safe way of taking payments and banks also charge a cash deposit fee.

When is the best time to send your invoice?

The VAT Act also prescribes the timeframe within which a tax invoice must be issued (i.e., 21 days from the time the supply was made).

When selling goods

The options for goods are quite straightforward. You can request that payment clears before shipping, on receipt of goods, or on terms of your choosing.

When selling services

There have been plenty of studies about when is the best day of the week/month to send your invoice, but the reality is that you will get paid when companies complete their payment runs. This is generally at the end of the month but not always.

Ask your client when their payment run is, as well as what their cut-off date is for invoice submission.

If you have an ongoing project, you could negotiate submitting a monthly invoice to cover expenses for that month.

If you have staged payments (as above), you can agree in advance the dates that your invoices will be raised, for example, before you begin, at certain milestones, and upon completion.

Large companies often have 90-day payment policies, which can wreak havoc on cash flow for freelancers. You can negotiate invoicing these clients as you begin, in order to circumnavigate the system and reduce the payment times.

Always remember to double-check your invoice for accuracy before you send it to avoid delays. Be prompt, polite and accurate.

How to send your invoice

The structure of your invoice is only half of the process. Ensuring your invoice gets to the person who can pay you is essential. Ask your customer for the name and contact details of the person who will be making your payment. Having this information is vital so that you can chase late payments as the person who actually makes the payment holds the power.

Email is the preferred standard for submitting invoices and, if you are sending to an accounts department, remember to copy your contact on the email. Use a document that can be universally opened – most accounts departments prefer PDFs. Do not send your invoices in an editable format.

Subject header

Companies that process thousands of invoices appreciate legible subject headers in their mails. It is also a good way to ensure your invoice doesn’t get lost in their systems.

Subject header format

[Your company name] [Your company services/goods Invoice] [month/year]

For example: Sparkle Design, Brochure Design Services Invoice, January 2021

Writing your email

War And Peace is not required. To be professional, make your email clear and concise:


Dear [Big Company],


Please find attached my invoice dated 31 January 2021 in the sum of R5,500 for brochure design services.

If you have a PO number, insert here.

Authorised by [the name of your contact here].

If you have any queries do not hesitate to contact me.

Kind regards

Jane Smith


Getting paid when you need to be paid

Everybody hates chasing late payments, and it takes up valuable time that you could be putting to better use.

Your best line of defence is what you do before the invoice is issued:

  • Have clear terms and conditions (Ts&Cs) and obtain agreement in writing (paper signed or by email).
  • Agree your payment terms in advance as part of your Ts&Cs.
  • Ask for a PO number – a purchase number (PO) forms a contract between yourself and your client.
  • Ask new customers to pay their first invoice in advance.
  • For large invoices, ask for a staged payment. If payment is delayed at any stage, you can stop work to avoid risking further cost.
  • Make your payment method easy – bank transfer is best.
  • Get the name and contact details of the person responsible for paying your invoice.
  • Issue reminders as soon as the due date is passed. Don’t ever leave late payments hoping they will get paid without asking.
  • Chasing up a late payment shows that you are a professional business owner and expect to be treated as one.

Accounting software will also help you manage your time better as it can send professional invoices for you as you process your orders, instead of you having to manually complete and send your invoices, giving you more time to focus on building your business.

Editor’s note: This article was first published in March 2018 and has been updated for relevance.

7 ways to take control of your business

Want to know how you can take control of your business? Read this guide for top tips to help you master your business admin.

Download your free guide