What is an invoice?
- By Book Keeping Pros
- Sources checked 15 Oct 2026
Definition
An invoice is a document a business sends to a customer asking to be paid for work done or goods supplied. It sets out what was supplied, how much is owed, when payment is due and how the customer can pay. Each invoice usually carries its own number, so the payment can be matched to it later.
In the books, an invoice is the record of a sale made on credit. Under accrual accounting the sale is generally recorded when it takes place, which is often when the invoice is issued, and the amount sits in accounts receivable until it is paid. Under cash accounting the sale is recorded only when the money arrives. Either way, the invoice number is what ties the customer's payment back to the right sale.
The same document looks different from each side. To the business that sends it, it is a sales invoice. To the business that receives it, it is a bill from a supplier, recorded in accounts payable under accrual accounting, or when it is paid under cash accounting.
In Australia
business.gov.au's guide to invoicing describes an invoice as the document that requests payment from a customer, setting out the amount owing, the payment deadline and the accepted ways to pay. It notes that in most retail and online sales the receipt also serves as the invoice, because the customer pays on the spot.
For what it calls a regular invoice, one of two main invoice types it describes, it says no law sets out the contents, but common practice is to include the word invoice, the business name and ABN, a unique invoice number, the issue date, contact details, a description of the goods or services with quantity and price, when and how to pay, and the buyer's name or business name. It also suggests sending the invoice when the customer buys, and listing payment methods and terms on it.
On keeping invoices, business.gov.au says most business records need to be kept for 5 years. Under the Corporations Act 2001, invoices fall within a company's financial records as defined in section 9, which section 286 requires the company to keep for 7 years, counted from when the transactions they record were completed.
Worked example
| Description | Quantity | Unit price (AUD) | Amount (AUD) |
|---|---|---|---|
| Garden maintenance, per hour | 6 | 65.00 | 390.00 |
| Green waste removal, per load | 2 | 45.00 | 90.00 |
| Mulch, per bag | 8 | 12.50 | 100.00 |
| Amount due by 17 Mar 2026 | 580.00 |
Illustrative example only: these rows show the method and are not sourced data.
Common mistakes
- Reusing or skipping invoice numbers, which makes payments hard to match and gaps in the sales records hard to explain.
- Sending an invoice without the bank details or other payment options the customer needs to pay it.
- Editing an invoice after it has been sent without keeping a record of the change, so the books no longer match what the customer holds.
Related terms
Related service
Accounts payable and receivable
Bills and invoices tracked, with you approving every payment.
Sources
- How to invoice
business.gov.au, Australian Government. Current at 16 October 2026, released 17 December 2025. Checked 16 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Choose between cash and accrual accounting
business.gov.au, Australian Government. Current at 15 October 2026, released 13 September 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Record keeping
business.gov.au, Australian Government. Current at 15 October 2026, released 7 November 2024. Checked 15 October 2026.
© Commonwealth of Australia 2020, licensed under CC BY 3.0 AU. Licence: CC BY 3.0 AU.
- Corporations Act 2001, sections 9 and 286
Federal Register of Legislation, Office of Parliamentary Counsel. Compilation No. 149, 19 September 2026, released 19 September 2026. Checked 15 October 2026.
Based on content from the Federal Register of Legislation at 15 October 2026. For the latest information on Australian Government legislation please go to https://www.legislation.gov.au. Licence: CC BY 4.0.