Dealing with an unpaid invoice
It is important to make sure you have invoiced correctly to ensure prompt payment.
Check your invoice
Before you send an invoice, you should double-check you have included everything, and that the details match the order and delivery receipt.
Your customer might not tell you there is something wrong with your invoice, and you will only find out when you do not receive a payment. It’s worth finding a contact in the accounts area that can let you know what information they need to process your invoice. This contact can also let you know when your invoice has been received and accepted.
What to include
Our Payment Times and Practices Inquiry found that it is important for small businesses to understand what their customers need to make a payment. Not only must the details be correct, it must also be sent to the correct section within your customer's business. Using electronic invoices can reduce errors, resulting in prompt payment.
According to the Australian Taxation Office, tax invoices must include at least seven pieces of information to clearly determine:
- that the document is intended to be a tax invoice
- the seller's identity
- the seller's Australian business number (ABN)
- the date the invoice was issued
- a brief description of the items sold, including the quantity (if applicable) and the price
- the GST amount (if any) payable
- the GST amount for each item, or clearly state that the total price includes GST.
There may be additional requirements for invoices depending on the type of sale. Find out more about issuing tax invoices.
Chase an invoice
Once you have checked your invoice was accurate and received, you can chase payment.
It can be useful to set up a timeline for monitoring payments. Here is an example of steps you can take to chase a payment:
Step 1: Before your send an invoice
Get in contact in the accounts area and find out what they need to process your invoice.
Step 2: 1-2 days after you send the invoice
If it is a new business or slow payer, confirm they received the invoice. Check the details are accurate and complete.
It might be worth checking 10 days before payment is due that your invoice is processed and due to be paid. Ask if it is 'in the system' or 'in the next pay run'.
Step 3: When payment is 1-2 days overdue
Check if there is a problem that has prevented payment. Find out what you can do to resolve it. Regularly remind them it is overdue and decide whether to take further action.
Step 4: Invoice overdue
Warn them about the next steps you will take if the invoice isn't paid.
Find out more about chasing unpaid invoices.
Take further action
If chasing payment hasn’t worked, it is time to consider your next step.
If you are ready to take further action, but you are unsure who to turn to for help, try our Dispute Support tool.
Dispute Support is an online referral tool to help businesses find the most appropriate low cost dispute resolution services to help resolve business disputes.
Follow these steps to find an appropriate service:
- Step 1: Choose ‘Recovering unpaid invoices’
- Step 2: Choose your state or territory
- Step 3: Is your business in the building and construction sector? Y/N
Still need help?
If you still need help, the Australian Small Business and Family Enterprise Ombudsman Information Line may be able to help you identify the most appropriate service to resolve your dispute.
Electronic invoicing or e-invoicing is the exchange of invoices between a seller and customer in an electronic format.
Electronic invoicing can make the payment process easier. There are software packages available which electronically record core customer details, generate and send invoices and send automatic reminder notices when payment is due.
In some cases, suppliers can issue invoices using their customer’s e-invoicing software, but they may need to pay a fee. It’s worth considering any cost against the benefit of being paid on time.
Find about more about e-invoicing.