How to prepare an invoice

Video transcript: How to prepare an invoice

[Audio/ Visual: Upbeat music starts playing with blue introduction screen with white business.govt.nz logo. The word “presents” in smaller, thinner lettering is beneath the logo. These words disappear and are replaced with white text “Tips for tradies e-learning series”. These disappear. White text saying “How to prepare an invoice” appears in the centre of the screen. Music continues to play throughout the entire video.]

[Visual: The screen changes to a profile shot of the presenter, standing in a tool shed. In the bottom right is the business.govt.nz logo which remains there until the end of the video.]

Invoices. Without them you’re not getting paid. Whether you’re a contractor, sole trader or business owner, sending invoices and chasing debtors is a crucial part of running any business.

But many small business owners struggle with invoicing. This can lead to not being paid on time, and not having enough cash for really important things - like paying yourself and your employees.

[Visual: screen cuts to an upper body shot of the presenter.]

To help you get paid and keep the stress at bay, here’s a step-by-step guide on how to invoice.

First, to create an invoice, you can download a template online, or create one yourself in a blank document or spreadsheet. To help you get started, business.govt.nz has a free template you can use which is linked below.

[Visual: Screen turns opaque white and shows a screenshot of the business.govt.nz invoice template. The top left of the invoice template says:

Client’s name

Address Line 1

Address line 2

City, Post code

Client’s NZBN

The top right of the invoice template says:

Business name

Date

Invoice number

GST number

NZBN

The centre of the invoice has four columns, from left to right: Description, Quantity, Unit Price, Amount. There are three empty lines below this to fill in the details of the job you are invoicing for.

Below these columns on the bottom right-hand side of the invoice template are three lines:

Subtotal

GST

Amount Due.

On the bottom left-hand side of the invoice template are two lines:

Invoice to be paid to

Due date.

As the presenter speaks, the words Business name, Client’s Name, Address Line 1, Address Line 2, City, Post Code, Invoice No., Date, and Due date are highlighted in blue, and remain highlighted. The words are unhighlighted and the invoice template disappears from screen.]

In the template or spreadsheet, add your business name, customer’s name and address, invoice number, date you’re sending the invoice, and a due date.

You can number your invoices starting at 1, like INV001.

[Visual: “INV001” pops up on the screen and disappears after a few seconds.]

or use a unique code, which might be your business name, like DIG001.

[Visual: “DIG001” pops up on the screen and disappears after a few seconds.]

Next, add a description of the goods or services provided. This can include the date you did the work or provided the goods, the quantity, your rate, and how many hours you worked.

[Visual: The screen cuts to the invoice template with the description fields filled out. As the presenter speaks, the words Description, Quantity, and Unit Price are highlighted in blue and remain highlighted. The invoice description says:

Aluminium frame plus door, quantity 1, unit price $510, amount $510,

Double pane glass, quantity 2, unit price $850, amount $1700,

Installing per hour 10/05/2024, quantity 4, unit price $200, amount $800.

Below the description, as the presenter speaks, the words Amount Due and Invoice to be paid to account are highlighted in blue and remain highlighted. The totals and account number says:

Subtotal: $3010.00

GST: $451.50

Amount Due: $3461.50

Invoice to be paid to account 00-0000-000000-00

The words are unhighlighted and the invoice template disappears from screen.]

Add the amount payable and payment details, for example, your bank account or a credit card payment slip.

[Visual: the screen cuts to an upper body shot of the presenter on the left of the screen. “Buyer's reference” pops up on the right of the screen.]

You can also include a buyer’s reference, as many buyers request their suppliers to include purchase order numbers or other reference numbers.

[Visual: the screen cuts to a profile shot of the presenter. “For business clients” pops up on the bottom left of the screen. “e-Invoicing” pops up on the top right of the screen. Both pop ups disappear after a few seconds.]

With eInvoicing you can send eInvoices to your business clients (for example if you’re a subcontractor to a construction business).

[Visual: the screen cuts to an upper body shot of the presenter on the left of the screen. A basic illustration of a piece of paper with a dollar sign on it appears with a tick next to it. This disappears after a few seconds.]

It will speed up the process, reduce errors and help you get paid faster. And receiving eInvoices from your suppliers means the invoices go straight into your accounting system, which reduces admin. Businesses need to register for eInvoicing by following the instructions of their accounting software.

[Visual: “NZBN” pops up in bold on the right of the screen. Below this are the words “New Zealand Business Number”.]

Have your New Zealand Business Number (NZBN) handy. This number is the unique global identifier that ensures your suppliers’ eInvoices reach you. If you don’t have one already, it’s easy and free to get one.

[Visual: The URL “einvoicing.govt.nz” pops up on screen and disappears after a few seconds.]

For more information about eInvoicing, visit einvoicing.govt.nz.

[Visual: the screen cuts to a profile shot of the presenter. A blue banner with “Invoicing tips” pops up in the bottom left of the screen.]

Here are some quick tips to help you when invoicing.

Be upfront with how much you’re going to charge from the beginning, so there are no surprises or negotiation needed.

[Visual: screen cuts to a shot of the presenter working on a laptop and shuffling some papers in a home office setting. The words “Confirm contact details pops up on the right side of the screen and disappear after a few seconds.]

Confirm your customers’ contact details early on, so you’re ready to fill out your invoice.

[Visual: “Invoice as soon as the job is complete” pops up on the right side of the screen and disappears after a few seconds.]

Invoice as soon as the job is complete. For bigger jobs, consider a phased approach.

[Visual: the screen cuts to a profile shot of the presenter in the tool shed setting.]

For example, if a project will take six months to complete, you might split the total invoice into three payments to be paid at the beginning, middle and end of the work.

[Visual: the screen cuts to an upper body shot of the presenter.]

Don’t be afraid to talk to your customer about what payment plan suits them best before the job has begun.

[Visual: the screen cuts to a profile shot of the presenter.]

If an invoice isn’t paid on time, keep a record of how long the invoice has been overdue.

[Visual: the screen cuts to a man sitting at a dining table typing on a laptop. The words “polite email reminder” appear briefly on the right side of the screen.]

Send a short and polite email reminding the customer.

[Visual: the screen cuts to the same man in the same setting talking on the phone. The words “Follow-up phone call” appear briefly on the right of the screen.]

If you don’t receive a response to your email, don’t be afraid to give them a follow-up phone call, especially if you’ve had no response after a week or so.

[Visual: the screen cuts to a profile shot of the presenter.]

If your invoice remains unpaid, and you haven’t heard from the customer, it may be time to make a valid payment claim.

[Visual: “Payment claim” pops up on the right side of the screen and disappears after a few seconds.]

If you are not paid by the client, you can enforce the claimed amount as a debt owed to you.

[Visual: the screen cuts to an upper body shot of the presenter on the left side of the screen.]

This is more than an invoice. It has to be in writing, and include details about the work you’ve done, how much is owed and a due date.

[Visual: the words “20 working days to pay or dispute a claim” pops up on the right of the screen. This disappears after a few seconds.]

Your client then has 20 working days to pay you or dispute your claim.

[Visual: the words “5 working days” pops up on the right side of the screen. This disappears after a few seconds.]

If they don’t respond, you have the right to suspend work after five working days.

If you need more help, get in touch with a building disputes specialist.

[Visual: Blue outro screen appears with the business.govt.nz logo in the centre of the screen. This logo disappears and the Ministry of Business, Innovation, and Employment logo appears on the left-hand side and the Te Kāwanatanga o Aotearoa, New Zealand Government logo appears on the right-hand side.

[Video ends]