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In business, you will often deal with invoices daily, either when you sell goods or services to your customers, or when you purchase supplies for your business. If you have registered for GST, you will need to issue receipts or tax invoices that meet specific requirements depending on the amount of the sale, and keep appropriate records of your purchases if you want to claim the GST paid. Your invoices should clearly show your business details, as well as a description of the goods or services you exchanged with your customers. If you sold or purchased these on credit, your invoice should also specify your payment terms and available payment methods. Invoices are not legal agreements. However, they are crucial commercial documents, as they improve your business’ credibility and cash flow. This article explains what you should include in your invoices, including specific requirements for GST-registered businesses.

What Is an Invoice?

An invoice is a commercial document that lists the goods or services that you have supplied to your customer, and the total amount they owe you as a result. As a business, you will issue and receive many invoices every month. You are required to keep copies of these invoices for tax purposes. They serve as records of: 

  • sales revenue earned; 
  • GST collected; 
  • expenses paid; and 
  • GST paid. 

Some common types of invoices include: 

  • sales invoices (to request payment from a customer for the sale of goods or services);
  • purchase invoices (when a supplier requests payment from you for the purchase of goods or services);
  • tax invoices (sales or purchase invoices that include GST);
  • interim invoices (to request progress payments on a long project, such as a construction contract); 
  • final invoices (the last in a series of interim invoices); 
  • recurring invoices (when you charge your customer the same amount every time, such as in a subscription arrangement);
  • pro forma invoices (to calculate customs on imported goods);
  • commercial invoices (to calculate customs on imported goods after the transaction has occurred); and
  • credit memos or notes (to reverse a charge from a previous invoice, for example, if your customer returns the goods or if you accidentally overcharged them).

What Should You Include in Your Invoices?

Your invoice should list details of the supplier and the buyer, as well as the goods or services they exchanged. You need to include:

  • the invoice number; 
  • the name and address of your business and your customer’s;
  • a list of the goods or services you provided and the cost; 
  • instructions on how and when to pay; and
  • if you collected GST on the sale, then you also need to show how much. 

If you have registered with the NZBN or automatically obtained an NZBN number when you incorporated your company, you can now directly exchange invoices (e-Invoicing) with your suppliers’ and buyers’ financial systems, as long as you have their NZBN. 

You should keep your invoices short and straightforward, by limiting them to a single page if possible. This makes it easier for your customers to process them, and therefore, pay you faster. The website offers a one-page invoice template available for download as a PDF. 

If you cannot fit your invoice on one page, provide a summary on the first page and add details to subsequent pages.

How to Provide Clear Payment Terms to Get Paid Faster

If you want to get paid on time (and improve your cash flow), you need to provide clear payment terms in your invoices and specify when the payment is due. You could also give customers incentives to pay before the due date, such as a small discount, and (or) charge late payment penalties. You also need to show how your customers can pay. Therefore, you can include the following sections in your invoice:

  • the deposit amount if required;
  • the due date for payment;
  • if you provide discounts for prompt payment, the discount amount; 
  • if you charge late payment penalties, the penalty amount; and 
  • the methods of payment you offer, for example, internet banking, credit card, PayPal, cash or cheque. 

If you want to get paid faster, you should include clear instructions that explain how to pay. For example, add the invoice number in the file name and email subject line, so it is easier to search. If you do not use online invoices, you should provide your invoices in a PDF format, to avoid getting caught in a scam.

Tax Invoices for GST-Registered Businesses

If you have registered for GST, you should issue tax invoices when you sell goods or services. If the sale is worth $50 or less (inclusive of GST), you can provide a receipt instead. If your customer is a GST-registered entity and they request a tax invoice, you must provide them with one within 28 days to avoid penalties or other liability.

To claim GST on supplies that you buy for your taxable activity, you need to:

  • if they cost more than $50, keep the tax invoice for your records; or
  • keep a copy of your receipt (showing date, description, cost and seller).

Your tax invoices must be in New Zealand currency and have to show:

  • the words ‘tax invoice’ clearly;
  • the seller’s name (or trade name) and GST number;
  • the date of issue; and
  • a description of the goods or services.

If your tax invoice is for $1,000 or less (inclusive of GST), you also need to show the total amount payable and state that it includes GST. There are more specific requirements for tax invoices worth more than $1,000, which are listed on the Inland Revenue website

You can only issue tax invoices once, so if your buyer requests a copy, you must add the words ‘copy only’ on it.

Key Takeaways

Issuing clear invoices to your customers when you sell goods or services is a good commercial practice that can help you get paid on time and meet your tax obligations if you have registered for GST. Your invoices should include:

  • your business name, address and the invoice number; 
  • your customer’s name and address; 
  • details of the goods or service you provided and the cost; 
  • instructions on how and when to pay; and
  • if you collected GST on the sale, then you also need to show how much. 

The Inland Revenue website provides specific requirements for preparing tax invoices if you are a GST-registered business. 

If you need help with preparing your invoices or understanding your tax obligations, LegalVision’s business lawyers can help. Call 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is the difference between invoice and receipt?

An invoice is a payment request, while a receipt serves as proof that your customer has received and paid your business for the goods or services.

What information does an invoice include?

Your invoice should include an invoice number and the name and address of both your business and your customer’s. It should also list the details of the goods or services you provided, and the cost, including the GST collected on the sale, if any. Finally, it should provide instructions on how and when to pay.

How do I create an invoice online?

You can download a free invoice template from the website, or sign up to an invoice generator platform like Invoice Simple or design platform like Canva, which will allow you to add your company branding. Most accounting software offers online invoicing as part of their packages.

Does an invoice have to say tax invoice?

If you have registered for GST, you need to issue tax invoices, as opposed to commercial invoices, when you sell goods or services. Your tax invoices must be in New Zealand currency and have to show the words ‘tax invoice’ in a prominent place. 

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