Basics
What is an invoice? What it does, and what goes on one
An invoice is a dated request for payment that also records a sale. What it does for you, your customer and the tax office, what goes on it, and how it differs from a quote, a receipt and a bill.
27 Oct 2026 · 6 min read
Tom takes photos of a new kitchen for a renovation company in Brisbane. They agreed A$1,650 by email. When the job is done, the company's office manager writes: “Great, send us an invoice and we will pay it on our next run.” Without one, nothing happens. Their accounts team cannot pay an email thread. The invoice is what turns finished work into a payment.
An invoice in one sentence
An invoice is a dated document from a seller to a buyer that lists what was sold, at what price and with what tax, and asks for payment by a certain date. It is both a request for money and a record that a sale happened.
What an invoice does
For you
- It asks for the money in a form your customer can act on.
- It records the sale in your books, with a number and a date.
- It shows the tax you charged, which you then report and pay over if you are registered.
- It is your evidence if a payment is disputed or never made.
For your customer
- It is what their accounts team approves and pays against.
- It records a cost in their books.
- If they are registered for VAT or GST, it is usually the document they need to claim back the tax you charged.
For the tax office
Invoices are the trail of a business's sales. Where VAT or GST applies, the law usually sets what a tax invoice must show, and how long you must keep it. The time varies by country, often five to ten years. Check your own tax office's guidance.
Is an invoice legally binding?
On its own, an invoice is not a contract. The agreement is what you and the customer agreed before the work: a quote they accepted, an order, an email, a signed contract. The invoice records what is owed under that agreement. That is why it should match what was agreed, and why a clear agreement makes collecting easier. If you have to go to court or a collections agency over an unpaid bill, the invoice and the agreement behind it are usually the first things asked for.
What goes on one
| Field | Why it is there |
|---|---|
| The word “Invoice” (or “Tax invoice” where required) | So nobody mistakes it for a quote or a statement |
| A unique number | So it can be found, paid and referred to without confusion |
| The date of issue | Starts the payment terms, and puts the sale in a tax period |
| Your name, address and tax number if registered | Who is asking to be paid |
| Your customer's name and address | Who owes the money |
| What you sold: description, quantity, price | What the money is for |
| Tax, if you charge it: rate and amount | So your customer can claim it back |
| The total and the currency | How much, in what |
| The due date and how to pay | When, and where the money goes |
That list works almost everywhere. Some countries add their own items: India's HSN or SAC codes and place of supply, the date of supply in the UK when it differs from the invoice date, the reverse charge wording for business sales across the EU. Our checklist of what every invoice must show goes country by country.
When to issue one
Usually when the work is done or the goods are sent. For long jobs, at agreed stages. For ongoing work, at the same point each month. Some tax systems set a deadline: you must issue the invoice within a set number of days of the sale. When you are free to choose, sooner is better, because the payment terms only start when the invoice arrives.
How it differs from the documents around it
| Document | What it is |
|---|---|
| Quotation or estimate | Before the sale: the price you offer. Nothing is owed yet. |
| Proforma invoice | Before the sale: a draft invoice, often to arrange payment or import. Not a record of a sale. |
| Invoice | After the sale (or at it): what is owed, by when. |
| Receipt | After the payment: proof that the money arrived. |
| Statement of account | A summary of several invoices and payments for one customer. Bills nothing new. |
| Credit note | Reduces an invoice already issued. |
“Bill” usually means the same as invoice, seen from the buyer's side: the invoice you send is the bill they pay. For the documents before a sale, see quotations and proforma invoices, and for the one after it, invoice or receipt.
Do you need to be registered to send one?
No. Anyone who sells something can send an invoice: a freelancer, a sole trader, a small company. What changes with tax registration is what the invoice must say. If you are registered for VAT, GST or sales tax, you charge it and show your tax number. If you are not, you do not charge it, and in some countries you add a short line that says why.
Numbers matter more than they look
Each invoice needs a number that is never used twice, and in many countries the numbers must run in an unbroken series. That lets you, your customer and an inspector find any invoice and see that none is missing. A simple pattern like a prefix, the year and a counter works well. See how to number invoices.
The short version
- An invoice asks for payment and records a sale, with a number and a date.
- It is not the contract. It records what is owed under the agreement you made.
- It shows who, what, how much, the tax, the total, when it is due and how to pay.
- A quote comes before it, a receipt after it, and a credit note corrects it.
- Keep every invoice for as long as your country's tax rules ask.