Invoicing clause: when invoices go out and what they must show

Sample clause

a labour hire agreement between Sandpiper Trades and a facilities management company that runs a purchase order system

5. Invoicing 5.1 Sandpiper Trades must issue one invoice each calendar month, in arrears, for Services performed in that month. 5.2 Each invoice must be a valid tax invoice and must also state the Purchase Order number issued for the relevant Services, the Site, the period covered, and the hours claimed for each worker. 5.3 Each invoice must be sent to the accounts payable address in the Details Schedule, with the approved timesheets for the period attached. 5.4 An invoice that does not comply with clauses 5.2 and 5.3 is not payable. The Client must notify Sandpiper Trades within five (5) business days of receipt that the invoice does not comply, and must identify what is missing. 5.5 If the Client gives a notice under clause 5.4, the payment period runs from receipt of a corrected invoice. If the Client gives no notice within that period, the invoice is treated as compliant on the date it was first received. 5.6 Sandpiper Trades must not issue an invoice for Services performed more than three (3) months earlier.

Sample wording, not legal advice.

Variants

What to negotiate

• What makes an invoice non compliant

  Customers want a missing purchase order number to stop the clock. Suppliers accept that only with a duty to object quickly and to say what is missing. The usual landing point gives the customer five business days to reject with reasons, and treats an unrejected invoice as compliant from the day it first arrived.

• Billing frequency

  Monthly in arrears suits the customer's cycle and costs the supplier up to a month of funding. Suppliers on labour heavy work push for fortnightly, since wages go out weekly. The compromise often ties frequency to value, with monthly billing on small engagements and fortnightly above an agreed threshold.

• A backstop on late invoices

  Customers ask for a rule that work not invoiced within a few months cannot be invoiced at all, because a surprise invoice for last financial year is a budget problem. Suppliers accept a reasonable window. Three to six months is normal, and it also improves the supplier's own billing discipline.

The risk of leaving it out

Without an invoicing clause the supplier bills when it likes in whatever format it likes, and the customer rejects invoices on grounds nobody agreed. The payment term then has no reliable start date, so the whole payment section becomes uncertain, and a recovery claim starts with an argument about whether a proper invoice was ever delivered.

What a tax invoice has to show

For an Australian taxable sale under one thousand dollars the Australian Taxation Office requires seven details: that the document is intended to be a tax invoice, the seller identity, the seller Australian Business Number, the date of issue, a brief description of the items including quantity and price, the tax amount or a statement that the total price includes it, and the extent to which each sale is taxable. At one thousand dollars and above the buyer identity or Australian Business Number is needed as well. A supplier must provide a tax invoice within twenty eight days of a request, other than for sales of eighty two dollars and fifty cents or less.

Common mistakes

The clause requires a purchase order number but the customer has no process for issuing one before work starts. Non compliance makes an invoice unpayable with no duty on the customer to say so, which turns a formality into an indefinite hold. Invoices are sent to a project manager rather than to accounts payable. And credit notes go unmentioned, so a corrected amount has no agreed document behind it.

Where it sits in a generated document

Invoicing and payment are usually one section with two numbered clauses, invoicing first because it creates the document the payment clause depends on. Generated agreements keep them apart so a non compliance rule cannot be read as excusing payment generally. The invoice itself can be generated from the same builder as a separate document, with the seven required details written as content rather than as fillable fields.

Documents that carry this clause

Tax invoice template with GST, terms and a due dateLantern Creative bills Meridian Property Partners $19,437 for six branding and website lines. Both ABNs are printed, the buyer’s purchase order PO-8842 is quoted, and the due date is 14 days after issue. Everything an accounts payable team checks before paying sits in one block above the table, and the bank details sit under it.Purchase orderA civil contractor buys structural steel for a job that starts in three weeks. The order is written by the buyer, not the seller, and almost everything on it exists to stop a surprise arriving on the truck.Weekly timesheetAn electrician records a week across two jobs and a Saturday callout. The same 46.50 hours are counted twice, once for the pay run and once for the customers, and the sheet only works if both agree.Translation services agreement with word rates and turnaround bandsTranslation is priced by the word and judged by the deadline, so an agreement that names neither is just a handshake. This one puts five language pairs and two rates in a table, bands the turnaround by word count, and says exactly what a certified translation is before anyone argues about whether the authority will accept it.

Questions people ask