ErrorsInvoicestake control

Why I check every detail on an invoice

Why do I check invoices?  Do I have spare time and nothing better to do?

Ha Ha – funny one.  I see over 50 invoices some days alone so I certainly don’t have spare time to check invoices – but I think it is a must in this day and age in business and I will tell you why.

Invoices contain errors

some are just human errors, some are system errors and some are because other business owners might not know the rules when it comes to raising correct invoices.

Why does it matter I hear you ask and more importantly who cares?  You have an invoice in your hot little hands and you just want to get it entered and paid.

Well here is the news….the ATO deem it to be the business owners responsibility to ensure they are paying correct invoices.  If an invoices is wrong…the supplier doesn’t get in trouble – it is you as the business owner who has processed an incorrect invoice who will be left bearing the scars of the ATO whip.

PLEASE EXPLAIN….I hear you shout at your screen right now.

1.  Invoices with an invalid ABN.  Yes – people can put an ABN on their invoice but do you check they are actually operating under that ABN?  If the ABN doesn’t exist – then as the payer you must withhold tax at the top rate – currently 48.5%.  The easiest (but not foolproof) way is to check the Australian Business Register online.  Bookmark that page….use it…..it could save you so many hassles.

2.  Invoices provided to you by your suppliers can have errors.  I have seen various errors in the past – some of which include invoices not adding up, having items missing, not having a total.  You name  it – and I have most likely seen it.  What do I do when I get an invoice that doesn’t add up – I send it back.  No question about it.  The supplier must provide me with a correct invoice before I make any payment.

3.  Is someone charging you GST when they are not registered?  This can be a real hassle – and only because if you don’t check, and claim the GST as per the invoice and get audited from the ATO….you could be in trouble.  The ATO will disallow the claim for the GST credit…and potentially make you pay that money back…PLUS interest.  So do your homework.  The Australian Business Register (link above) will also tell you if suppliers are registered for GST.

4.  The invoice you have received might be just totally wrong.  Take today for example. I had a client receive two invoices for a monthly subscription. One for January and one for February.  I had never seen the invoice before so I questioned it.  I had to go back and forth several times with the supplier.  An hour of my time later (and yes my clients pay for this time) I found out the invoices were raised in error and would be credited out.  So yes – my client pays my hour, but in fact overall have just saved themselves over $300 as they more than likely would have just paid the invoices.  So question things and don’t be afraid to ask.

5.  Invoices are often in the wrong format.  This tends to happen when people are not using accounting software and creating invoices in excel or word.  Invoices must have certain things mandatory – like date, invoice number, ABN, business name, etc, etc.  Check the invoices you are receiving so you don’t get caught out.  If you are unsure….then ask us.  Part of our financial coaching service is to check and ensure you are complying with the ATO rules.

So there you have it – my list of things that can be wrong with an invoice.  Sure it might only be $100 here and $100 there – but over the course of the financial year – these errors can add up and cost your business much more than those pesky hundreds of dollars.

So check invoices, ask questions and take control of your finances.