While it’s important to stay on top of the invoicing process carefully, at times details will fall through the cracks. Have you noticed an accounting error after you’ve already sent an invoice? Before you issue an amended invoice, here’s what you need to know about your legal obligations in this situation.
What is an invoice?
Let’s start with the basics. An invoice is a formal document requesting payment from a customer or client. Businesses send out an invoice after goods or services have already been provided, outlining what’s been sold and the amount owed in return. Invoices are an important component of the accounting process because they serve as a record of purchase. As a result, it’s important that all details are correct on your invoice, or this can cause further problems down the line when compiling financial statements.
There are several types of invoices to use depending on the type of transaction. Examples include tax invoices, sales invoices, and interim invoices.
Amended invoice meaning
When you amend an invoice, this means that you’re making changes to the original statement. You might be correcting accounting errors or adding missing information. The amended invoice meaning doesn’t refer to deleting the document in its entirety, however. It’s important to hold onto all financial documents for record-keeping purposes, ensuring you have everything in order to file taxes.
Is it legal to amend an invoice?
In Australia, it’s usually legal to amend invoices, provided you’re simply adding missing information or correcting small errors. However, there are a few factors to consider depending on the timing of your amended invoice.
How to amend the last invoice before it’s issued
One thing to note is that invoices aren’t considered ‘issued’ unless they’ve been physically sent to the addressee, either electronically or on paper. If you notice an error before the invoice has been sent to your client, the problem’s easy to solve. Edit the invoice, fixing any errors or missing information. You can then submit the invoice.
How to amend the last invoice after it’s issued
The situation is slightly more complicated if you’re already sent your invoice to the client. If you need to adjust the total amount up or down, you can issue a separate credit note in lieu of an amended invoice. To correct additional details like date, address, or product details, you must submit a fresh invoice, ensuring that it comes with a unique invoice number to reflect the change.
The procedure for dealing with amended invoices differs depending on whether your business is GST registered:
GST registered businesses are required to issue tax invoices, which aren’t valid when the invoice is incorrect or incomplete. If the missing information is available through previously submitted documents, these can be used as supplements to the invoice to make it valid. However, in the absence of this supplemental information you’ll need to replace the invalid tax invoice with a corrected version. Legally, businesses have 28 days to replace an invalid tax invoice with a valid version. Amended invoices sent outside of this timeframe can only be treated as valid with the ATO’s permission.
Businesses that aren’t GST registered don’t need to worry about submitting tax invoices. In these cases, amending the invoice simply involves replacing the incorrect invoice with a fresh, corrected document as quickly as possible. Although requirements aren’t as stringent, it’s still recommended to do this within 28 days.
The bottom line
While amended invoices are legal in most cases, it’s still best practice to avoid issuing incorrect invoices to begin with. It’s worth setting up an efficient invoicing procedure as part of your business accounting strategy. Automating the process with software can also be helpful, as this cuts down on human error. Finally, remember to keep a copy of all issued invoices. These are important both for your own record keeping as well as for tax purposes.
We can help
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