What must be on a legal invoice in South Africa?

A legal South African invoice must include: 1) The word "Invoice" or "Tax Invoice", 2) Unique sequential invoice number, 3) Invoice date, 4) Your business name and contact details, 5) Client name and details, 6) Itemized description of goods/services, 7) Quantity and unit price for each item, 8) Subtotal before VAT, 9) VAT amount (15%) if registered, 10) Total amount due, 11) Your VAT registration number (if applicable), 12) Payment terms and due date, 13) Banking details for payment.

What is the difference between an invoice and a tax invoice?

An invoice is a payment request for goods or services. A tax invoice is specifically required when you are VAT-registered and includes VAT (15%) on the total. Tax invoices must display your VAT registration number, clearly show VAT breakdown, and comply with SARS requirements. If you're not VAT-registered (annual turnover below R1 million), you issue standard invoices without VAT. Only VAT-registered businesses can issue tax invoices.

How do I number my invoices correctly?

Use unique sequential numbering that never repeats. Common formats: Simple sequence (001, 002, 003), Year-based (2025-001, 2025-002), Year-month (2025-11-001), or Custom prefix (INV-001, SA-001). Never skip numbers or reuse them. SARS requires consecutive numbering for audit purposes. Track your last invoice number carefully. Most accounting software auto-generates numbers to prevent duplicates.

What payment terms should I include on invoices?

Standard payment terms in South Africa: "Payment due within 30 days" (most common for B2B), "Payment due within 7 days" (for quick payment), "Due on receipt" (immediate payment required), or "Net 30" (30 days from invoice date). Clearly state late payment penalties (e.g., "Interest charged at 2% per month on overdue amounts"). Specify accepted payment methods and banking details. For repeat clients, consider offering early payment discounts like "2% discount if paid within 7 days".

Do I need to be VAT registered to create invoices?

No, you can create invoices whether VAT-registered or not. If turnover is below R1 million/year, you're not required to register for VAT. Issue standard invoices without VAT. If turnover exceeds R1 million, VAT registration is mandatory - you must then issue tax invoices including 15% VAT and your VAT number. Voluntary registration is possible between R50,000-R1M turnover if beneficial for your business.

Can I create invoices in Excel or Word?

Yes, you can create invoices using Excel, Word, or Google Docs templates. Ensure they include all legal requirements (business details, invoice number, itemization, totals, payment terms). However, dedicated invoice generators or accounting software offer advantages: automatic numbering, professional design, calculation accuracy, VAT compliance, tracking/management, email/PDF export, and client history. For professional businesses, dedicated tools save time and reduce errors.

How long must I keep copies of invoices?

South African tax law requires keeping invoice copies for 5 years from date of issue. This applies to both issued invoices (sales) and received invoices (expenses). Store digitally (PDFs) or physically in organized filing system. SARS may audit and request invoice records up to 5 years back. Proper record-keeping is essential for: tax returns, VAT submissions, expense claims, audit compliance, and dispute resolution. Use cloud backup for security.

What should I do if a client doesn't pay my invoice?

Follow this process: 1) Send friendly reminder when payment is 1 week overdue, 2) Send formal reminder at 30 days with late payment charges, 3) Phone call to discuss payment at 45 days, 4) Send final demand letter at 60 days, 5) Consider: suspending services, using debt collection agency, or legal action (small claims court for amounts under R20,000). Prevention: credit checks for new clients, deposits for large jobs, payment milestones for projects, and clear payment terms upfront.

Business & Finance

How to Create a Professional Invoice for Your Small Business (2025)

Complete guide to creating professional invoices for your South African small business. Learn invoice requirements, best practices, payment terms, VAT compliance, and use our free invoice generator template.

2025-11-08

10 min read

By SA Tools Hub

Creating professional, legally compliant invoices is essential for every South African small business, freelancer, and entrepreneur. A well-designed invoice ensures timely payment, maintains professional credibility, and keeps you compliant with SARS requirements. This complete guide shows you everything you need to know about creating invoices, from legal requirements to best practices and using our free invoice generator.

📄 Professional Invoice Essentials

Legal Compliance

Meets all SARS requirements for tax invoices and record-keeping

Professional Image

Creates trust and credibility with clients and customers

Faster Payment

Clear terms and details lead to 30% faster payment on average

Essential Invoice Components

Legal Requirements for South African Invoices

Every Invoice Must Include:

Business Information:

✓ Your business/trading name
✓ Physical business address
✓ Contact details (phone, email)
✓ VAT registration number (if registered)
✓ Company registration number (if applicable)

Invoice Details:

✓ Word "Invoice" or "Tax Invoice"
✓ Unique invoice number (sequential)
✓ Invoice date
✓ Payment due date
✓ Payment terms (e.g., "Net 30")

Client Information:

✓ Client/customer name
✓ Client address
✓ Client VAT number (for tax invoices)
✓ Contact person (if company)

Line Items & Totals:

✓ Description of goods/services
✓ Quantity for each item
✓ Unit price per item
✓ Subtotal (before VAT)
✓ VAT amount (15% if registered)
✓ Total amount due

Standard Invoice vs Tax Invoice

Feature	Standard Invoice	Tax Invoice (VAT)
Who Can Issue	Any business	Only VAT-registered businesses
Title	"Invoice"	"Tax Invoice" or "VAT Invoice"
VAT Display	No VAT shown	VAT (15%) must be clearly shown
VAT Number	Not required	Your VAT number mandatory
Client VAT Number	Not required	Required for B2B transactions
Turnover Threshold	Below R1 million/year	Above R1 million/year (mandatory)

Invoice Numbering Best Practices

Numbering Systems That Work

✅ Good Numbering Examples

Simple Sequential

001, 002, 003, 004...

Easy to track, works for small volumes

Year-Based

2025-001, 2025-002, 2025-003...

Resets annually, good for tax year tracking

Year-Month

2025-11-001, 2025-11-002...

Monthly resets, excellent for high-volume businesses

Custom Prefix

INV-001, SA-001, JHB-001...

Identifies invoice type or location

❌ Common Numbering Mistakes

• Skipping numbers: Creates audit issues with SARS
• Reusing numbers: Illegal and causes confusion
• Non-sequential: Random numbers don't comply with tax law
• Starting at 1: Looks unprofessional (start at 001 or 1001)
• Using dates only: Not unique if multiple invoices per day
• Inconsistent format: Switching systems mid-year causes confusion

Payment Terms and Conditions

Setting Clear Payment Terms

Standard Payment Terms:

Net 30 (Most Common)

Payment due within 30 days from invoice date. Standard for B2B transactions.

Net 15

Payment due within 15 days. Good for service providers and consultants.

Net 7

Payment due within 7 days. Use for quick-turnaround projects or cash flow priority.

Due on Receipt

Payment required immediately. Use for retail, one-time services, or new clients.

2/10 Net 30 (Discount Terms)

2% discount if paid within 10 days, otherwise full amount due in 30 days. Encourages early payment.

Late Payment Protection

Include These Clauses:

Late Payment Interest: "Overdue accounts attract interest at 2% per month compounded"
Collection Costs: "Client liable for all reasonable debt collection costs if legal action required"
Service Suspension: "Services may be suspended for accounts 30+ days overdue"
Ownership Retention: "Goods remain our property until full payment received"

Professional Invoice Design Tips

Visual Elements That Matter

Essential Design Elements:

✓ Company Logo: Top left or center for brand recognition
✓ Clear Hierarchy: Title "INVOICE" or "TAX INVOICE" prominent
✓ Readable Font: Arial, Helvetica, or similar professional font
✓ Font Sizes: 10-12pt body text, 16-24pt for title
✓ White Space: Don't cram - use spacing for clarity
✓ Color Scheme: Match brand colors but keep professional
✓ Table Format: Line items in clear table structure
✓ Bold Totals: Make final amount due stand out

Optional Enhancements:

• QR Code: For easy payment via app (use our QR generator)
• Payment Links: Direct link to online payment portal
• Company Stamp: Adds formality for some industries
• Thank You Message: "Thank you for your business!"
• Social Media: Website, social handles for contact
• Terms & Conditions: Link to full T&Cs document
• Itemized Hours: For time-based services
• Project Reference: Quote or PO number

VAT Invoice Requirements

VAT Registration Thresholds

Do You Need to Register for VAT?

Mandatory Registration: Turnover > R1 Million/Year

If your annual taxable turnover exceeds R1 million, you must register for VAT within 21 days of exceeding threshold. You must then charge VAT (15%) on all taxable supplies and issue tax invoices.

Voluntary Registration: R50,000 - R1 Million/Year

You can choose to register voluntarily if turnover is between R50,000 and R1 million. Benefits: claim VAT back on business expenses, appear more established. Drawbacks: additional admin, bi-monthly returns.

No Registration Required: Turnover < R50,000/Year

Cannot register for VAT. Issue standard invoices without VAT. Cannot claim VAT back on expenses. Simpler admin for micro-businesses.

Tax Invoice Calculation Example

Example: Website Design Services

Website design (40 hours @ R800/hour):R32,000.00

Domain registration (1 year):R150.00

Hosting setup:R500.00

Subtotal (before VAT):R32,650.00

VAT @ 15%:R4,897.50

TOTAL AMOUNT DUE:R37,547.50

Invoice Management Best Practices

Record Keeping Requirements

SARS Requirements:

• Retention Period: Keep all invoices for 5 years minimum
• Format: Paper or electronic (PDF) both acceptable
• Organization: Sequential filing for easy retrieval during audits
• Backup: Keep digital and physical backups in separate locations
• Accessibility: Must be able to produce within 21 days if SARS requests

Invoice Tracking System

Track These Key Metrics:

✓ Outstanding Invoices: What's owed to you and by whom
✓ Average Payment Time: How quickly clients pay (aim for 30 days or less)
✓ Overdue Invoices: Invoices past due date requiring follow-up
✓ Payment Success Rate: Percentage of invoices paid without issues
✓ Monthly Revenue: Total invoiced per month for cash flow planning
✓ Client Payment History: Which clients pay on time vs late

📄 Create Your Professional Invoice Now

Use our free invoice generator to create professional, legally compliant invoices in minutes:

• Automatic calculation of subtotals, VAT, and totals
• Professional templates that include all legal requirements
• Sequential invoice numbering
• Download as PDF or share via WhatsApp
• Save client details for future invoices
• No registration required - completely free

Generate Invoice Now →

Disclaimer: This guide provides general information about creating invoices for South African businesses. Invoice requirements and VAT regulations change periodically. Always verify current SARS requirements and consult with registered accountants or tax practitioners for advice specific to your business situation. We are not responsible for any errors or omissions in invoices created using this guide.