4A: Prepare invoices for debtors

This section covers the following performance criteria:

Preparatory calculations are performed to produce accurate invoices
Relevant documentation is completed to ensure accuracy of contents
Invoices are distributed to nominated personnel for verification prior to despatch
Verified invoices are despatched within designated timelines
Verified figures are entered into financial journals
Documents are filed for auditing purposes and follow-up action is taken as required

Preparatory calculations are performed to produce accurate

invoices
When a company has provided goods and services to another person or company, and there is a
charge associated with these goods and services, they usually prepare an invoice. An invoice is a
formal document issued by a seller to the buyer that details the products, quantities, and agreed
prices for products or services the seller has provided the buyer.

Invoices must be accurate and they must abide by consumer law and taxation law. Where a
payments clerk is unsure of the legislative requirements to which invoices must conform they
should consult their supervisor.

When preparing an invoice, the payments clerk needs to know some basic information:
what the goods and services supplied were the quantities of goods and services supplied the unit
price of each item
any discounts offered (including those for bulk purchases)
whether GST is payable

Once the payments clerk has this information they can start to calculate the invoice. The first step
is to list all the goods and services and the quantity provided, together with the unit price. Then a
subtotal for each line item is calculated. Finally a total is calculated.

GST
GST is a tax of 10% on most goods and services. It is paid at each step as the goods go from the
manufacturer through various entities (wholesale, retail etc) to the retail customer/ consumer. All
entities along the chain except for the consumer can claim back the GST which they have, in effect,
paid as a credit. GST liability is reported to the Australian Taxation Office (ATO) on either a
monthly or a quarterly basis in the form of a Business Activity Statement (BAS).

GST calculation
It is easy to calculate GST when the cost of the individual goods/ service is known:

Cost of goods/ service (Ex GST) 1040

GST $540 X 10% = 104
Total cost $1144.00

If GST is already added to goods/ services and individual costs are not known, it is necessary to divide the
total (the GST inclusive figure) by 11.

Cost of goods/ service including GST 660.00

GST $660.00 /11 = $60.00
 Example invoice calculation:

Description Unit price Quantity Total

Blue pens 36c/ pen 300 $108
Red pens 36c/ pen 150 $54
Reams A4 paper $12.45 so $622.50

Subtotal $784.50

GST@10% $78.45

Total payable $862.95

Preventing calculation mistakes

Calculation mistakes can occur for a number of reasons. Help to prevent mistakes from occurring by:
making sure that source information, eg price lists, is accurate
using a calculator or piece of software to perform the calculations
developing a personal work system to ensure that no items are missed or duplicated
working carefully and methodically
minimising interruptions
double-checking all calculations

Now complete the learning task below. (called task 11 in the

activities tab)

Complete the calculations for the following invoices. Show your subtotals and the totals.

1. Three x black coats at $106.00 each, 5 Jeans at $110.00, 1 x boots at $125.00. These are non GST
prices and GST is payable.

Description Unit price Quantity Total

Subtotal

GST

Total payable

2. four hundred black gremlins at $55 each, 250 green gremlins at $33 each, 90 silver gremlins at $39
each. GST is payable.

Description Unit price Quantity Total

Subtotal
GST

Total payable