Benefits of Sending Invoice and Statements now


The end of the financial year is fast approaching, and for many businesses, it's time to start thinking about tax planning. One important consideration is the timing of your invoices. The date on your invoice can affect when the income is deemed to be earned. If you use accrual accounting, which most of my clients use, then invoicing a customer before June 30, 2023, will mean that the payment will be taxed in the 2022-2023 financial year, even if the customer doesn't pay the invoice until July 2023. This increases your tax liability for this financial year.

However, here are some other reasons why you should consider sending their invoices before the end of the financial year:

-To improve your cash flow. Getting paid sooner can help you cover expenses and avoid late payments.

-Give your customers a chance to take advantage of tax deductions or credits. If your customers are cash basis taxpayers, which most of them are, they may be able to deduct the cost of your services in the current financial year if they pay the invoice before June 30.

Of course, there is a potential downside to sending invoices before the end of the financial year, as if you invoice a customer before they've received the goods or services, they may not be happy to see it immediately. To get over this, add a note to the invoice to say we send this early account to help you get a head start on your bookkeeping and tax returns and to make it easier to prepare your books and taxes.

This is why many of you are getting your invoices early now, and ultimately, whether or not to send your invoices before the end of the financial year is your call. You only have a little time if you do it, so get to it.

It would also be good to talk to your accountant for professional advice. They can help you understand the tax implications of your decision and ensure you comply with the law.

If you have any questions, please feel free to contact me.

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