The order of operations matters
Getting the sequence wrong changes the total, and it is the most common invoicing error. The correct order is:
2. Less discount
3. Plus shipping
4. Plus tax, on the discounted amount
5. Less any deposit already paid
Discount before tax is the key rule. Tax is charged on the amount actually payable, so a discount reduces the tax too. Applying tax first and discounting the gross figure overstates the tax and produces a total your client's accounting will reject.
Taxing before discounting would have given $900 of tax and a $5,400 total — $90 too much.
What a valid invoice must contain
Requirements vary by jurisdiction, but these appear almost universally:
- A unique, sequential invoice number.
- The issue date, and the supply date if different.
- Your full legal name, address and tax registration number.
- The client's name and address.
- A clear description of each item or service, with quantity and unit price.
- The subtotal, tax rate, tax amount and total.
- Payment terms and the due date.
- Your bank or payment details.
Additional requirements by region
| Region | Additional requirements |
|---|---|
| India (GST) | GSTIN of both parties, HSN or SAC code, place of supply, CGST/SGST/IGST shown separately |
| EU (VAT) | VAT numbers of both parties, and a reverse-charge note for cross-border B2B supplies |
| UK | VAT number and rate per line where registered; sequential numbering is mandatory |
| US | No federal invoice format; sales tax rules are set by state |
For the Indian CGST/SGST/IGST split specifically, the GST calculator handles it directly.
Payment terms and getting paid
| Term | Meaning |
|---|---|
| Due on receipt | Payable immediately |
| Net 7 / Net 15 | Due in 7 or 15 days |
| Net 30 | Due in 30 days — the most common B2B default |
| Net 60 / Net 90 | Common with large corporates; hard on cash flow |
| 2/10 Net 30 | 2% discount if paid within 10 days, otherwise due in 30 |
| 50% upfront | Half on acceptance, half on delivery |
Research on invoice payment consistently finds that shorter stated terms are paid faster, and that invoices sent immediately on completion are paid sooner than those batched at month end.
- Invoice the day the work completes. Delay compounds — a week late in sending is a week late in getting paid.
- State a due date, not just a term. "Due 30 September" is acted on more reliably than "Net 30".
- Take a deposit on larger projects. 30% to 50% upfront is standard and filters out clients who will not pay.
- State a late fee. Even if rarely enforced, its presence changes prioritisation.
- Make payment easy. Include full bank details or a payment link directly on the invoice.
Frequently asked questions
Should I apply the discount before or after tax?
Before. Tax is charged on the amount actually payable, so the discount reduces the tax as well.
On $5,000 with a 10% discount and 18% tax, discounting first gives $5,310. Taxing first gives $5,400 — $90 too much, and it will not reconcile with your client's accounts.
Is shipping taxable?
In most jurisdictions, yes, when the goods being shipped are taxable. Some US states exempt separately-stated shipping charges.
The advanced options let you switch it off if your jurisdiction exempts it.
What payment terms should I use?
Net 30 is the common B2B default, but shorter terms get paid faster. Net 15 or "due on receipt" is entirely reasonable for smaller invoices and new clients.
State an actual due date rather than only a term — it is acted on more reliably.
What is withholding tax on an invoice?
Tax the client deducts and pays to the authority on your behalf. In India, TDS on professional services is typically 10% of the pre-GST amount.
You invoice the full amount, receive less, and claim credit for the deducted portion when filing. It is not a discount.
Do I need to charge tax on every invoice?
Only if you are registered for it. Below the registration threshold you generally must not charge it.
Thresholds differ: ₹40 lakh for goods and ₹20 lakh for services in most Indian states, £90,000 in the UK, and varying economic nexus rules by US state.