Invoice numbering and records: a simple system that survives an ATO review

Why numbering matters

A sequence proves completeness. If your invoices run from 0041 to 0090 for the year, anyone can see there were fifty and check them against your income. A missing number raises the question of whether an invoice was deleted, and a duplicate number means two invoices cannot be told apart. Customers use the number to reference payments, which is how you match a deposit to a job. And when a customer disputes an amount, the number is the anchor for the whole conversation.

Choosing a format

Keep it simple and sequential:

• Plain counter: 0001, 0002, 0003. Start at a number above 1 if you prefer not to look brand new; 1001 is common.
• Year prefix: 2026-001, resetting each financial or calendar year. Handy for filing, and it keeps the counter short.
• Client prefix: ACME-014. Useful if a few large clients want their own series, but it adds a second sequence to manage. Avoid unless asked.

Whatever you pick, one series for all invoices, no letters that change meaning, and no reusing a number. Invoicing software assigns the next number automatically, which removes the whole problem; FlowFi does this and will not let two invoices share a number.

Quotes, invoices, credit notes

Quotes and invoices are different documents and should have different series (Q-0031 and 0031, say) so a quote is never mistaken for a bill. A deposit invoice and a final invoice for the same job are two invoices with two numbers; see deposits and progress payments.

When an invoice needs to be reduced or cancelled after it has been sent, issue a credit note (an adjustment note if you are GST registered) with its own number, referencing the original. If the invoice was wrong before anyone acted on it, void it, keep it, and issue a new one with the next number. What you do not do is delete it and reuse the number.

What to keep for each invoice you issue

• The invoice itself, as sent, in PDF.
• The quote or agreement it was based on, if there was one.
• Evidence of delivery: the sent email, or the platform record.
• Evidence of payment: the bank statement line, remittance advice or payment gateway record.
• Any credit notes, reminders or correspondence about it.

Together those show what was sold, for how much, when, and that the money arrived. The tax invoice elements themselves are covered in tax invoice requirements.

What to keep for invoices you receive

Every supplier invoice or receipt for a business expense, especially anything over $82.50 where you claim GST, plus the evidence you paid it. A photo of a paper receipt is acceptable, as long as it is legible. File it against the expense in your bookkeeping so the invoice and the bank transaction are linked; that is what makes 1B on your BAS defensible line by line.

How long, and in what form

Five years from the date the record was prepared or the transaction completed, whichever is later, and longer if the record relates to an asset you still own or a dispute that is still open. Electronic records are fine and are the norm; the ATO asks that they be accessible and readable for the whole period, so keep them somewhere backed up, not only on a phone. Full detail in record keeping requirements.

A filing system that works

One folder per financial year, with subfolders for invoices issued, invoices received and bank statements, and a file name that starts with the date and the number: 2026-03-14 INV-0057 Smith kitchen.pdf. That is enough for a business that files by hand. Better is software that stores the invoice with the transaction it belongs to, so you search by client, amount, date or number and get the document and the bank line together. FlowFi issues numbered invoices, tracks whether they are paid, attaches supplier receipts to expenses, and keeps the lot for as long as your account exists, with an export for your accountant.