Commercial clients pay reliably, but only through their own process: supplier set-up, a quote that answers what they asked for, a purchase order raised against your quote, work kept within that order, and a tax invoice that quotes the order number and matches it to the cent. Get the paperwork right and the money arrives on their payment run. Get it wrong and a correct invoice for good work can sit unpaid for months while it bounces between a site manager and an accounts team. Before the first job, ask for their supplier requirements and payment terms in writing, and decide whether those terms work for your business.
Getting set up as a supplier
Most businesses of any size will not raise an order for a supplier they have not set up. Expect a supplier form asking for:
- Your ABN and whether you are registered for GST.
- Bank details, often on your letterhead or a bank-issued document.
- Certificates of currency for public liability insurance, and workers compensation if you employ staff.
- Licence numbers for the work you do.
- Safety documents, such as a safe work method statement for high-risk construction work, and sometimes a site induction.
Keep these as current files on your phone and send them the day you are asked. Set reminders for each certificate's expiry. A lapsed certificate can stop new orders being raised even for a client you have worked with for years.
One caution worth repeating to anyone in your office: criminals impersonate suppliers by email and ask clients to change bank details. Good clients will ring you to confirm a change. Do the same in reverse, and never act on a bank detail change that arrives only by email.
Payment terms
Commercial terms are usually longer than a homeowner's. "30 days" means 30 days from the invoice date. "30 days end of month" means 30 days from the end of the month the invoice is dated in, so an invoice dated early in a month waits close to two months. Find out the client's terms and payment run dates before you quote, and price the wait into the job if it is long.
You can ask for shorter terms, and some large businesses offer them to small suppliers. If a client's standard terms look one-sided, remember that the unfair contract terms rules in the Australian Consumer Law cover small businesses on standard form contracts. The ACCC and the Australian Small Business and Family Enterprise Ombudsman both publish guidance.
Quoting to the request
Commercial clients often send a written request for a quote with a scope. Quote exactly to it, in the same order, and list anything you have changed or left out as a deviation. If you think the scope is wrong, quote it as written and offer the alternative separately. A procurement officer comparing three quotes needs to compare like with like, and the quote that does not match the request is the one that gets set aside.
Show figures before GST and the GST amount, because business clients think in prices before tax. Put the client's reference number on the quote. If you send quotes from Quote Desk, the total is the sum of your lines with no tax calculated, so enter GST-inclusive prices and write the GST amount and the figure before GST in the note; the help article on GST explains how.
When the purchase order arrives
Check it against your quote before you start: the description, the amount, the site and the dates. An order raised for less than your quote, or for a different description, is far easier to fix before the work than after. For maintenance clients who send a stream of small jobs, a standing order against an agreed schedule of rates saves everyone a quote per job.
Extra work on the day
This is where most commercial invoices get stuck. You find something that needs doing, it is obviously needed, and the site manager says go ahead. Do not. Stop, photograph it, send a short quote for the extra work to the person who raised the order, and wait for the order to be amended or a new one raised. The site manager's verbal yes does not change the order, and accounts payable will reject an invoice that exceeds it, however reasonable the extra was.
A worked example
Sparrowhawk Electrical is a fictional electrical contractor with a property group as a client. The group asks for 40 fluorescent ceiling fittings on one floor of an office building to be replaced with LED panels, on a Saturday when the building is empty.
The quote, in the order of the request:
- LED panel supply and install, 40 at $165: $6,600
- Removal and disposal of old fittings, 40 at $8: $320
- Weekend labour premium, 8 hours at $45: $360
The figure before GST is $7,280, GST is $728, and the total is $8,008. The group raises a purchase order for $8,008 with a description that matches.
On the Saturday, Sparrowhawk finds that the ceiling grid around three fittings is damaged and will not hold the new panels. The building is empty and the facility manager is on the phone. Sparrowhawk photographs the grid, emails a quote for the repair, $270 plus GST, so $297, and waits twenty minutes while the facility manager raises an amendment to the order. The repair is done the same day.
The tax invoice is for $8,305, quotes the order number exactly, lists the original lines and the grid repair, and goes to the accounts payable address rather than to the facility manager. It is paid on the group's next payment run under its 30 days end of month terms. Had the grid been fixed without the amendment, the invoice would have been $297 over the order, rejected, and paid a month later at best. The purchase order entry has a similar case.
Getting the invoice right
A commercial invoice should be a tax invoice if you are registered for GST, with the order number exactly as the client wrote it, one invoice per order unless the client says otherwise, and the description matching the order. Send it to the address the client names for invoices, attach anything they ask for, such as a service report or the signed job sheet, and keep a list of what is outstanding by client and by expected payment date.
Mistakes to avoid
- Starting work before the order arrives because the site contact said it was coming.
- Doing extra work on a verbal yes and invoicing over the order.
- Changing the order of the scope or the wording in your quote so it cannot be compared.
- Sending invoices to the site manager instead of accounts payable.
- Letting an insurance certificate expire and finding out when an order is refused.
What to do this week
- Put your supplier documents in one folder on your phone, with expiry reminders.
- Ask each commercial client for their payment terms, payment run dates and invoice address.
- Add the GST amount and the price before GST to your note template for business clients.
- Write a two-line message for requesting an order amendment from site.
- List every unpaid commercial invoice with its order number and expected payment date.