Cheap online invoicing in South Africa, and what it costs later
Sending an invoice is the easy part, and dozens of tools will do it for nothing. The expensive part arrives later, when the invoices have to become books.
If you have just started out, a free invoicing tool is a perfectly sensible thing to use. This article is not an argument against them. It is an argument about timing: there is a specific point at which invoicing-only software stops saving you money and starts costing it, and most people go past that point without noticing for about a year.
First, what a South African tax invoice must actually contain
This is the part cheap tools most often get wrong, because they are built for a generic international market. If you are a VAT vendor, the VAT Act sets out what a tax invoice has to show. Get it wrong and your customer cannot claim the input VAT, which turns into an awkward phone call and a reissued document.
A full tax invoice, required where the consideration exceeds R5,000, must show:
- The words Tax Invoice, VAT Invoice or Invoice
- Your name, address and VAT registration number
- The customer's name and address, and their VAT number where they are registered
- A serial number and the date of issue
- A full and proper description of what was supplied
- The quantity or volume supplied
- The value, the VAT amount and the total, or the total with a statement that it includes VAT and at what rate
An abridged tax invoice is permitted where the consideration is R5,000 or less. It drops the customer's details and the quantity, but still needs the heading, your details, the number and date, the description and the amounts.
A serial number sounds trivial and is not. Invoice numbers have to be sequential and unique, and the most common failure in cheap tooling is letting two documents take the same number, or letting you edit a number by hand after the fact. Both are audit problems.
The same rules apply in the other direction, to the invoices your suppliers send you. You cannot claim input VAT against a document that is not a valid tax invoice, and a missing supplier VAT number is the usual reason. That is worth checking before you file rather than after:
What an invoicing tool leaves undone
An invoice is one half of a transaction. The other half is what it did to your books, and invoicing-only software does not have books. That difference is invisible for a few months and then arrives all at once.
| What happens | With an invoicing tool | With an accounting system |
|---|---|---|
| You send an invoice | A PDF goes out and a row appears in a list | The sale, the VAT and the amount owed to you are all recorded against the right accounts |
| The customer pays, partly | You tick it off, or you do not | The receipt is allocated, the balance updates and the bank account moves |
| You need to know what you are owed | You add up the unticked ones | An age analysis, by customer, at any date |
| VAT is due | You export to a spreadsheet and work it out | The return is built from the transactions and reconciles to the ledger |
| Your accountant asks for a trial balance | There is not one | It exports |
| You credit an invoice you already sent | You delete it, or send a note and hope | A credit note reverses the sale, the VAT and the stock together |
None of the right-hand column is exotic. It is what accounting is. The reason it matters commercially is that the work does not disappear when the software does not do it. It moves to you in February, or to your accountant at their hourly rate, or to a bookkeeper you now employ.
The point where free stops being cheap
There is no universal threshold, but the trigger is almost always one of these five. If two or more apply to you, an invoicing tool is already costing you more than it saves.
- You have registered for VAT, or you can see the R2.3 million registration threshold from where you are standing.
- You have hired someone. Payroll, PAYE, UIF and a monthly EMP201 are now yours, and they need to land in the same books as everything else.
- You buy stock. Without cost of goods sold, your profit figure is fiction.
- You are paying an accountant to reconstruct your year. Their invoice is the price of not having a ledger, and it is usually more than the software would have cost.
- You cannot answer what you are owed without opening a spreadsheet.
What to look for if you do move
- Check the invoice template against the tax invoice checklist above, before you buy. Ask for a sample PDF.
- Check that invoice numbering is sequential and cannot be edited by hand.
- Check that recording a payment moves the ledger, and that reversing one moves it back.
- Check that credit notes reverse the sale, the VAT and the stock together, rather than just producing another document.
- Check what a VAT return looks like, and whether you can reconcile it to the ledger before filing.
- Check that you can export everything, and that your accountant gets in without costing you a seat.
For a fuller treatment of choosing between the options, including the tier pricing trap and the honest gaps in our own product, see the guide to choosing accounting software in South Africa.
Where OxyAccounting sits
OxyAccounting is R149 a month with one plan and everything switched on, which includes invoicing with branded PDFs, quotations, credit notes that reverse the ledger properly, recurring invoices, overdue reminders, customer statements with an age analysis, and a real double-entry general ledger underneath all of it. There is no cheaper tier that leaves the accounting out, because leaving the accounting out is the problem this article is about.
It is not the cheapest way to send an invoice. Several tools will do that for nothing and do it well. It is a reasonable answer to the different question of what happens after you send one. The trial is fourteen days and takes no card details, which is the only way to find out whether that trade is worth it to you.