As BAS Agents and bookkeepers, one of the most common issues we see with new business
owners is a misunderstanding of how invoices and payments work within accounting software.
Many entrepreneurs are excellent at running their businesses but are still learning the financial
side of things. If you’ve ever wondered why we’re asking for bank access or proof of payment
when you’ve already sent us the invoice, this article is for you.
An Invoice and a Payment Are Two Different Things
Let’s start with the basics.
When a supplier sends you an invoice, it creates a bill that needs to be paid. The invoice tells us:
- Who you owe money to
- How much you owe
- The GST amount
- The date of the transaction
However, the invoice alone does not tell us how or when it was paid.
For your accounts to be accurate, we need to record both:
- The invoice (the bill)
- The payment (how the bill was actually paid)
Think of it like receiving a restaurant bill. Receiving the bill doesn’t mean you’ve paid it. There still needs to be a record of the payment leaving your account.
Why We Need to See the Payment
When we receive an invoice through Dext, Hubdoc, or email, our next step is to match that
invoice to a payment appearing in a bank feed.
This matching process is important because it:
- Confirms the invoice has been paid
- Prevents duplicate transactions
- Keeps supplier balances accurate
- Ensures your financial reports are correct
- Provides a clear audit trail for the ATO
Without a matching payment, the software assumes the invoice is still unpaid.
The Common Mistake We See
A very common scenario looks something like this:
A business owner purchases software, fuel, stock, or office supplies.
They receive the invoice and immediately upload it to Dext or Hubdoc.
From their perspective, the job is done.
The problem is that the payment was actually made using their personal credit card rather than
the business bank account.
When we look at the business bank feed, we can’t see a payment that matches the invoice.
As far as the accounting software is concerned, the bill remains outstanding because there is no
payment transaction available to match against it.
What Happens If You Pay Using Your Personal Card?
There is absolutely nothing wrong with occasionally paying for a business expense using your
personal credit card.
However, we need visibility of that payment.
There are generally two ways to handle this
Option 1: Provide Access to the Personal Credit Card Feed
If you regularly use a personal credit card for business purchases, it is often best to connect that
card to your accounting software.
This allows us to:
- See the payment transaction
- Match it to the invoice
- Accurately record the expense
- Maintain a complete audit trail
Option 2: Provide Regular Statements
If connecting the card isn’t possible, we may need copies of the credit card statements showing
the payments made for business expenses.
This gives us evidence that the expense was actually paid and allows us to record it correctly.
Why Accurate Records Matter
When invoices and payments are not matched correctly, several problems can occur:
- Expenses may be duplicated
- Supplier balances may be incorrect
- Financial reports become unreliable
- GST reporting may be affected
- End-of-year accounting becomes more difficult
Most importantly, inaccurate records can make it difficult to understand how your business is
really performing.
How You Can Help Your Bookkeeper
To keep your bookkeeping accurate and up to date, follow these simple guidelines:
- Upload all business invoices and receipts to Dext or Hubdoc.
- Let us know if a business expense was paid with a personal card.
- Provide bank feeds for all accounts used to pay business expenses.
- Avoid using multiple personal cards for business purchases where possible.
- Ask questions if you’re unsure how a transaction should be recorded.
The Bottom Line
An invoice tells us what was purchased. A payment tells us how it was paid.
For your bookkeeping to be accurate, we need both pieces of information.
If you’ve uploaded an invoice to Dext or Hubdoc but paid it using a personal credit card, please
make sure we also have access to the account that made the payment. Without that payment
record, we cannot properly reconcile the transaction, and your accounts may not accurately
reflect the true position of your business.
By providing both the invoice and the payment information, you’re helping us keep your books
accurate, compliant, and ready for BAS lodgements, tax time, and business decision-making.
Need help understanding how to separate business and personal expenses? Get in touch
with our team. We’re always happy to help new business owners build good financial
habits from day one.
