Invoices and Receipts

Clause 8e of the code of conduct sets out the requirement on an adviser to, each time a fee is payable, provide the client with an invoice containing a full description of the services that the invoice relates to. The code of conduct does not prescribe any particular requirements on advisers regarding the issuing of receipts.

When to issue an invoice

A fee only becomes payable once it has been contractually agreed to (i.e. an invoice cannot be issued until after the client has accepted a written agreement). An invoice notifies the client of their obligation to make payment.

An invoice therefore should only be issued after receiving the client’s written confirmation of the payment terms and conditions, even if the first instalment becomes payable upon acceptance of the written agreement.
A written agreement cannot act in place of an invoice.

If payments are due in instalments, then the adviser must issue an invoice for each instalment as it becomes payable at the contractually agreed time. A single invoice for the entire fee does not meet the requirements of clause 8e of the code of conduct. For example, a written agreement may set out the total fees that are expected in three separate instalments:

• X amount is due on the date of lodgement of the expression of interest
• Y amount is due on the date of lodgement of the application
• Z amount is due on the date a decision is received.

A separate invoice should be issued at each stage. As with any other amendments, if there are subsequent changes to the instalment amounts and/or payment terms, this should be recorded and agreed in writing with the client in line with clause 1.5e of the code of conduct.

However, if an invoice is provided to the client for X amount at the time the application is lodged, for example, and you and your client set up a payment plan so that X amount can be paid to you in weekly instalments until it is paid off, there is no requirement to issue invoices for each of these weekly instalments. The time at which X amount was payable was set out in the written agreement as the date of lodgement and the issuing of a single invoice for X amount at this time and then allowing payment of this invoiced amount by instalments does comply with clause 8e.

What to include on an invoice

The Authority recommends that the following items be included on all invoices:

• identification that the document is an invoice
• date of issue
• the identity of the client
• a full description of services provided, including the fee for services (charged hourly or as a lump sum)
• a full description of any disbursements
• the total amount payable
• the New Zealand Goods and Services Tax (GST) amount, if any, payable in relation to the services performed.

Invoice or Tax Invoice

The difference between an invoice and a tax invoice involves the charge of New Zealand Goods and Services Tax (GST).
If an adviser is charging GST, they must be GST registered with the Inland Revenue Department (IRD).

Advisers who are GST registered can charge GST at zero percent in some situations. This is known as ‘zero-rated GST’. Some examples include:

• where the client is a non-tax resident (as defined by IRD) at the time the services are performed
• where the client is outside New Zealand at the time the services are performed.

Record keeping

Advisers can choose the method that they use to record invoice information into the accounting system that they use.
In all situations however, the adviser must enter the following details into whichever accounting system they use, in order to be able to track all of their transactions under the requirements of clause 3e of the code of conduct:

• the name or unique personal identifier of the client
• the date of the transaction
• the amount of the transaction
• the purpose of the transaction
• the related invoice number or reference.

There must be a direct correlation between all work done and all transactions undertaken, and through reconciliation, the records must match the bank statements.

If the adviser has a client account, these details must also be recorded in the client account ledger.

Clause 3e of the code of conduct also requires that such records be kept for a period of seven years and be made available to the Authority for inspection, on request.

Receipts

As a matter of best practice, the Authority recommends that each time a payment is received from a client, the adviser provide the client with a receipt clearly indicating which invoice(s) the receipt relates to. This is particularly recommended if an adviser receives cash payments.

Difference between an invoice and a receipt

The table below sets out the difference between an invoice and a receipt:

Invoice	Receipt
Provided to a client when the fee is payable (i.e. falls due) as defined in the written agreement. Represents the amount payable (i.e. due) to the adviser by the client. Contains a full description of the services that have been performed.	Provided to the client after payment is received from them. Represents the amount already paid to the adviser. Should clearly indicate which invoice(s) the receipt relates to.