Definition
The net amount on an invoice is the price of what was sold, excluding any VAT, sales tax, or other indirect tax. It is sometimes called the 'subtotal' or the 'taxable amount' depending on the template and the jurisdiction. Tax is calculated as a percentage of this number, then added to give the total the buyer actually pays.
Net amounts are also how prices are usually quoted in B2B contexts, especially across borders, because the tax treatment can vary by buyer location and registration status. 'Our day rate is £900 net' means £900 plus whatever tax applies.
Why it matters
Quoting and budgeting in net amounts keeps your numbers comparable across customers and jurisdictions. It also avoids the most common pricing mistake: quoting a gross price (tax-included), winning the work, then realising the tax portion has eaten into what you thought was your margin.
Where this appears in your tools
The Invoice Generator shows the net subtotal, the tax line, and the gross total separately on every invoice — and treats discounts as adjustments to the net amount, not the gross.
Example
An invoice has one line at £2,400.00 net. VAT at 20 percent adds £480.00. The gross total — what the buyer pays — is £2,880.00. The seller's revenue is the net £2,400; the £480 belongs to the tax authority and must be remitted later.
Common confusion
'Net' on an invoice means 'before tax'. 'Net' on payment terms (e.g. 'Net 30') means 'payable in full within thirty days'. They are unrelated uses of the same word and frequently confuse first-time invoice readers.