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Check ABNs are active before paying invoices

A short check you can add to every pay run, so you are not paying invoices against cancelled or mistyped ABNs.

An invoice with a wrong or cancelled ABN is a warning sign. It can be an honest mistake, a business that has closed and restarted under a new structure, or occasionally a fake invoice. A quick ABN check before each pay run catches most of these without slowing you down.

There is also a tax reason. If a supplier does not quote an ABN when they invoice you for a business supply, you may have to withhold tax from the payment at the top marginal rate (47%) under the ATO’s “no ABN withholding” rules. Your tax agent or the ATO website can tell you whether that applies to a particular payment.

How the ABN checksum works

Every ABN has 11 digits, and the first two digits are check digits. The Australian Taxation Office publishes the rule, so you can test a number yourself before you look it up:

1. Subtract 1 from the first digit.
2. Multiply each of the 11 digits by its weight: 10, 1, 3, 5, 7, 9, 11, 13, 15, 17, 19.
3. Add the 11 results together.
4. If the total divides evenly by 89, the number passes the checksum.

Take 51 824 753 556. After subtracting 1 from the first digit, the digits are 4 1 8 2 4 7 5 3 5 5 6. The weighted products are 40, 1, 24, 10, 28, 63, 55, 39, 75, 85 and 114, which add up to 534. 534 is 89 × 6, so the number passes. Change the last digit to 7 and the total becomes 553, which leaves a remainder of 19, so it fails.

A pass only tells you the number is well formed. It does not tell you the ABN was ever issued, who holds it, or whether it is still active. For that you need the Australian Business Register (ABR).

A simple pay-run check

1. Export the invoices due this run, with supplier name, ABN and amount, into a Google Sheet.
2. Check every ABN passes the checksum. A FALSE usually means a typo on the invoice or in your system. This free formula works in any sheet:

=LET(d, REGEXREPLACE(TO_TEXT(A2), "[^0-9]", ""),
  IF(LEN(d) <> 11, FALSE,
    MOD(SUMPRODUCT((VALUE(MID(d, SEQUENCE(11), 1)) - (SEQUENCE(11) = 1))
      * {10;1;3;5;7;9;11;13;15;17;19}), 89) = 0))

3. For each ABN that passes, confirm on the register that the status is Active.
4. Compare the registered entity name with the name on the invoice. A different name is not always a problem, as many businesses trade under a business name, but it is worth a look.
5. Hold any invoice with a failed checksum, a cancelled ABN, or a name you cannot explain, and contact the supplier using details you already have on file, not the details on the invoice.

Free method: the ABR website

You can do steps 3 and 4 with the free ABN Lookup website at abr.business.gov.au. Search the ABN, then read the ABN status (Active or Cancelled, with the date) and the entity name. It is accurate and free. The catch is time: it is one search per invoice, so it tends to be skipped when the pay run is large or late.

How ABN Formula does it

ABN Formula for Google Sheets™ reads the status and entity name from the Australian Business Register through ABN Lookup, so the check sits in the same sheet as your pay run.

=ABN_VALID(C2)    TRUE or FALSE, checksum only
=ABN_STATUS(C2)   Active or Cancelled
=ABN_NAME(C2)     registered entity name, to compare with the invoice

1. Open ABN Formula, then Open sidebar, once in the pay-run sheet to authorise lookups.
2. Add columns for =ABN_STATUS(C2) and =ABN_NAME(C2) next to the supplier ABN, and fill them down.
3. Filter the status column for anything other than Active, and review those invoices before you approve the run.
4. To keep a record, select the ABN column and use ABN Formula → Check selected cells. It writes Status, Legal name, GST, GST since, State, Postcode and a Checked at time as fixed values, which you can save with the pay-run file.

Register answers are saved for up to 24 hours, so a status can be up to a day old. An Active status means the ABN is current on the register. It is not a guarantee that the business is sound or that the invoice is genuine, so keep your usual approval steps.

Related guides

• How to validate ABNs in Google Sheets
• Bulk ABN lookup in a spreadsheet
• Check GST registration for a list of suppliers

ABN Formula is not affiliated with, endorsed by, or part of the Australian Government, the Australian Taxation Office or the Australian Business Register. ABN status, entity names and GST registration come from the ABR through the free ABN Lookup web services. This guide is general information, not tax advice.