Payment Against Invoice – A Simple and Legal Solution for Businesses and Freelancers in Israel

The way businesses and freelancers collaborate has changed dramatically in recent years. Companies of all sizes increasingly rely on independent professionals for projects, consulting, and short-term work. Freelancers, on the other hand, enjoy the flexibility to choose projects and work without being tied to a single employer.

But there’s a catch: how can both sides work together legally if the freelancer doesn’t have a registered business? Many companies hesitate to hire talented professionals because they cannot issue an invoice. Freelancers may be reluctant to open a business file just to take on a small or temporary project.

The solution is Payment Against Invoice by NETO – a service that makes collaboration between businesses and freelancers simple, legal, and risk-free. The business receives a valid tax invoice for accounting purposes, and the freelancer receives a payslip with full employee rights. Everything is managed digitally, transparently, and in compliance with Israeli law.

What Is Payment Against Invoice?

Payment Against Invoice is a service that allows a freelancer to issue an invoice via NETO without opening a business file. The freelancer is officially employed by NETO and receives a payslip, while the client company gets a tax-deductible invoice as if working with a registered contractor.

This model is ideal in situations such as:

• Businesses hiring freelancers for temporary or one-off projects.
• Consultants or specialists who prefer not to open a formal business.
• Freelancers who want to serve multiple clients without bookkeeping.
• Companies that need flexibility without committing to full-time employees.

How It Works – Step by Step

1. Registration – The freelancer signs up with NETO and provides bank details.
2. Job details – Once work is complete, project details and amounts are entered into the system.
3. Invoice generation – NETO issues a legal tax invoice to the client.
4. Payment – The client pays NETO directly.
5. Salary transfer – NETO transfers the payment to the freelancer’s bank account.
6. Payslip – The freelancer receives a full payslip including pension, National Insurance, vacation, and holiday rights.

The entire process usually takes less than 10 minutes and can be done completely online.

Advantages Compared to Alternatives

Hiring a Full-Time Employee

Employers take on all obligations: vacation, sick leave, severance, and benefits. True cost is often 30–50% higher than base salary, plus long-term commitment.

Opening a Business File

Freelancers must register with the Tax Authority and VAT, submit bi-monthly reports, pay advances, and hire an accountant. This is often too expensive and bureaucratic for small-scale work.

NETO – Payment Against Invoice

• Business gets a legal tax invoice for expense reporting.
• Freelancer gets a payslip with full employee benefits.
• No business registration required.
• Legal and secure under License No. 1565.
• Suitable for both one-off and ongoing work.

Real-Life Scenarios

• A startup hiring a cybersecurity consultant for two months. The consultant gets a payslip, and the startup gets a valid invoice.
• A small business needing a photographer for a marketing campaign. The photographer has no business license, but works legally through NETO.
• A freelance trainer delivering a workshop at a corporate client. Instead of opening a business, they issue an invoice via NETO.
• An architecture firm outsourcing 3D design work to a young freelancer. NETO ensures the payment is smooth, legal, and protected.

When Payment Against Invoice Is Not the Right Fit

• Freelancers with steady, high monthly income (over ~100K NIS annually) – may benefit more from opening a business.
• Business owners who employ staff or maintain inventory.
• Professionals with large deductible expenses (30%+ of gross revenue).

In such cases, registering as a formal business might be a better long-term strategy.