As a freelancer, the most important part of your day can be spent sending out invoices. While you might run across a client or two who is happy to send you payment as soon as he receives a finished product, most will wait for your invoice: no invoice, no money. That means invoicing is just something you do. It's necessary — but it's also a system you can improve on. Taking a look at some best practices for invoicing can help you tighten up your own system. You can get the money you're owed without taking too much time away from your income-producing work.
Standardize Your Invoices and Communications
Pretty much every part of the invoicing process can be standardized, even if you're using a basic invoicing application. There's the invoice itself, of course, but any communication you send relating to your invoicing should probably be a matter of filling in the blanks. But there are other facets of your invoicing practices that can be streamlined with a little standardization as well.
Do you vary your invoicing terms to suit each client's needs? Many freelancers do, simply because clients with money can often dictate that they handle invoicing on a net-90 basis because they need a full 90 days to get an invoice approved and processed. Just the same, you should have your usual invoicing terms (payment dates, late fees and other details) set for when a client can be more accommodating. That sort of standardization can also help you figure out just how far you can stretch your terms to help land a particular client. I've had a client ask for 120 days to pay an invoice. For most projects, though, I can't afford to work on a net-120 basis. Working for a payment four months out may mean that my bills three months out won't get paid.
Present Professional Invoices
Most freelancers understand that an email including nothing more than a total and a due date doesn't quite constitute a legitimate invoice. But most of us do rely on invoicing applications that let us plug in a client's information, our services and rates — not necessarily meeting a client's expectations for a truly professional invoice. Unfortunately, the standards for an invoice can vary, based on what industry you're working with.
The most common trip ups are purchase orders and other information requirements set by individual clients. It can be hard to predict exactly what each client's accounts payable system needs to move your invoice through quickly — but if you don't have all the necessary information on your initial invoice, some clients may think of you a less professional freelancer. That means asking ahead of time about purchase order numbers, identification numbers and other details.
For most freelancers, a professional invoice includes at least most of the following:
- the date
- a unique reference number
- your name and contact information
- the client's name and contact information
- a description of services or products, usually broken down into specific charges
- the date the project was delivered
- the total amount charged
- the acceptable methods of payment
- the payment's due date and information about late fees
Resolve Disputes Quickly
The longer a dispute about an invoice drags out, the less likely you are to actually get your payment. Make responding to your clients' questions and concerns about invoices a priority, if only to get your money a little faster. And if the clock winds down and an invoice comes due because a client is waiting on your response, do the right thing: waive the late fees that might be arguably your fault. It may make your money situation a little tighter, but it will also help convince a client to bring you repeat business. After all, even if a client pays up on late fees he doesn't feel are his fault, he probably won't be back with any more business.
If you just don't have time to handle invoicing questions and all your paying work, it may be time to start looking into alternatives. A virtual assistant or a bookkeeper could probably take over the nuts-and-bolts of invoicing and answering clients' questions. It's not always an issue of whether you can afford a little help, either: assuming your invoicing system isn't too complex, an assistant could probably handle a week's worth of invoicing in an hour or two — leaving you free to work on paying projects.
Invoicing is Key
Whether you're a freelance designer, writer or widget maker, your business only runs if you get paid for your invoices. That means making time — or hiring someone — to keep your invoices up to date. Letting any part of invoicing lapse means putting financial problems down the road. You may not be able to collect on every invoice you issue, but it's well worth every effort you can put forth to try.
You can use Freshbooks for professional invoicing and payment tracking.