- Oct 15, 2024
- 9 min read
The Freelancer’s Guide to Invoicing
Invoicing isn’t usually thought of as the glitzy or glamourous side of freelancing. It doesn’t have that hair-raising rush of landing a new client or the warm and fuzzy wave of release after finishing up a cool project, but it is what keeps the lights turned on! On the of that, getting paid is what keeps us away from the 9-5, and isn’t that why we are freelancing in the first place? Without a steady and reliable invoicing process, you open the door for late payments, confused clients, and worst of all...absolutely no cash flow. Let’s look at the nitty gritty, learn how to invoice like a freelancing pro, and make sure you always get paid in full.
Why Invoicing is Key to Your Freelance Survival
Freelancing may elude the 9-5 but it does not mean that all the boring stuff is gone too. Consistent and organized invoicing is one of those must do’s that keeps you on top of your income, keeps finances stable, and helps you stand out as a professional to clients. If you don’t have a well oiled invoicing system, you may be stuck hunting down payments like a bloodhound, or even worse, not getting paid at all for all that hard work.
As a freelancer, cash flow is king. 9-5’ers know when the checks are coming, but freelancers can only depend on timely payments from clients. Having an A+ invoicing process that facilitates accurate invoicing is crucial to make sure the cash flow doesn’t turn into a dried up river bed. It helps you keep eyes on what’s due, eliminates late payments, and creates an optimistic and stress free financial future. From an aesthetics standpoint, professional invoices keep up your professional image, which gives clients reassurance in choosing you and your freelance business. Not so boring now huh!
What Should Be on Your Invoice? Don’t Forget These Essentials!
Slapping on your name and pecking in the total amount due carelessly email form isn’t a invoice. Not even if you put a cool image in the corner that you think radiates confidence. It’s a recipe for clients potentially paying late and questioning your credentials. A “good” freelance invoice has a few key elements that make sure you get paid on time and without confusion. Here’s what you should never forget:
- Contact Information: This is for clients to be able to reach you if they need to. Include your name, business name (if applicable), and email.
- Client Information: Don’t forget to include your client’s name or company name, as well as their contact details.
- Invoice Number: Numbered invoices help you and clients keep track of the invoice and it adds a little professional flair to your freelance business (never a bad thing).
- Freelance Invoice Date: The exact day you are sending the invoice — this starts the clock on your payment terms.
- Description of Services: Break the work down in detail and include any and all milestones or deliverables.
- Payment Terms and Payment Due Date: The key to timely payments is being as specific as possible. “ASAP” doesn’t cut it and neither does “a few days”. Aim for something like "Net 30 days.” instead.
- Payment Methods: Let clients know how they can pay you. PayPal, bank transfers, or online payments via invoicing software are all great options.
- Total Amount Due and Hourly Rate: If you’re billing by the hour, include your rate and the total amount of hours worked. On the flip side, if it is by the project, outline the agreed upon terms.
- Sales Tax and Applicable Taxes: Depending on where you’re based, don’t forget to include any sales tax or VAT to make Uncle Sam happy.
Pro Tip: Set up a recurring invoice for clients on a retainers and always use time tracking tools to keep track of hours worked for the per hour projects. Keeping it all in one place makes the process smooth as silk.
Pro Tip: The Magic of Simple Payment Terms
Want to avoid those relationship ruining back-and-forth’s about when you’re getting paid? Well, it’s all down to the details when it comes to payment terms (and happy clients). For freelancers, keeping it simple and clear means getting paid and keeping everybody happy. Instead of saying "ASAP," spell out exactly when the invoice is due. The truth is that “ASAP” is different for everyone, and “as soon as possible” may be a year to one client and a day to another. Use options like "Net 30" or "Net 15," which mean payment is due 30 or 15 days from the invoice date.
Clear payment terms eliminate confusion, discourage late payments, and put out a clear and understandable deadline. If you want to turn up the heat to a higher degree, outline penalties for late payments. A small ding for every week the invoice isn’t paid tends to motivate clients to quickly fork the funds over.
The Best Invoicing Tools for Freelancers
Odds are you didn’t choose to become a freelancer to be crafting invoices from scratch around the clock (unless you are in the invoicing niche). Thanks to living in a high speed world, invoicing software exists to take that burden off your shoulders! Here are some of the major players that make invoicing a breeze for freelancers:
- FreshBooks: One of the more widely used tools for freelancers, FreshBooks churns out invoicing, expense tracking, and time management. Even better it synchs up with accounting software so you can handle your bookkeeping in one spot.
- QuickBooks: A timeless classic, QuickBooks is the go to for freelancers who want tie in invoicing with total financial management. It keeps tally on your income, expenses, and even handles applicable taxes to keep the tax man happy.
- Wave: For those looking for a free invoice solution, Wave is your answer. It’s an easy to use, easy on the bank tool for freelancers who prefer professional invoices without a scary price tag. Plus, it has a surprising amount of value packed into it for a free tool.
These apps handle the invoicing process all while bookkeeping, helping keep a handle on peace-of-mind when tax time rolls around. On top of it all, you can keep an eye on client payments, set reminders, and use them on the go. Need we say more or does it already sound like QVC channel after midnight?
Budgeting Tools with Built-in Invoicing Can Kill Two Birds with One App
Why mess with juggling different apps for invoicing and budgeting when you can have the best of both worlds in one? Some tools let freelancers simplify the whole workflow shebang, and honestly, they’re game-changers. Here are two of the best picks:
- Bonsai: Freelancers, meet your new best friend. Bonsai has invoicing, budgeting, and even time tracking all wrapped up in one handy app. It’s perfect for keeping your freelance business organized. Plus, it even throws in contract templates. Total one-stop shop!
- AND.CO: Another top choice for freelancers, AND.CO does invoicing, expense tracking, and budgeting all in one place. It’s got everything you need to manage your freelance business finances without the migraine.
With a tool that handles both, you’ll save time and get back to doing what you love—your actual freelance work (we hope)!
How to Make Invoicing Less of a Hassle
Invoicing doesn’t have to be the snooze-fest of freelancing. With a wave of the wand, you can make invoicing fast, easy, and potentially painless.
The first thing you are going to want to jump into is invoicing templates. Most invoicing software gives you the power to create flashy and professional templates that “POP”. From there, automate your invoices and reminders and dial up invoicing software to automatically send them and schedule follow-up pings when payments are due.
Want a real game changer? Try cloud-based invoicing! With cloud-based tools, you can get your invoices from anywhere whether it’s an airport in China or a weather station in the Antarctic tundra (Wi-Fi is preferable though). This helps you stay on top of your payments no matter where your freelance business takes you, because after all, freelancing is freedom!
Automation is Your Best Friend
Robots are the stuff of the future and have an insatiable appetite for boring tasks! Automation can be your buddy, and can make invoicing a warm summer breeze. With most invoicing platforms, you can decide to automate:
- Sending invoices on a regular schedule (hello, recurring invoices!)
- Sending those pesky follow-up emails and payment reminders
- Flagging late payments for you to review
Automation not only is clock friendly, but also helps you oversee your freelance business without chasing down clients like a dog chases down mail carriers. Say hello to doing the things that you love and goodbye to the dull stuff!
Dealing with Late Payments Like a Boss (You are)
Late payments are the thorns in a freelancer’s rose garden. The great news is that they are preventable and can be dealt with swiftly without losing your cool or your client.
Start with a reminder that is both polite and clear. If your are having trouble toeing this line, invoicing software can do this for you automatically (robots write without emotion after all). If you’re taking the reigns, be mindful to keep it professional. For example:
"Hey [Client’s Name], I just wanted to give you a friendly heads up that the payment for Invoice #[Invoice Number] was due on [Due Date]. Please let me know if there’s anything I can do to help expedite the payment process. Thanks!"
If late payments become the standard, you may want to weave in late fees to your payment terms. This can add incentive for clients to make sure that they pay on time in the future. If all else fails, escalation is always an option, but keep it cool and cordial to preserve the client- freelancer relationship.
Freelancer's Playbook for Avoiding Payment Issues
Want to avoid the whole “Oops, I didn’t get paid again” scenario? It’s all about setting things up right from the start. Here’s how you can keep it easy and stress-free:
- Get That Contract In: Trust me, a contract is your BFF. It spells out everything—especially your payment terms—so there's no awkwardness later. Everyone knows the deal upfront.
- Ask for a Deposit: Don’t be shy! Getting some cash upfront shows your client you mean business and protects you from any flakiness, especially with bigger projects.
- Be Clear on Payment Terms: No beating around the bush. Be upfront about payment terms right away. The clearer you are, the smoother everything will go.
Set it all up upfront, and you’ll spend way less time stressing about getting paid and more time focusing on the good stuff!
Final Thoughts About Invoicing Like a Boss
The truth is that invoicing will never yield the thrill of all-inclusive vacation. But in freelancing, it’s extremely important in keeping your business afloat (and getting you that vacation). When you leverage the right tools, set crystal clear payment terms, and let Wall-E handle your invoicing process, you get timely payments without the heartache.
So, invoice like a boss (you are), get paid the big bucks, and keep your freelance business running smoothly without any unforeseen whammies!