For new freelancers, invoicing is a bundle of questions: When should I invoice? What goes into an invoice? How should I send my invoice? When should I follow up?
WHEN TO INVOICE
When you send invoices will depend on your clients and their projects.
Your client, especially established companies, may dictate when you invoice. The more established the company, the more likely an accounting department will have a system for receiving and paying invoices. To receive timely payments, follow that system!
When you set the terms, however, you have several options:
- Invoice for the total at the end of the project. This works for well-established companies or individuals you have a good relationship with.
- Invoice for a deposit now and the balance later. For new clients, especially individuals, protect yourself from nonpayment. Ask for half or a third of the total before beginning the work. Invoice the balance in one or more subsequent installments, with the last installment due at the end of the project, before you hand over your edits.
- Invoice monthly. This works well for clients who send you several projects a month or a long-term project (think six months of ongoing work). It also works well for clients with larger accounting departments, as they usually have a schedule of when they make payments.
WHAT TO PUT IN YOUR INVOICE
Unless a client dictates what software to use to create invoices, MS Word is your best bet. You’re already familiar with the software and you can create a simple template in just a few minutes.
Information to put in your invoice:
- Your business details. Think letterhead copy. Include your name, company name, mailing address, email address, phone number, and logo. You can also include your company tag line, company web address, and organizations you belong to as part of promotional copy.
- Your client’s business details. Add your contact’s name, mailing address, email address, and phone number. You can create a template for each client or store this information in text expander software for easy pasting.
- The term invoice or If you collect tax as well, you may need to use the term tax invoice instead. Check with your account to see which term is best for your business.
- Date of the invoice.
- Invoice number. Don’t skip this step. When an invoice or a payment goes astray, an invoice number will make tracking it down easier.
- Description of work. Include a brief description of the work performed, pay rate (e.g., hourly rate, project rate, or page rate), and the total amount due for the project.
- Total amount. Make sure this number is easy to find and read. If you charge tax, list the amount before tax, the tax, and the full total.
- Payment details. Explain how the client should pay you, how long they have to pay you, and what your late payment policy is.
- Thank-you message. Thank your client, and ask them to refer you to others.
- Tax identification number. While I don’t recommend including this sensitive information to your invoices, if a client asks for it, add it.
- If your client will pay for the work in two or more installments, list the installment amounts, due dates, and current balance. Installment invoices can be based on the original invoice, with payment updates noted.
- Any additional information the client requests. Some clients need more details, such as the date the work was done or a billing code. Find out upfront what’s needed and deliver it.
HOW TO SEND YOUR INVOICE
Once you’ve created an invoice for a client, save it as a PDF file. This will ensure that your invoice looks the way you designed it to and that it’s not easily tampered with it.
Email is the most common way to send an invoice. Be sure your email signature has all the necessary contact information, especially if you send your invoice to someone other than your daily contact.
FOLLOW UP ON OVERDUE INVOICES
Once you’ve sent your invoice, log it somewhere (like in my free Invoice Tracking Form), and track who paid you and when. If a client misses a payment deadline, politely follow up: Did they receive your invoice? Did it have all the information they needed to pay the invoice? When can you expect payment?
A polite inquiry keeps the client from becoming defensive; often the problem is simple human error that the client is willing to fix quickly. If the client doesn’t follow through on payment, however, stronger measures may be required.