Whether you’re a freelancer or small business owner, invoicing is essential. After all, if you aren’t getting paid, how can you expect to keep your business afloat or keep up with your bills? However, if you’re new to invoicing, you may feel a bit overwhelmed because there’s a lot more to it than just sending out an email that says “You Owe Me $1,000.”
To help you better understand the invoicing process, here are some useful tips you should implement the next time you send out an invoice.
Before sending out an invoice, you’ll want to make sure you have the following key elements covered:
This is an area that should be discussed with clients prior to working on a project. This includes agreeing on how much you’ll be paid, how long the project will take, how you expected to be paid, and signing any contracts. You may also want to think about asking for a down payment or deposit so you have some cash to work with until the project is completed.
Establishing these terms helps establish trust between you and your client, which will create more work for you down the road. After all, your client doesn’t want to be hit with any surprise charges or confusion on how and when you are to be paid. Keep in mind that when you and your client agree on policies and terms you need to stick with them. Again, you don’t want to include any surprises on an invoice.
Unless you have agreed on a billing cycle, such as the first of each month, then you want to send out your invoices as soon as a job is finished. Not only does this prevent you from forgetting about an invoice, it’s also common sense. The sooner you send out an invoice, the sooner you’ll get paid.
What modes of payment do you accept? Is it by check or electronically through a service like PayPal? If you want to get paid faster, getting paid electronically makes the most sense. Even if you don’t accept credit cards or have a PayPal account, you can still set up direct deposits.
This may not always be the case if you’re a freelancer, but if you are a company, such as a LLC, Corporation or Partnership, you will be facing various legal and tax implications. For example, most states exempt services from sales tax. And online services have their own set of regulations.
In short, your business structure will determine what you’ll have to pay in taxes, and that information may be required on invoices. The best course of action is to consult your accountant or attorney to make sure you understand exactly what tax information you’ll need to include on invoices.
Remember, your invoices are business documents. This means they should reflect your brand. Your invoice templates should feature your company’s logo and the colors and fonts you commonly use. For example, if your company is called “Beach Rentals, LLC” and your logo is a wave with blue and white coloring, then your invoice should match that theme.
Branding your invoices not only improves professionalism, it also helps your invoice stand out from all of the other invoices your clients are receiving.
Invoicing isn’t the most exciting of tasks, so why not simplify the process by using invoicing software? Most invoicing services allow you to quickly create invoices, send them out electronically, track which invoices are pending, keep track of time spent on projects, and even automate any recurring invoices. Most invoicing software also allow you to get paid through gateways like PayPal and can be used to accounting purposes, such as managing cash flow. Here is a freelancers’ guide to invoicing I put together to help you navigate this!
Invoicing no longer requires a master’s degree in accounting! Today, there are tons of tools to help make getting paid easier – so you can focus on running your business.
About the Author
John Rampton is an entrepreneur, investor, online marketing guru and startup enthusiast. He is founder of the online invoicing company Due. He currently advises several companies in the San Francisco Bay area.