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Freelancers have a tough job invoicing clients for work done. You have to be skillful in preparing invoices for your freelance business to succeed. Otherwise, you won't receive your money. Some of the clients could even send you less money because you never sent them an invoice to refer to before forwarding the payments to your account. According to the Bureau of Labor Statistics, around 1 out of 3 Americans work as freelancers today. If you're one of them, learning how to prepare an invoice should be in your list of priorities.

One of the options available to you is using invoicing software to prepare an invoice for the freelance work you have done for your client. You have to search the market for excellent software to use for this purpose. In some cases, it would be better for you to use online software, as they are capable of tracking all your clients and the money they owe you easily. You can choose between free and paid for online software depending on your needs and financial status. Choose software that has all the features you need to prepare invoices and track clients.

Have you informed clients about your policies? Do clients know when to pay you for work done? Do you receive payment before commencing or after completing work? Inform the clients all your policies. The policies should indicate your preferred mode of payment, which can be credit cards, cash or checks. The policies should indicate the amount or percentage you accept as down payment. After formulating the policies, stick to them no matter what. Stick to the policies and pricing structure you developed on freelance invoice.

Do you know the most important rule in pricing? The rule says that you should never undercharge for your services. Find out what your competitors charge and use the information to set your own charges. Avoid entering low rates on the freelance invoice to attract more clients. If you quote low charges, expect to attract cheap clients who will haggle and harass you for a discount, thus reducing your profits further. The invoice should be clear as to whether you charge hourly rates or per job.

According to Forbes, more than 50 percent of the US workforce shall comprise freelancers. If that's the case, you have to begin marketing yourself as a professional freelancer. One way of doing this is by preparing and sending accurate freelance invoices to your clients. The invoice should include accurate charges. The invoice should clearly display the services you rendered to your client and the amount you charged for each. Lastly, the invoice should display the methods of payments that you accept, due dates for the payments and your contact details.

Creating a Freelance Invoice for the First Time

Payment is crucial for any work a freelance does. Without payment, money will not come in. When money doesn’t come in, the freelancer will lack the finances needed to run
the business. When this happens, the freelancer will lose motivation for work and probably move into something different. The key to getting paid is preparing a valid and accurate invoice. Doing that isn’t as difficult as many newbie freelancers imagine.

The best invoice is one that displays your brand clearly. For this reason, it needs to have a professional header. Display your full name or official business name in a professional font on top of the invoice. Ensure the font is easy to read too. The size of the font on the header has to be larger compared to other texts in the invoice. Do not hesitate to bold the text on the header for emphasis.

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Also, the professional header should include the following right under the business name:

  • Your mailing addresses
  • Your phone number
  • Your email address
  • Your website

Type all this information in different lines to avoid making the invoice look too congested.

The freelance invoice will be incomplete without your client’s contact information too. Here, the invoice is like a letter that needs to have the sender’s information and recipient’s details. Check that the invoice not only has the recipient’s name, but also address and phone number. All this information should appear right under the invoice header. Your contact details and the client’s contact information should be on opposite sides of the invoice.

With the contact information in place, you should now focus on adding all the necessary invoice details. Before dashing to this part, confirm that the accuracy of the contact details on the invoice. Remember that some clients are too picky. They may withhold your payment because of something that seems insignificant to you. Check that the name and title corresponds to the person you transact with, especially the one who sought the freelance services from you.

The invoice details you must include are as follows:

  • Invoice number
  • Date the invoice was prepared
  • Date when payment is due

Use a sequential numbering system to avoid confusion.

It’s your prerogative to choose the date when you expect clients to submit payment. It’s alright to base this date on specific but universally acceptable timeframes of 30 days, 45 days, or 60 days. Additionally, there is nothing wrong with letting the client know that the payment is “due upon receipt”. Due on receipt means that you expect a client to settle the invoice immediately after receiving it.

An invoice that doesn’t specify payment options is not worth sending to a client.

The most common payment options your freelance invoice should have are:

  • Paid with cash
  • Paid by cheque
  • Paid with credit card
  • Paid via PayPal

Some clients will indicate a willingness to pay through direct deposit. Expect this arrangement with clients that send you freelance work regularly. In some cases, clients will ask you to expect payment only once you complete the work you’re doing for them. Whatever the case, make sure that you specify this on the invoice before mailing or emailing it to your client. There shouldn’t be a grey area or room for confusion and misunderstanding here.

It’s also important to indicate whether you charge fees for late payments. Late fees apply for invoices that clients settle past the due date. Many freelancers prefer including this option in all their invoices. It’s a good way of discouraging clients from making late payments. Also, fees for late payments are an excellent way of keeping bad clients, especially those who seem willing to make your life difficult, at bay.

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Including the tax ID number (TIN) on the invoice is also highly recommended.

TIN is essential for tax purposes. Freelancers have to pay tax for any income earned just like any other professional. They are not exempt.

Also, the freelance invoice must have a breakdown of all the services you rendered. The breakdown can be done manually when preparing the invoice using Microsoft Word or Excel. You may also do it manually when preparing the invoice using Google Drive Templates. Do not exclude any service that you rendered. All the additional charges applicable for the work done must also feature on the invoice.

A well-drafted invoice should feature the following columns too:

  • description of services/work
  • date worked
  • quantity
  • rate
  • hours worked
  • subtotal

By doing this, you make it easier for clients to tally up all the totals and confirm whether what you’ve indicated is the correct sum to be paid. Also, dividing the invoice into several columns is an excellent way of listing multiple projects you have done. It’s a great way of being accountable and avoiding inaccuracies. It shows the work or tasks that you have already completed successfully.

What next after preparing the invoice?

You’re now ready to send the invoice. Check and recheck it for mistakes.

Make sure that it satisfies all the conditions listed on the freelance contract. For example, the contract should be clear on issues such as when you will be invoicing the client. Also, the contract should indicate when you expect to receive payments from the client. Before doing any of these, be cognizant of what happens in your industry. In some industries, it is normal practice to invoice clients before embarking on any freelancing work.

It’s best practice to send invoices consistently. Observe the dates or timelines listed on the contract. If the contract states that you will be paid on a monthly basis, send the invoice on time. Failure to do that would mean not getting paid on time. If you fail to receive timely payments, your freelancing business would suffer greatly. Failure to send the invoice on time would mean receiving payments sporadically rather than consistently.

Freelancers don’t enjoy invoicing. Some rely on what they remember to create invoices – even though that’s a bad practice. Freelancers need to keep accurate records. Without accurate records, it’s easy to forget to include certain work you did. Also, lack of records makes it easier for the freelancer to overcharge or double-charge. Many times, freelancers don’t get paid simply because of failure to state that what they’ve prepared and are sending is an invoice.

All invoices must have unique reference numbers. Choose numbers that proceed sequentially. This makes it easier to do bookkeeping properly. The unique reference numbers serve a crucial purpose. Without them, the client might think that you have resent an invoice you sent earlier. Clients might insist that they already paid for the work when they haven’t. Unique reference numbers identify and separate invoices.

Using Invoicing Software

Many freelancers have embraced different types of invoicing software. Such software helps them to stay on track and keep preparing invoices on time. The market is full of
numerous types of software that you can choose from depending on your unique needs. Find good online invoicing software. Use it to track your clients. The software will also help you to monitor the amount of money your clients owe you.

A few of the best invoicing software include:

  • Bonsai
  • LessAccounting
  • Freshbooks
  • BlinkSale

Develop Your Own Policies

Freelancers prefer copying each other. There’s nothing wrong with doing that. However, it’s better to develop and use your own policies, especially regarding invoicing. In
your freelancing career, you will notice that some clients pay on time while others have to be pushed. To avoid these – and ensure that you don’t lose money – come up with policies that highlight a few issues to your clients, especially where payments are concerned.

The policies can be on:

  • the mode of payment clients should use
  • the amount clients should pay as deposit/down payment
  • whether to start the work with or without any payment
  • the number of days you’re willing to wait before reminding the client about payment
  • whether to impose fees for late payments or not
  • whether clients will receive completed work before or after settling the invoice
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It’s worth mentioning that any policy you come with isn’t written in stone but is a guideline.

Developing your policies will not work if you disregard them.

Endeavor to adhere to the policies. Do not deviate from these policies at all. After all, most clients you get are the type that never takes surprises lightly. They like predictability. They like knowing what to expect from the beginning. As the business grows, you will feel the urge to change some of the policies. There is no problem with that, but only if you inform your clients early enough so that they are aware and can plan accordingly.

Some clients will withhold your payments if you surprise them with new policies.

Adhering to the policies is one way of winning the trust of your clients.

A client that trusts you will give you more work.

Evaluate your rates

Take time to evaluate what you charge for the freelancing services. In freelancing, it’s almost criminal to undercharge. If you undercharge, it will not be long before your business starts struggling with overheads. Cash flow problems are normal in businesses that undercharge for services rendered. Quoting low rates to attract more clients is considered bad business practice. Ensure that your rates align with what other freelancers in the industry charge.

Undercharging will only attract cheap, troublesome clients to your business.

Cheap, troublesome clients are renowned for giving freelancers plenty of work only to disappear without settling the freelance invoice. The work they bring is not only tedious but also requires long hours to complete. You will end up sweating profusely for no pay. While evaluating your rates, do not forget to settle on the most appropriate pricing method based on the services you provide. Two of the most common pricing methods are:

  • charging per hour
  • charging based on job done

Consider all charges and services

Do not exclude services and charges while preparing the invoice. The invoice must indicate:

  • the services rendered
  • amount charged for each service rendered

If you do this, the clients will have no trouble understanding the invoice. Some freelancers never get paid on time simply because they send complicated invoices. Nobody will pay or settle an invoice that’s impossible to comprehend. Make sure that the clients understand what you want them to pay for. Do this to make it easy for both of you to monitor the payments that have already been made and the work that’s been paid for.

As previously stated, clients should understand the mode or method of payment.

Never leave grey areas on the invoice. Check that the clients know how you expect them to settle the invoice. Once again, this issue has to be written in black and white on the contract. Confirm this issue with the clients. Obviously, some will prefer paying in cash. Others will prefer sending cheques. Other clients will hinge towards making credit card payments. Discuss this matter conclusively with clients, and write everything down in the contract to avoid confusion.

Choose a method that’s acceptable to you (the freelancer) and the client.

As shown here, it’s good to take your time preparing an accurate freelance invoice. Preparing such a piece of document requires high levels of attention. Exercise caution to avoid making costly mistakes. Remember, the invoice will motivate the clients to pay on schedule or discourage and cause them to make late payments. Find ways of ensuring that they all – or at least most of them – pay on time.