If you’ve left a 9-5 job to pursue freelancing, you are probably a bit concerned about how the finance side of being your own boss will work. Let’s be honest; it can be downright worrisome to wonder how you’ll get your invoice templates paid and if you’ll get money on time each month! Fortunately, working as an independent contractor is not new, and there are hundreds of freelancing tips out there to help you get your most troubling questions answered – including the big unknown regarding what is an invoice, how to make an invoice and what kind of invoicing software to use.
Here are the basics on the best ways to request (and get) money for your work:
Even solopreneurs don’t need to go it alone these days. With so many freelance tools available, it’s probably wise to check them out and commit to using one in your business. Not only does using a professional billing tool make you look good with customization options for your company logo and branding, but you can be sure that every invoice that goes out for a client is as good as the first. A consistent method of asking for money is the best way to get money consistently.
No one wants to think negatively, but money isn’t something to be unrealistic about. In fact, with 29% of invoices being paid late, it’s naïve to think you’ll never have a deadbeat client. That’s why smart business owners expect there to be a little pushback with payments and settle on the terms of what will happen to late payers before they become a problem. Whether you tighten your payment language in the invoice, include a late fee that reflects your contract, or you require a portion of the project fee upfront, you’ll want to work through all the possibilities in your mind before you start. Collections shouldn’t be something you make up as you go.
Any person at your client’s company should be able to read your invoice and know exactly what services were provided, how much they cost, and how payment should be made. If all three of these aren’t clear, you haven’t demonstrated that you know how to invoice clients. This rule should be followed even if you’ve worked with a client for a long, long time. Staff changes may require someone new paying the bills, and they need to be just as informed from looking at your invoice as your old contact.
If you are billing for a partial project (such as in the case of requiring a deposit or payment for milestones), indicate this clearly and also show how much of the project is left to be paid and when that remaining amount may be due. If it isn’t due until project completion, state this clearly. Having a freelance invoice template can help you maintain consistency in your invoices.
Clients have bills to pay, and they are often paid in the order they are received. For this reason, you should always send the invoice as soon as the work is finished. (Who doesn’t want money faster?) There is another reason to make sure your invoices are sent promptly, however, and that is because some companies have strict rules as to how long they have to pay for services.
If you forget to invoice for a project done a year ago, you may be out of luck. While you should always get paid for work you do, if you have an agreement in place with a client to bill them within so many days, it is wise to follow through. You also don’t want to lose money if a company goes out of business or no longer has the funds to pay you while you waited to send that invoice.
Now, let's look at how you can use Bonsai to quickly create and send custom invoice templates. First, just go to your dashboard on click on "send an invoice" from the right side.
Next, you'll have to create or choose an existing client and project for which you want to create and send an invoice. Once done, click on "create invoice".
Finally, you'll be taken to the invoice editor where you should set up basic details for you and the client, add items to the invoice, and when everything looks good just click on "send now" and wait to be notified when the invoice is paid.
Simple, right? If you want to explore more of Bonsai's invoicing software or any other product components, just sign up for your free trial.
Most clients have a favorite way of paying. Most freelancers have a favorite way of getting paid. In a perfect world, these preferences will align, but in most cases, they will not. That’s why it’s advisable to offer two to three ways for clients to pay that you prefer. Whether it be Paypal, Stripe, EFT, or check, you should offer more than one method to ensure prompt payment.
Remember that some of these options charge fees, so opt for the choice that’s cheapest in the long run or gives you the fastest cash (whichever you value most.) Some clients may choose one option one month and another option the next, so make sure you communicate with them so that you can be on the lookout for their payment in whatever manner it arrives.
This should go without saying, but know what invoices you have sent and which ones are yet to be paid - numbering invoices appropriately should make tracking this a breeze. If the terms of your contract state that you should be paid within 30 days of invoicing, set a reminder on your calendar to check that you get paid by that date.
A better, easier way is to enlist the help of a bookkeeping tool that can track late invoices automatically, as well as send out reminders when something is late. Once an invoice is paid, mark it as such in your files. You don’t want to embarrass yourself by trying to collect on a paid invoice!
Perhaps as important as knowing how to invoice clients is showing your appreciation. If your invoicing tool allows it, set up a “thank you” message that lets clients know you’ve received their payment and that you appreciate them. If invoicing is still a manual process, a quick email to your contact letting them know that the check was received can go a long way toward establishing goodwill and professionalism for your freelance business.
What if you aren’t charging for a project? While it’s not advisable to do too much work “pro bono” or as a free service to a current or potential client, sometimes it’s necessary to gain experience with a particular skill, add to your portfolio, or build a reputation. In the case that you do a project for free, don’t forget to follow what you’ve learned about how to invoice clients.
You can still go through the process of creating and sending an invoice, just add in a line item for “discount” and make this number 100%. You want to show the recipient of your generosity that you have provided a valuable service (including what the value would be), even if you didn’t require payment. There’s something impressive about billing for a $3,000 project that you give a discount of 100%. Simply putting the service cost as $0 doesn’t have the same effect.
If you take away anything from this guide, it’s to invoice early and invoice often. These two rules are the most important to remember. Never leave your accounting duties to the last minute, and don’t let unsent or unpaid invoices pile up. If possible, invoice multiple times within a month (for each project, if you can) and keep that cash flow coming positively. You will have bills to pay and investments to make. Invoices are key to helping you meet your most important business obligations.
Your freelance business is worth nothing if you don’t get paid – no matter how talented or in-demand you are. Take a proactive approach to set up a system that works and gives you more time to pursue your talents and serve your clients. You won’t regret investing a little extra in an invoicing process that gets you paid and takes the stress of collections out of your daily workflow. Make all that easy by signing up for a free Bonsai trial.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?