Managing your own business means you have to look after a multitude of administrative tasks. If you want to get paid, for instance, you have to invoice your clients. Whether you’re experienced or just starting out, freelance invoicing is one of the key parts of your business, so you want to get your invoice templates right.
Freelance businesses can sometimes have issues with getting paid, especially if not using proper invoicing software. In fact, Bonsai analyzed three years of freelance invoice data and discovered that 29% of freelance invoices are paid late.
Effective invoices can help nip that problem in the bud. To be effective at invoicing, you need to understand invoicing terms. After all, problems with invoicing terms could mean the invoice gets in the wrong hands, you don’t get paid, or you don’t get paid when the invoice is due.
If you plan to handle your invoicing on your own, here are the 9 key things you need to know about effective invoicing terms.
The first step in having success with invoices is to have a freelance contract with your client, and ensure the contract spells out all the payment factors that will be part of any downloadable invoice template you send. That includes the invoicing terms we will spell out below, such as how many days after project completion you expect payment, and whether there are late fees.
You can also consider payment plans for large pieces of work. For instance, your contract can spell out that you will get paid half the amount when the work is 50% complete, and the remaining half when the work is complete. Then an invoice midway through the project won’t surprise the client.
Not to be confused with the invoice date, the due date is the date by which you require payment. The invoice date is simply the date the invoice is created. The due date is the final date payment is required from the client. Make sure your invoice clearly spells out invoice date vs. due date.
It’s important for you to determine the appropriate lapse in time that you’re prepared to wait between finishing a job and wanting the money in hand. It’s best practice to invoice as soon as the work is complete, and don’t make the due date too far after that. Two weeks is fair, and a month is probably the longest timeframe you want. You need to ensure proper cash flow, and waiting months to get paid is not the ideal situation for any freelancer.
As well, spell out the actual date for the client, to make it as easy as possible for them to know when you expect to get paid. For instance, don’t state that payment is due in 15 days. If you add a date of March 15 to your fillable invoice template, and your payment schedule is a two-week period, then state that payment is due on or before March 30. If you can live with a 30-day period, state the due date as April 15.
In fact, it could be argued that besides the amount owing, the due date is the most important part of your freelance invoice template. Consider stating the exact date payment is due in bold letters and in its own box in a prominent part of the invoice.
Don’t expect your client to find the invoice date and do the math. Make it easy.
As part of any journalist invoice template or even modeling invoice template, for example, you should clearly outline the work performed. Ensure it matches what you agreed to do in the contract phase.
Longtime freelance writer Kim Maciejewski has valuable advice in that regard:
“Rather than writing one large description for ‘work performed’ create a new invoice line for each individual assignment…If you are maintaining multiple contracts for a single client organization, consider invoicing out individual projects rather than grouping together. A clear price for each task makes it easier for the client to route to multiple approvers or double-check their records to ensure the work was performed and approved.”
There are several other payment factors that are key for you to include in your invoicing terms:
It’s essential that your painting invoice templates or even any subcontractor invoice templates you send are clear and easy for clients to understand. The most important parts of the invoice need to be precise: what work was done, how much they owe you, and when they need to pay you.
If you need to, reach out to other freelancers or even clients for feedback and to get your invoices reviewed for clarity. You may think you’ve spelled everything out clearly, but if your language is vague or ambiguous, there’s a greater chance that you won’t get paid on time.
Be sure to include your business name and logo as well, to ensure your invoices are professional and branded.
You can also consider using an online tool to help automate your administrative tasks. Things like tracking hours for a client, sending and following up on invoices, can be automated to save you time.
For instance, Bonsai offers a free trial for its services, which has an integrated invoicing tool that creates and customizes invoices. You can generate an invoice automatically from any proposal, contract or time sheet.
Before sending an invoice, make sure you know where to send it, and how to send it. For instance, you may have done work for a specific branch of an organization, but it’s another branch that looks after paying you. It’s essential you know exactly who is in charge of payments, even if it means a phone call to be sure. Incorrect invoices could be sent back or sit unpaid.
As well, be sure you know how the invoice needs to be sent. You may prefer email, but the customer may prefer traditional paper invoices. If possible, see if you can transition a customer to an email system to make your life easier.
Since you have an invoice due date clearly marked, it’s good to also include a late fee as one of your invoice date rules. Adding a notice of late fee can add some urgency to the invoice, and could mean you will get paid on time.
To determine a late fee, you can choose a flat rate or a percentage. Again, this should have been part of the initial contract, so seeing it on an invoice won’t surprise the customer.
If the customer is late, the additional fees should be added as a line item on your follow-up invoice, with a clear description of why it is being charged.
Late fees can help ensure you get paid promptly. If you do have to chase after clients, the late fee won’t make you rich, but it should help compensate for the time and energy spent trying to get paid.
There are a few additional items you can consider adding to your invoices. While they aren’t considered formal terms, they may be points you want to include after a successful piece of work is complete.
For instance, including a thank you note in your invoice is a nice personal touch that will also let the client know that you’d like to work together again in the future.
Another example is a request for a testimonial. If you’re confident the client was happy with your work, you can include a feedback form and ask if the client would be willing to let you use the feedback in future proposals, or on your website.
Finally, it’s important that you have a system in place to follow up with clients. You need to track when payment is due, so that you can send a friendly email as the due date approaches. You’ll need to follow up again, perhaps with a phone call, if the due date passes and you still haven’t been paid. If you have included late fees as part of your invoicing terms, a subsequent invoice should be sent that includes the late fee.
Invoicing clients, tracking payments, and following up if they don’t pay, is not the most enjoyable aspect of running a business. In fact, it can be daunting to have to phone a delinquent client. But it’s an essential part of running your business, and your clients should understand that you need to get paid in order to remain in business.
Invoicing does take time and effort, but it’s vital to a successful freelance business. Now that you understand invoicing terms, consider exploring the integrated tools available to you as part of Bonsai’s freelance suite by signing up for a free trial now.
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?