Getting your first client as a freelancer can seem like cause for celebration and, of course,it is cause for celebration.
However, there is more to running a business than only the creative side. You must also bill your clients, track payments, keep track of expenses, and more.
But when it comes to invoicing, you might wonder how to get started. To help you avoid rookie mistakes, here’s how to create your first ever freelance invoice.
1. Choose a Freelance Invoice System
A few decades ago if you wanted an intricate invoicing system you had to spend hundreds if not thousands of dollars to buy it. Then you needed to pull out the disk, put it in your computer, and load it. Only later after it was finally installed could you finally begin creating an invoice to send to your customers.
Thankfully times have changed. Now you can find an affordable invoicing system easily by searching the internet. In fact, some of them are even free.
Of course, you may have to weed through the available systems first to find the one that is right for you. To get started, make a list of your requirements to help you find one that is a good fit for your business.
2. Create a Header
One of the first things your customer will see is the header at the top of the statement they receive. As a result, you want to make sure it is professional, easy to read, and correct. Include your business name, address, phone number, and website so your clients can easily contact you if they have any questions.
If you have a logo, include it as well to increase the professional image you are trying to create. But don’t make the mistake of getting too hung up on which font to choose. A lot of time could be wasted on this detail. This takes away from the creative work that makes your income. Instead, make sure the information is the right size for your needs and is clear and easy to read.
3. Include Your Client’s Information
It is important to include your client’s contact information on your invoice so you can track payments as well as outstanding invoices. Be sure to include their name, address, phone number, and any other information that could help you quickly make contact with them later if necessary. Placement should be either beside or beneath your contact information.
4. Add Invoice Numbers
Keeping track of invoices can be a nightmare and is one of the top mistakes people make when creating invoices. To prevent yourself from ending up in a bookkeeping nightmare you should create a numbering system. This easily enables you to track each invoice.
5. Don’t Forget to Date it
A mistake some new freelancers occasionally make is to forget to date the invoice. Without a date it will be that much harder for you to track which payments were made on time and which were late.
In addition, if you offer early payment discounts, it will be harder to know whether a client took the discount or short paid you.
6. Billing Cycle
Deciding what time of month to generate statements is another factor that ties directly to your invoice date. The nice thing about having your own business is you get to control it. That means if most of your own bills are due at the middle of the month, you could require your business statements to be paid by the tenth, for example.
You should generate statements on a consistent time frame, whether that is at the end of the month or the middle of the month. Furthermore, you must decide if you will send them once a month, bi-monthly, or on some other schedule.
My suggestion is to invoice regularly for all customers, even if that means sending a bill to each as work is completed. Tracking statements and payments is easier with consistency.
Not staying on top of your receivables is a mistake that can put your business at risk and is tied closely to your terms. Without payment terms your customer does not know when you expect their payment.
As you decide what your payment terms will be, consider:
The Method of Payment
Will you accept checks, credit cards, or electronic payments? Be clear about what is acceptable by stating it right on the invoice.
When a down payment is required and you bill up front, include this information on your statement. If you instead bill after services are rendered, don’t forget to reduce the amount owed by any down payment that was made.
Days Before the Payment is Due
In order to get paid on time you must let your client know when you expect their payment. To make it even more clear add what happens if the bill is unpaid, such as interest charges being applied or turning the account over to a collection agency.
You can choose the payment due date that best fits your needs. Some common ones are “due upon receipt”, “net 10”, and “net 30”.
7. Remittance Advice
Not all businesses will need to include a remittance advice. Obviously if you aren’t going to accept payments by any other form aside from electronic this addition most likely won’t be necessary to your invoice.
If you are going to accept payments by check, you might want to add a perforated, tear-off section on your statement. When your customer is ready to pay their bill they can tear off this portion of the statement and send it along with their payment. Once you receive the payment it will be a piece of cake to know exactly which account and which statement to apply the money to.
Whatever type of service your business provides, be clear about it as you list it on the invoice. Doing so will save you from receiving emails, texts, or phone calls later asking for clarification on what you listed. Whenever you have to answer additional questions about invoices, it takes time away from revenue producing activities.
9. Keep a Copy
Even if you are invoicing electronically you want to keep a back-up copy of the invoices you send. This will not only aid you with tracking payments it will also help when it is time to do your taxes.
Just imagine what would happen if you were to send statements only by mail and you had a fire. It would be chaos trying to figure out which payments were for which statements and what is and isn’t billed. Keeping a back-up copy in this type of situation could make or break your business.
Any amount of work you do sending statements and chasing down customers takes away from the time you could be spending on billable services. Sure, getting clients is important, but so is getting paid. Knowing how to create your first ever freelance invoice can put you on the right track to keep your business flowing smoothly and profitably.