Freelancing work is now a popular trend that began during epidemic times. It is quite common, particularly in the corporate world.
While offering various advantages like flexible working and less workload, it also involves many challenges. One of them is getting on-time payments.
Freelancers often struggle with the same, and smooth cash flow is a challenging part. That’s where a smart invoicing system is needed.
An effective invoicing process accelerates your payment process. Hence, you get on-time compensation for your hard work.
If you are working as a freelancer, keep yourself continuing reading this blog. Here, you will unlock the right way to invoice as a freelancer. Let’s go ahead.
Why Do You Need to Send an Invoice as a Freelancer?
An invoice is a request from a business professional to a client for a payment. Working as a freelancer, it is your right and responsibility to ask for payment from the client once the project is completed. Creating a professional invoice helps streamline the payment process.
Sending an invoice helps to remind your clients about the payment. Moreover, it helps to make payment tracking easy. Freelancers are highly eligible to manage financial activities.
They can keep track of financial transactions and records and receive on-time payments. Moreover, it enhances your professional impression in front of clients.
How to Create and Send Invoices to Your Clients as a Freelancer?
An invoice for freelance work can be created in a variety of ways. For their first invoice, freelancers can use one of the following three techniques:
- Create an invoice using Excel, Word, or Google Docs – You can opt for any option to create an invoice. There are multiple in-built samples to create an invoice in Excel, Word, or Google Docs and easily share with clients.
- Use a free invoice template – Freelancers can easily create an invoice using online invoice templates. Just download, customize, and create an invoice in a short time with high accuracy. Easily send professional invoices to your clients and get on-time payment.
- Use invoicing software – Invoicing software like Moon Invoice offers complete end-to-end invoicing management. It helps you to create a professional invoice, track invoices, and perform various activities easily. One can avail of the Free sign-up and get all the latest features to streamline the overall invoicing.
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What Should You Include on a Freelance Invoice?
1. A Professional Header
Your invoice for a freelance business should have an invoice header at the top that includes your company name and logo(if you have it). If the header says that the document is an invoice and mentions your company at the top of the page, your customer will enjoy it.
You can incorporate just your name even if your company does not have a logo or a name. On your freelance invoice, write your business name or the full name of the recipient in a professional-looking, readable font.
2. Your Contact Information
You should include your contact details on a professional invoice.
Your client is most likely receiving many bills for their own business. Both your contact information and the company being billed must be on the invoice.
This information is used by the customer to determine how to contact you and where to send payments.
Just below this, also mention your mailing address, phone number, email address, and website of your business.
You should also provide your client’s information or your client’s business name and address. If you are aware, include the name of the person who receives your invoices.
3. Mention Invoice Number
Consistency is vital while creating and dealing with invoices.
Each freelancer invoice should be assigned a first invoice number. Instead of using an invoice number with just one digit, use a four- or five-digit number. With this method, you might use the first digit to identify the company and the last digit to identify the invoice number.
This is a one-of-a-kind number that will help you keep track of your bills. There is no right or wrong way to do it; simply keep everything in sequential order to minimize confusion and keep track of your freelance invoices fast.
4. The Issue Date and Due Date
Because the payment term begins with sending invoices, mention the issue date on your invoices. If you inadvertently numbered your bills incorrectly, referring to the issuance date may also aid in distinguishing one invoice from another.
The day on which both you and your client agreed that your invoice is due is known as the due invoice date. You and a client may have an agreement that prompt payment will be made after the month or a project.
This will be reflected in the due date, enabling you to determine whether a client is behind on their payments after the due date passes.
5. A Detailed Breakdown of the Work
The task breakdown is almost certainly the longest and most important section of the invoice. This section, usually in the form of a table, provides a detailed breakdown of the services rendered by the client.
Include a detailed breakdown of the total amount owed for each item, as well as a description of the tasks completed or the goods supplied, the quantity of that well delivered, and the unit or hourly rate for that good or service.
There should be no hidden prices or fees, and the client should understand the line items.
6. Total Invoice Cost
After the itemized breakdown, the total amount due together with any applicable taxes should be displayed. Even though it could seem straightforward, determining the client’s required payment is crucial.
The invoice total will reduce customer errors and increase payment accuracy to get paid faster.
7. Payment Terms and Method
Finally, mention the forms of payment you accept, including cash, checks, cards, PayPal, Stripe, and other methods. Direct connection to your payment options and step-by-step instructions are frequently helpful.
List the payment terms for bank transfers after describing the payment method. The final invoice due date is reiterated in this section, along with any discounts for early payment or late payment fees that may apply.
Make it as easy as you can so that your client pays on time. Include payment options for repeat clients, as well as any additional information they need to complete the payment.
How to Invoice as a Freelancer? 8 Invoicing Tips For Freelancers
Following our discussion of the core components of an invoice, let’s take a look at some crucial invoicing tips for independent freelancers.
1. Review Your Invoices and Send them Soon
Invoice issues are one of the most typical reasons for late payments. Examine your invoice for errors and ensure that you are not invoicing your client for more or less than the correct amount. Check your grammar as well to ensure all your invoices look professional.
Another crucial piece of advice is to deliver your bills as soon as possible. Because experts believe that sending an invoice soon will not make you appear pushy, though freelancers frequently send multiple invoices a few weeks late after the task is completed.
2. Don’t Be Afraid to Follow Up
Let’s be honest. Some customers may find it difficult to collect money. While some customers may have valid reasons for paying after the due date, others may just refuse to pay on time. To maximize their chances of collecting payment, freelancers should develop a follow-up routine.
It is best to remind clients 24 hours before the deadline to request payment. Please keep in mind that a healthy cash flow is just as crucial as aggressive invoicing, which may otherwise jeopardize your client relationships.
3. Offer Multiple Payment Methods
Giving your customers many payment alternatives simplifies the checkout process because the appropriate gateway for their unique needs will be ready and waiting for them.
Accepting a variety of ways boosts your chances of directly addressing each customer’s preferred payment method and providing them with invaluable convenience.
4. Offer Early Payment Incentives
You may get your clients to pay you regularly with various methods. The most effective of these is to offer rewards for making early payments.
To further motivate your clients to make on-time payments, don’t be afraid to implement late payment penalties. You can also create monthly plans to let the client automate invoice payments.
Most freelancers also use one from many other invoice types such as proforma invoices, progress invoices, freelancer invoices, etc. to get paid on time. You can also include in your invoice late fees to ensure clients pay on time. Make sure to convey this to your clients when you send an invoice.
5. Using Invoicing Tools and Template, Create Professional-Looking Invoices
Manually producing a business invoice can be time-consuming, resource-intensive, and error-prone. Money can be lost due to a manual invoicing document. Using a template will help to send your invoice and enhance the billing process.
If you send out multiple invoices to different clients each month, it can be difficult to keep track of them all. Using professional tools to ensure that there is no mismatch between invoice and transaction prices can also help you avoid profit leakage.
An automatic invoicing solution like Moon Invoice can be useful in this situation. You save time and money by using these products, which streamline and automate the entire invoicing process.
6. Include Taxes and Fees
Freelancers are eligible to pay self-employment taxes according to tax rules. So, including tax details in the freelancer invoice helps to earn the applicable tax on the services provided. Professionals must include tax and other additional charges in a proper way.
7. Discuss Payment Terms Upfront
Don’t forget to include payment terms and conditions in your invoice related to your freelancing business. Mentioning the payment policy helps to prevent confusion. Clients get a clear picture of your payment policy and make the payment accordingly. Thus, you get the exact amount with no delay.
8. Maintain Good Records for Your Invoices
Maintaining a record of your invoices is crucial. Always give a unique number to your invoice that helps to make invoice tracking easy. Freelancers must organize the invoices systematically by using folders or any other digital tools.
While maintaining the soft copies of invoices, it is also a good idea to maintain physical records of invoices. This helps in maintaining a proper backup.
When to Send the Invoice as a Freelancer?
Sending an invoice depends upon the business’s nature and policies. In the case of freelancers, the same concept is applicable. In general, freelancers must send an invoice as soon as the project is completed. There are multiple conditions for sending an invoice as a freelancer –
Upon Project Completion – Once you complete the project, it is crucial to send the invoice immediately after it. This enhances the on-time payment from the clients.
Hourly Project – If you are working on an hourly project, then you must send invoices accordingly. In this case, you must mention the hourly rate in an invoice.
End of the Agreement – Send the invoice once the contract period of your freelancing business has been completed.
Milestone-Based Project – If your freelancing business involves a milestone-based approach, then send an invoice once your milestone is achieved.
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Conclusion
Even though it may appear scary and even frightening at first, creating a new invoice for your client directly is a simple way to get paid once you break it down and set a system in place.
After you’ve sent your payment request and invoice, make it easy for a client to contact you if they have any questions regarding the business invoice or your payment.
Send courteous reminders as the payment deadline approaches, and enquire if they have any qualms about making the payment.
With the following information, we hope you are ready to create your next invoice to get paid for the services provided to your client.
FAQs
Jayanti Katariya is the founder & CEO of Moon Invoice, with over a decade of experience in developing SaaS products and the fintech industry. He holds a degree in engineering. Since 2011, Jayanti's expertise has helped thousands of businesses, from small startups to large enterprises, streamline invoicing, estimation, and accounting operations. His vision is to deliver top-tier financial solutions globally, ensuring efficient financial management for all business owners.
