I didn’t really know what I was doing the first time I created and sent an invoice. Luckily, I wasn’t working for myself at that point, I was an executive assistant for a woman who ran a search firm in New York City. She had templates for me to use, and double-checked my work until I got the hang of it.
I learned an invoice doesn’t need to be especially intricate. I’d prepare and send our Word document invoice to Fortune 100 companies, and a few weeks later they’d send us back a check. Although, I also learned that it’s important to keep track of invoices, as sometimes I’d have to follow-up to make sure our invoice was processed and paid.
When I became a freelance writer, first as a sole proprietor and then as the owner of an LLC, I relied on these lessons and developed my own procedures for creating, sending, and tracking invoices. But even with my experience, the first few times I was nervous that I’d mess something up.
I turned to online guides to help me. Now, I’ve come up with my own guide for fellow freelancers. It’s important to remember that an invoice doesn’t need to be scary. Quite the opposite, you should be happy when you send an invoice — it means you’ll be getting paid soon.
What you should include in an invoice
While there’s no single template or process that you need to follow when you create and send invoices, there are a few pieces of information that you likely should include.
These can help you look professional, clarify clients’ common questions, and remind clients of the terms of your contract. Because the person responsible for approving your invoice isn’t necessarily the same person you work with, having the information right on your invoice could be important.
Your name, contact information, and the client’s name
Your invoice should have your name and address on it, and your business’s name when applicable. Include your phone number and email address in case a client wants to contact you. If you have one, you can add your company logo to make your invoice look more professional.
Your client’s business name should also be listed, along with its address — you can double-check your contract or their website if you’re unsure. If you know who reviews your invoices, you could also include his or her name.
An invoice number
Invoice numbers can be a combination of numbers and letters. They can help you stay organized and make sorting out invoice-related problems much easier. If a client has a question or hasn’t sent a payment on time, you can reference the number and be sure you’re both looking at the same invoice.
It’s up to you to decide how you want to number your invoices, but each invoice should have a unique number. You should also come up with a straightforward system for organizing and keeping track of your invoices.
For example, say your businesses is ABC, LLC. You could number your invoices based on your business’s name (ABC1, ABC2, ABC3, etc.), or also include the year in your numbering (ABC118, ABC218, ABC318, etc.) to help distinguish invoices from different years.
Alternatively, you could base your invoice number on the client’s name. For example, you could invoice Great Client, Inc. using GC118, GC218, GC318, etc. A client-based numbering system could be a better option as it’s easier to distinguish between your invoices.
The issue date and due date
Including the date you issued the invoice is important as sending your invoice starts the clock on the payment timeline. In case you accidentally misnumber an invoice, the issue date can also help distinguish the invoice if you need to reference it later.
You should also include a due date for the payment. The date will depend on the terms of your contract or the agreement with your client.
Line item descriptions and the total amount due
The meat of the invoice is often the breakdown of the goods and services you provided. It’s best to list each item separately, with a description, quantity, rate, and subtotal amount.
The descriptions on my invoices are often the title of a blog post I created for a client, with a single quantity, so the rate and subtotal are the same. However, sometimes I do editing work on an hourly basis. In those cases, the description is the name of the piece I edited, the price is my hourly rate, and the quantity is the number of hours I worked. The subtotal for that line is then higher than the price.
Below the list of all your line item descriptions and subtotals, include a clearly marked total amount due. If you work with international clients, be sure to include the total amount due in your currency.
How and where the client can pay
Don’t make it difficult for a client to pay you. Include options for how clients can send payments, along with all the associated information they’ll need.
If you accept payments by check, make sure it’s clear which address they should send the check to. Likewise, the email address associated with your business’s PayPal account, or an instruction to pay via bank transfer if you’ve already set up electronic payments with the client.
You could also use payment software to accept other forms of payment, including credit cards, but there’s often a fee for accepting such payments. Some freelancers give clients the option to pay by credit card, but only if the client also pays the fee. If you want to do this, clearly state the fee amount and the new total on the invoice.
Some clients may have particular requests for how you list items on your invoice. For example, I invoice monthly, and one client asks that I include the date I submitted my first draft of an article within its line item description. Another client requested that I specify “content creation” on each line item. It’s a little extra work, but they’re easy requests to comply with and I want to make sure my clients are happy.
Additional fine-print items
At the bottom of the invoice, you can include any other fees, discounts, or fine-print points you want to clarify. These could be a late payment fee, in case the client doesn’t pay within the agreed-upon terms. Or, if you have long payment terms with clients, you could offer them a discount if they pay early.
4 steps to help you stay on top of invoicing
1. Start with a clear agreement
The invoices you send should be a reflection of the agreement you already have in place. They should not surprise your client. The goods or services you offer, the amount you’ll charge, how clients can pay, and the payment terms should all be spelled out in a contract. Or, at a minimum, over an email exchange so there’s a written record of your agreement.
You can also ask your client if they have a preference for how or when you send invoices. Russ Nauta, the owner of CreditCardReviews.com, pays about eight invoices from freelancers each month. He prefers freelancers to send invoices via an online accounting software platform instead of a Word document or PDF.
“My favorite of all is Freshbooks because when I receive the invoice, I can also pay it through their interface,” says Nauta. “If I am on the go and don’t pay it upon opening, Freshbooks will send me periodic reminders through their digital dispatch.” Other software can be set up to send similar reminder emails to clients.
2. Use a template
Rather than creating an invoice from scratch every time, create or find a template you can use each time you send one. “I’ve actually tried many things when it comes to invoicing,” says Jackie Lam, a freelance writer and blogger at HeyFreelancer.com. “Creating my own template using InDesign, a Word template, using invoicing tools such as And.Co, FreshBooks, and QuickBooks Self-Employed.”
“When I did use my own template, I just kept it simple and included essential information,” adds Lam. You can find a variety of templates online that you can modify and use.
3. Have an easy-to-follow invoicing system
Having a schedule or system for when you send invoices and check on late payments can also be helpful. You may want to set calendar reminders or use a spreadsheet to track of which invoices to send and which payments are still outstanding.
“I batch them because I save time that way,” says Lam. Sending all her invoices at the same time each month also helps her avoid accidentally overlooking an invoice. She winds up still having income at different points throughout the month as clients pay on different schedules.
Like Lam, I send invoices to all my clients around the end of the month. Before I started using invoicing software, I kept track of the invoices in my budget spreadsheet — placing an X next to the client’s name and invoice amount when I sent an invoice and replacing the X with the date once I was paid. If an X was still next to a client’s name and balance by the end of the next month, I knew it was time to follow up.
Batching can be helpful for organization, but if you’re worried about cash flow, you may want to send invoices as soon as a project is done. If that’s the case, a tracking system can be even more important as you’ll likely have various payment due dates in the coming months.
4. Consider invoicing software
Using software can make the entire invoicing process a lot easier. The software may give you a template that you can modify and save, store clients’ contact information, track when your invoices were sent, send reminders when you’re not paid on time and automatically send recurring invoices.
Invoicing is often a feature of more robust accounting and/or payroll systems. For example, Lam has stuck with QuickBooks Self-Employed because she also uses it to track her business expenses. I’ve used Xero for about a year, as I found it to be an affordable choice for managing payroll, accounting, and invoicing.
Many options require a subscription fee and may be best suited for different types of freelancers or business entities. There are also some free options, such as AND CO and Invoicely, which may meet many freelancers’ needs.
Managing long payment terms
As a freelancer, you may have a say in when you send invoices. You may also be able to negotiate different payment terms, but often you’ll be at the whim of larger clients’ standard procedures. That might mean waiting 30, 45, or 60 days to get paid, or sometimes even longer.
If you’re in a cash flow crunch, sending your invoices as quickly as possible rather than waiting until the end of the month can help. Additionally, invoice factoring, which lets you receive an advance on your unpaid invoices, could help ease cash flow problems.
Dealing with non-payment
Much worse than waiting on a payment, is waiting, waiting, and waiting until the due date has come and gone. In 2015, the Freelancers Union conducted a survey and found that 71 percent of freelancers had had trouble with at least one non-paying client.
Lam and I have both had to deal with an occasional client who didn’t pay on time. Fortunately, it doesn’t happen often, and a reminder email is usually enough to prompt payment.
Sometimes, there may be a mixup on the freelancer’s side and perhaps the invoice was sent to the wrong email address. Or, the client may have seen the invoice and forgot to pay, or worse, wasn’t able to afford to pay on time.
Nauta weighed in on what it’s like to be on the other side of the table and admits that he’s missed invoice due dates. However, “a scenario like that would be an honest mistake,” he says. To the contrary, Nauta tries to pay his freelancers as soon as possible, even if the contract allows for longer terms, and hopes that the freelancers will be forgiving if he is late.
If it does happen, Nauta suggests sending the client a reminder rather than a demand. “People, myself included, are much more apt to respond to friendlier inquiries.”
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