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Managing your money properly is crucial as a freelancer and invoicing is a key part of that. Unfortunately, a lot of new freelancers don’t really know how to approach invoicing. They might feel awkward about asking for money and people have a tendency to be too forgiving with clients that don’t pay on time because they worry about losing work in the future.
There are a lot of practical mistakes people make with invoicing and payments too, like not offering the right payment options or writing poor invoices. Making errors with your invoicing and the way that you handle payment can make it difficult to stay on top of your finances as a freelancer, so you need to get it right. This quick guide will tell you all of the basic information you need to know about invoicing and payments as a freelancer.
Establish Payment Terms Early
Setting clear expectations from the beginning makes things much easier for you. Discussing money early on also helps you determine whether the client is willing to pay your fee and whether the project is worth taking on. If you don’t talk about money right away, you could end up wasting your time and theirs if they eventually decide that your fee is too high and they want to go another way.
So, discuss the payment terms from the beginning and get an initial agreement in writing via email. When you give them the price, you also need to give detailed information about how and when you expect the money to be delivered. For example, do you want half upfront? Will you expect regular installments for certain parts of the project? Maybe you are happy to take the full payment when the project is delivered. Ultimately, it’s up to you how you want to do things but you need to make this clear to the client from the outset.
Write Clear Invoices
When the project is finished and it’s time for you to get paid, you need to write a clear invoice so there is no confusion about how much is owed and when the money is due. Don’t be too forgiving with the due date either because it’s much harder to manage your money if payments don’t come in for a long time. It’s always a good idea to provide a complete breakdown of all of the costs so people know exactly what they are being charged for. This will prevent issues with people contesting the amount that they owe.
Sending invoices to the right people is crucial too. The person that you usually communicate with about the project is probably not the person that pays the invoices. If you are dealing with a company, it’s better to send invoices directly to the accounts department. So, ask for the email address of the accounts department before sending your first invoice.
Follow this simple checklist to make sure you’ve included everything on your invoice:
- Your name
- Company logo and name (if applicable)
- Unique invoice number
- The date of the invoice and the date when payment is due
- Description of the work you are invoicing for
- Name and address of the client
- Details for payment (bank details, Paypal address etc.)
Offer Flexible Payment Options
There are a lot of different ways to get paid and if you can offer more flexible payment options, clients will be more inclined to pay on time. Making things easy for them will always impress them and make you more likely to get repeat work in the future. So, look into different types of card readers so you can take payment in person where applicable, and find options that integrate with other online payment platforms so you can track all of your invoices in one place. Paypal and bank transfers are one of the most common payment options for freelancers, but you should also accept checks and online card payments. Look at alternative options like Google Pay and Apple Pay too. The more payment options you have, the better.
Keep Your Invoices Organized
Failing to organize invoices properly is a common mistake that new freelancers make. When it comes time to file their taxes, they end up spending hours searching through files on their computer and old emails to pull together all of their invoices. You can save yourself a lot of trouble if you organize things properly from the start.
When filing invoices on the computer, separate them into folders with clear dates on them. That way, you can easily find the relevant ones for tax purposes. It’s also a good idea to create a simple spreadsheet and log payments as you go, so you have a clear idea of how much you are earning. As you progress in your freelance career, you might decide to invest in some accounting and bookkeeping software, but to start with, a basic spreadsheet should suffice.
You should also back up your invoices in case anything happens to your computer. If you lose all of your invoices and you cannot recover them, you might find yourself in a difficult position when you need to file your taxes.
Don’t Wait To Chase People Up
Most people will pay their invoices on time with no trouble. Unfortunately, there will always be clients that are slow with payments and try to avoid paying what they owe. Being clear with your invoices and payment terms can help you manage this problem but it’s just something you will have to deal with from time to time as a freelancer. When people are late with payments, don’t feel awkward about chasing people up. This can be difficult for new freelancers but if you give people an inch, they’ll take a mile. Next time you send them an invoice, they’ll know that they can get away with paying late so you’ll constantly end up with delayed payments, which causes you a lot of financial problems. Set a precedent from the beginning by chasing people up and you won’t have any more trouble from them in the future.
It’s vital that you stay on top of your invoicing and payments if you want to manage your finances as a freelancer. Hopefully, this guide has given you everything you need to know to get started.
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