Ahh, financials. Every freelancer’s least favourite part of running their own business. You’ve pitched, landed the job, delivered your work…and now it’s time to get your money.
A surprisingly common question from newbies is, well, how do you do that? Luckily, help is at hand!
Who are you dealing with?
The primary point of contact in your client’s office most likely won’t be involved with their company finances in any way, and will simply forward your invoice through to their accounts department when you send it. This means it’s often easier for everyone if you deal with the accounts department directly.
When it comes time to settle up, ask for the contact details of whoever is responsible for actually paying your invoice. This way, you know they’ve actually received it, and if you have to chase them up you can get in touch with them directly.
How do you actually make an invoice?
There are a number of ways to skin this particular cat. For first timers, check out our easy-as-pie invoice templates, which is a simple fill-in-the-blanks procedure that will have you firing off invoices indiscriminately in just a few minutes.
The next step towards invoicing professionalism is some kind of standalone invoicing software, which allows you to add your clients, beautify your invoices, and track your income. There are a whole host of options here, including BallPark, Invoicera and Harvest (the latter is more focused on timesheets, but handles invoicing as well).
The top tier is some accounting software that will take care of your invoicing as well as calculate tax, run payroll and track expenses. At this point we should mention our parent company Crunch, who offer just that (although, of course, other online accounting packages are available).
What should go on my invoice?
There are a couple of legal bits an invoice must include (more details here), however the most important items are the stuff you’re charging for – your work. This depends entirely on the work you agreed with your client when you started the project. It may be as simple as one line item listing the product or service you sold, for example:
- 1x company logo design @ £250
It’s always advisable to put as much detail as possible on your invoices, so if you should need to pull them out of your archive for any reason in the future you’ll remember what they were for. For example if I wrote three pieces for a magazine, I could invoice like this:
- 3x magazine articles @ £150
Or, more sensibly, I could list separate line items:
- Article “Why Ham Sandwiches are the best”
- Article “What Postman Pat can tell us about the US Financial crisis”
- Article “Five reasons the Internet makes you hungry”
The other form an invoice can take is that of a timesheet, for example if you’re working for a client on an ongoing basis and billing by the hour. In this case each line item should list the date, the hours worked, and the rate.
Should I put VAT on my invoice?
A common question, and one that never fails to stump new freelancers. For a more detailed explanation see our expansive VAT guide, but if you’re unsure the answer is probably no. An invoice should only include VAT if the company issuing it is VAT registered. If you’re not sure if you’re VAT registered, you aren’t.
When should you send your invoice?
Well, this one is easy. As soon as your work is finished, and sooner if possible. If it’s a big job, consider asking for part-payment up front, or staggering your invoices at set milestones. Don’t delay in issuing your invoices, either. If you’re sticking to the standard 28 days payment terms, waiting two weeks to issue the invoice is increasing the time before you get paid by 50%, which is bad news for your cashflow situation.
Invoice straight away, don’t mess around.
Congrats, you’ve successfully invoiced your client. Next comes chasing payments, which is an entirely different kettle of fish. For some help there, see our guide to chasing payments, or download Safe Collections’ excellent credit control guide.
Bonus best-practice tweets
We put a call out on Twitter for some invoicing top tips, and here’s what the people have to say -
@freelanceadvice Gain a deposit b4 starting. Often easier to have someone else do the chasing so that you can maintain relationship.
— Accessible Marketing (@JudithHutch) June 11, 2013
@freelanceadvice If chasing, find out who in accounts actually deals with the invoices, then email or phone them. And be nice. Works for me!
— Bob Cree (@bobcree8) June 11, 2013
@freelanceadvice always chase promptly and regularly so new clients know you aren’t going to take late payments lightly – but be polite!
— Fran Swaine (@franswaine) June 11, 2013
Have a friend who takes neighbour’s two dobermans to collect late payment. He says just one look at dogs works wonders! @freelanceadvice
— SEAS-IT (@seas_it) June 11, 2013
Photo by khrawlings