How to Invoice as a Freelancer: Things You MUST Include
Writer? Designer? Bookkeeper who helps different companies during tax season? Whatever services you offer, you’ll be in business like the 73.3 million other freelancers in the USA, more than 36% of the country’s workforce. To maintain the freedom and independence you value most, you must guarantee a stable flow of capital. In other words, you must receive orders and issue bills on time. To achieve this, comprehending how to invoice as a freelancer is essential. Let’s discuss the importance of freelancer invoicing and how to generate such payment documents.
Do freelancers really need invoices?
In simple terms, yes. Although you most likely provided the customer with a price proposal before you began work on their project, there are several distinctions between the price proposal and the invoice. The first and most apparent is the delivery period. You communicate the cost offer before the start of the job and send an invoice after completion.
Moreover, the offer is based on a preliminary evaluation, while the invoice indicates the final sum to be paid. Let’s assume that you are involved in a project lasting four months and have come to an agreement with the client on monthly payments. It means the offer will be for one amount, and you must send four invoices, one for each payment.
In such a situation, each payment document contains only data on the job performed at the moment, and the whole sum will be divided into four parts. It simplifies the invoicing procedure and makes it more understandable.
If you operate as an independent employee, you can enter into hourly agreements with contractors when you obtain remuneration for your time on a project and fixed-price contracts when you receive a fixed reward for the whole project.
Some rules to make invoices like freelancer
You should be able to invoice a freelance job at the moment you complete your first freelance assignment in the USA. Regardless of which method of drawing up payment documents, they must contain all the data necessary for accurate and timely payment. Below, we will discuss the main elements that should be presented in your bill and how to invoice as a freelancer.
Contact data
Adding your details to the commercial document is essential so customers can contact you quickly and easily. If you are an independent worker, add your name (utilize the full or short form), firm name (if necessary), location, telephone number, and email. Adding a firm name is required to promote the service.
- Your location should inform contractors where you really operate, whether it’s the house or a rented room. It is an essential element of professionally designed invoices.
- Phone and email are the main methods of interacting with customers, so be sure to write them in payment papers.
- Adding an image and logo makes the invoice non-standard and assists in exciting customers. Although a photo is not required, a logo is worth using.
Don’t forget that the presence of contact data strengthens customer confidence and makes it simpler to consult you if issues arise.
Invoice number
You should track the document numbers, whether you compose bills manually or utilize a particular program. As an independent worker, you may have to answer customer issues about your activity or manage overdue payments. Transparent organization of commercial documents makes it simpler to solve any problem. The invoice number assists the customer, and you may be sure to discuss the same operation.
You may implement a creative structure, e.g., utilizing the first numeral to define the customer, the second for the account index, and the third to describe the current year. Let’s imagine you have several customers, John and Jack. Then, the first bill for John looks like 010123, where 01 is the customer’s designation, 01 is the bill’s index, and 23 is the year. The next commercial document looks like 010223, etc. The same is true if we speak about Jack: the first bill looks like 020123, where 02 is its serial number since Jack is the second customer, 01 is the account number, 23 is the year, and the next bill looks like 020223, etc.
Line item description
A transparent line item description on the invoice is critical to compensate you adequately for your working hours and effort. If you are an author, list the texts сomposed and the job’s completion date. The designer can talk about certain projects he operated on and when they were completed. It is also vital to clarify the prices of various tasks.
Implement itemized billing and list all tariffs if you set up various rates for separate objectives. When choosing an hourly remuneration, indicate the time spent on the job and multiply by the negotiated rate. It guarantees that you obtain the proper sum.
Issue and due moments
The invoice date corresponds to the beginning of the payment period, so it is critical to indicate this moment in your commercial documents. If you made mistakes when giving bill numbers, having an issue date also lets you differentiate one record from another.
Also, indicate the payment date, computing the period the funds should arrive in your account. It depends on the conditions you have set out in the freelance contract. Please carefully check the issue and due dates to avoid misunderstandings with your counterparty.
Payment systems
Including available payment methods in bills can be valuable for your customers and make the financial procedure more suitable. We recommend adding different payment options, including bank transfers, credit cards, and other advanced systems. After analyzing the customer’s preferences and requirements, you decide which variants to append to the bills.
Basic methods of сomposing invoices
All documents you forward to the counterparty should demonstrate professionalism; invoices are no exception. Therefore, we recommend taking the time to compose high-quality samples that can be applied many times:
- Invoice creation from scratch: If you don’t have experience as a designer, such a solution is unlikely to be suitable because you want to forward qualitative documents to your customers. If you plan to utilize Google Docs or Microsoft Office, be prepared to spend a lot of time on formatting. If you decide to compose a truly unique document, you may seek help from a qualified designer.
- Finding the free invoice template online: If we speak about self-employed individuals without design skills, finding a sample on the Internet and adapting it is easier and more effective than starting from scratch. All you should do is select the appropriate font and utilize corporate style elements, and you can forward the bill to the counterparty.
- Utilizing a particular invoicing software, depending on the volume of your activities, you can adopt an e-invoice system. If you’re just starting, this may not be a rational investment, but it’s worth considering applying a digital product on an ongoing basis if you compose a lot of bills weekly. Such a digital product lets you automate the process fully.
Each of these options has its strengths and weaknesses. Therefore, you must consider what is critical and which option works optimally.
Recommendation on composing invoices
When launching a firm, obtaining cash without delay is key to success. Customers who pay too late can hurt your cash movement, and chasing them distracts you from your job. Let’s talk about how to invoice as a freelancer:
- Select transparent payment terms: Ensure new customers interpret your conditions correctly before signing an agreement. You should add conditions on estimates and pro forma invoices.
- Select reminders: If a counterparty is late with a payment, particular reminders will usually be triggered. Install the e-invoice system to send one reminder via email or phone number one day before payment is due and a second one several days later. This way, you don’t have to monitor each client personally.
- Suggest flexible financial conditions: The simpler it is for the customer to pay the bill, the faster you will obtain the money. Advanced invoicing systems connect customers to e-payment systems, allowing them to make transactions using various solutions.
As your firm develops, you will send a bunch of bills. However, that’s not all: you must regularly track them to understand which payment documents have been paid and which are overdue. You can do this manually by assigning each bill a number and monitoring it in a spreadsheet, but this will take a lot of time. Choosing a program that handles these elements is better.
Final words
If you’re not working under an employment contract, invoicing issues pose an occupational hazard: About 71% of freelancers said they’ve had payment troubles at various stages of their work. A well-secured and user-friendly billing structure can decrease this problem and allow you to devote more time to professional activities. If you, as an independent worker, have difficulties with any financial issues, you can contact BooksTime. Maintaining an accurate log of income and expenditures and monitoring invoicing is critical for self-employed individuals, as this will simplify the payment of taxes and help in the case of audits.
