6 Invoicing Tips For Freelancers
Freelancers often have to walk the gritty path of extracting payments from clients on their own.
Although this can be one of the most challenging aspects of the job, the easiest way to request payments is by issuing invoices. To do so, you must provide your clients with an estimate or quote specifying the services you offer along with the associated costs and terms before any work has begun.
Once the work is complete according to the agreement’s terms, you can invoice the client. Billing documents contain an itemized list of the services or products sold along with the amount your client owes. You can choose to generate these documents manually or make use of invoicing software.
Here’re a few tips that can simplify invoicing for beginners and help shorten the chase for payments.
Check Your Contract
According to one study, around 29% percent of freelancers in the US suffer from late payments. One reason for these recurring lapses is the lack of work that these small business owners put in when drawing up a contractual agreement with their clients.
It’s a professional practice to create a contract that specifies, in lucid terms, the nature of service a client may expect and the payment that the vendor assesses for that service. Delays happen when the amount specified in the invoice fails to match the one defined in the initial contract. It’s imperative to evaluate the terms of your contract thoroughly and ensure that it specifies:
- The service completion deadline
- Method of payments
- Payment due date
As you proceed to execute the services, ensure that the output is always aligned with the terms specified in the contract to prevent future discrepancies.
Explain Your Work
Clients are often in contact with multiple freelancers at the same time. To keep your brand and name from getting confused with others, you must provide clients with a detailed description of the kind of services you provide.
One of the ways you can maintain this distinction is by providing unambiguous identifiers. These can include your company’s name, the nature of the service supplied, the commencement date, the assignment deadline, and your contact information.
By eliminating the client’s confusion, you’re a step closer to getting paid faster.
Name Your Price
At the time of accepting work from the client, you should be clear about the amount you’ll charge for the specific service. Moreover, make sure that your client is in the loop. When drawing up the estimated costs, take care to include any potential fees for additional edits or delayed payments.
Often, the initial conversation surrounding the costs of services either remains undocumented or is recorded informally over a text message, which can pose serious problems later. Make sure to follow up on these informal agreements with proper documentation that states your price.
Your invoices should also clearly specify the completed work by providing a thorough breakdown of every component. This allows a more objective cost analysis than a collective estimate of grouped assignments. This breakdown brings clarity to your clients, especially if they have to seek approval from their superiors.
Include Fees & Taxes
Taxes are an inextricable part of any freelancing business. Moreover, freelancers often face out-of-pocket expenses that aren’t accounted for when estimating costs. If the work you’ve been assigned could incur additional charges, don’t forget to factor these unknowns in your total estimates. Some freelancers don’t shy away from adding punitive fees for late payments, and you have the right to include these costs in your initial contract.
You must possess a basic but workable knowledge of tax rules for freelancers, and don’t forget that taxes such as VAT should be listed separately in your invoice.
One can’t stress enough the importance of keeping all lines of communications open for your clients. Once you issue the invoice to a client, follow up with your payments in a friendly manner. Make it easy for your clients to reach you for any clarification regarding the invoice.
It’s even better if you issue a friendly cover letter or email along with your invoice. Use this letter to include a thank you to your client for trusting your service. It’s an excellent way to build rapport with your customers and expedites business.
Once the invoice is sent, follow up with additional reminders in case the need arises. You can make it easier for your clients to make queries by making the first move. Instead of waiting for them to approach you, ask them if they’re clear on the means of payment and would like some kind of assistance. It’s not uncommon for invoices to sometimes slip through the cracks. These friendly reminders from you can clear up any such misunderstanding.
Consider Using Software
When it comes to hassle-free billing, invoicing software can come to your assistance in more ways than one. It helps you manage your bills, save time by covering manual and recurring activities, and organize your accounting efforts. Once integrated into your business, the software generates automated invoices and provides each with a unique invoice number. This can help you track outstanding invoices and payments.
Software integrations like these help you cut down avoidable labor costs while expediting the payment process. Manually entering the data in spreadsheets isn’t only cumbersome but also prone to errors. There’s various invoicing software for freelancers available that comes with a free trial period.
The Bottom Line
Remember that you must develop your processes as a freelancer when effectively chasing payments from your clients. Since this is a common scenario for many small business owners and entrepreneurs, consider joining a freelancer’s union for extra support. This provides a platform for freelancers to meet like-minded colleagues and exchange tips and best practices for chasing up payments.
Incorporating the tips specified in this post can make the payment process quicker. The key is to follow them consistently. Documentation is equally necessary and any term or stipulation added to the original contract must be put in print as soon as possible. This is the only way to prevent potential payment discrepancies from surfacing in the future while streamlining the end-to-end process.