You have set yourself free from the corporate world and joined the freelancing community. It must feel nice being able to control your business – who you work with, what your working hours are, etc. In a nutshell, you are your own boss!
Unlike in the corporate world, where everything is streamlined and done for you, you have to do much of the heavy lifting when you are a freelancer. This not only means that you have to handle the work, but you also have to deal with the finances all by yourself.
To prosper as a freelancer, you ought to gain sufficient income, which you get from the payments for the services you offer. To have a seamless process, it is essential to learn how to create, fill, and send an invoice for your work.
It is no brainer that for any business to succeed, you must get paid. Whether you are working on a long-term project or a short-term gig, you still have to get paid – taking into account various factors such as how big the task is, how long you’ll take to complete it, the nature of the work, among other factors.
Regardless of how much your freelance services are worth, you need to calculate the total amount due and bill your clients. This means that you have to know how to create an invoice template and send it to your clients.
But where should you start? How do you create a professional-looking invoice? How will you send it to your clients?
Get the answers to these and many other questions in our comprehensive guide to creating a freelancer’s invoice.
What is an invoice?
In layman’s terms, an invoice is a document created by a service provider or a seller and sent to the client or buyer. One can send their invoices physically or through electronic means (which has become a more popular method of sending invoices with many freelancers).
Invoices are essential not only for freelancers but also for their clients. They can keep track of all their dealings, making them plan better for future projects and allocate the necessary budget.
From a freelancer’s perspective, an invoice is important as it helps them keep track of all their supplied goods or services. This comes in handy when you need to create a list of your previous projects when making your professional portfolio. Moreover, it also helps keep tabs on your work – understanding which work belongs to which client.
What’s the difference between an invoice and a bill?
After going through our post above, it is clear that many of you will be wondering what the difference between an invoice and a bill is. Well, the two terms are often interchanged and misused – but there is a huge difference.
As mentioned earlier, an invoice is a payment request that includes more information and not just the services offered/ goods sold. It consists of essential data that must be reviewed, approved, and thereafter paid to the freelancer. Apart from having the details of all the work done, invoices also include the freelancer’s name (or business name if applicable), their registered address, payment conditions, a unique invoice number, and other details such as tax compliance.
On the other hand, a bill is simply a list of services or goods offered with the total price indicated alongside the list. You don’t have to include all the details such as tax compliance, official freelancer or business name, current address, etc.
How does an invoice work?
An invoice is defined as a financial document issued by a seller to a buyer (client) for the services rendered. The key purpose of an invoice is to seal the deal of the exchange with monetary remuneration. In this case, an invoice is used as an itemized bill for the amount due. All the goods or services are listed separately alongside their price and all the other information included in an invoice. More on this later.
Freelancers must know how to create their invoice templates to use at all times, in case the freelance service isn’t settled upfront by the buyer. Sending an invoice is a professional way of requesting payment for services offered, instead of the ‘informal’ methods of sending the clients messages and calls.
This information begs the question, ‘What would a freelancer do without invoices?’ Absolutely nothing. Creating and sending out invoices is a special and crucial skill that freelancers can use. Failure to receive the correct payable amount for the services rendered would become a significant problem to freelancers, besides killing their morale.
The key to solving all these issues is to have a good invoice template to use whenever the need arises. So how does one go about writing a professional invoice?
How to create a freelance invoicing template?
There are many perks associated with sticking to the right invoicing method. For starters, it shows that you conduct legally accepted business activities and that you wish to create a transparent relationship with your clients.
Furthermore, this also ensures that you receive the correct payments and that no mistakes are made when making the payments – either by not getting the accurate figures or the correct details. But why is it important to have an excellent invoicing template ready? Well, the answer is pretty straightforward – an invoice that’s half-done or with mistakes has a huge impact on your finances and professional credibility.
While some freelancers prefer to write their own customized invoices from scratch, others prefer to take upon already made templates using some of the best invoicing software.
Whichever direction you decide to take, a step by step analysis of the most important elements of writing an invoice for freelancers is crucial. Getting this right has never been made any simpler; all you need to create the ideal invoice is to ensure that it contains all the vital parts and the correct information.
Keep reading to understand what exactly is required to be included in a professional freelancer’s invoice and how you can create one by yourself.
Sections of an invoice
For you to create a professional invoice, you need to include a number of sections. So what makes up a good freelancer invoice template?
1. The header
The first thing that a client will see before going through your invoice is the header. They probably receive many invoices and might not have the time to go through all of them. But if you want yours to be given a higher priority, you ought to let them know who the invoice came from, just at a single glance.
Your unique branding should always stand out from the rest. An easy way to go about this is by having your name (or business name) as the header. This way, the client will immediately know who the invoice is from.
The other (and recommended) method you can use to create an eye-catching header is to include your logo. It can be a personal logo, company branding, or simply stylized initials of your name.
If you’re running a business without a logo, you should note that it is a major branding blooper. There are many experienced freelance graphic designers that can help you to come up with unique branding for your freelance business.
2. Unique invoice numbers
If there’s one universal rule to having invoices is that they should all have unique numbers. This helps you keep track of all your dealings and be better positioned to trace your finances. Furthermore, if you’re dealing with a single client, it is important as it also helps to know how many transactions you’ve had in total.
It is also recommended to keep things simple. This means, if it is your first time dealing with a particular client, you can number your invoice as 1. Other users find unique ways to number their invoices, sometimes considering the year or month the invoice was sent. For instance, if you’re sending out your first invoice of 2021, you can number it as 21001. The second one will be 21002, 21003, and so forth.
3. Your contact details
Another important detail to include in your invoice is your contact address. Your clients need to know how to contact you should they wish to discuss the invoice further. Your contact details should be in a visible location, whichever part you want to add them to. Be sure to include your email address, phone number, and any other contact information you wish to add.
4. Your client’s contact details
Apart from displaying your personal contact details, you can also note down your client’s contact details. This will also show that the invoice was indeed directed at them, and it was not a result of some mixup. If the invoice is directed to a specific department or individual within the company, you can still add their names as the recipient. It is not uncommon for invoices to get lost, so you have to ensure that it reaches the right hands.
5. Clarify the terms and conditions
Although much of this would have been handled in the contract, it is still a good idea to include it in the invoice. What forms of payment will you accept? Will you accept partial payments? This part of the invoice should act as a reminder, and it shouldn’t be the first time you are discussing it with the client.
For instance, if you had agreed on a particular amount for the job but not the payment method, it might strike the client as a surprise when you indicate that you prefer to be paid via PayPal, yet they only payout through bank transfers. Always be sure to agree on the terms and conditions before you sign up for the job and start creating invoices for your freelancing business.
6. A detailed list of services provided
Have an itemized list of services that you offered. Write the service or product and the price alongside your agreed-upon rates. If need be, you can also have a product or service description to shed more light on the item you’re invoicing for.
7. Date prepared
Another often overlooked yet crucial part of an invoice is including the date it was prepared and sent. This will come in handy when the client takes too long to respond to you or clear your invoice. In some cases, the clients might also claim not to have seen your invoice, and you can simply show them the date that it was prepared and sent.
8. Due date
Before you sign your contract, you should go over a couple of things with your employer, including how long they should take before they pay you for your services. You should add the expected date of payment for the invoice, or you can also indicate it as ‘due upon receipt.’
This means that the invoice ought to be cleared as soon as it has been received. If the client fails to pay in time, you can refer to the due date and even to the date the invoice was prepared if necessary.
9. Total due
Of course, your main agenda at the end of it all is to get all your money paid for. After listing all the services that you offered, you should sum them all up and indicate the total amount due. Ensure to place it right below your itemized list of services or products. Moreover, you should also strive to have a well conspicuous ‘Total Amount Due’ subsection to indicate the total payable amount.
This is because some clients won’t have the time to add the total of all the services you offered – while others won’t even have the time to go line by line checking how much each service costs. Most of them will only skim through your invoice, looking for the total, and clear it.
10. Thank you note
Maintaining good client relations isn’t hard – it is as simple as having a thank you note at the end of your invoice. A simple ‘Thank you’ message shows your gratitude, and it also fosters a good working relationship with your clients. Furthermore, it also encourages future cooperation by setting up a good foundation for social interactions. You can keep it as simple as ‘Thank you for your business. It is my pleasure to work with you.’
As a freelancer, having repeat clients is one of the best ways to succeed in the trade. You can still use this chance to convert this one time client to become a repeat client. You can offer them incentives, such as the one shown below:
Regardless of the words, you decide to use; you can always show your own style and look for different ways to make your clients feel special.
Quick tips to using invoices and get paid faster
While the tips above will help you create better invoices, here are a few that will navigate you to the proper usage of invoices to ensure that you get paid faster:
Allow for several payment methods.
Having various methods of payment gives your clients a lot of flexibility. Furthermore, having a payment method that is preferable to them can get you repeat businesses, unlike someone without their preferred method. For instance, as a freelancer, you should strive to allow for mediums such as bank transfers, credit card payments, online payment channels such as Payoneer and PayPal, etc.
Communicate terms upfront
To avoid any complications and surprises later on after the job’s done, always communicate your terms and conditions before you even sign the contract. This entails what modes of payment you’re more comfortable with, how soon after the job has been completed you should get paid, and many other important factors. Once this has been settled, it will be a lot easier to release your payment when due.
Keep the lines of communication open.
If you keep an open line of communication with the clients, it will be much easier for you to get paid much faster when the time comes. If you are in regular contact with the buyer, you will keep updating them of every move till the end. The lines of communication remain open, and the client will see your invoice much faster – meaning it gets cleared as soon as possible.
Have an independent contractor agreement
Although many freelancers often ignore this point, having an independent contractor agreement signed by both you and the customer is crucial for your freelance business’s survival. The contract that you design beforehand covers various aspects such as the scope of the services, the terms of the work, the expected compensation, rules determining the termination of the contract, payment terms, and details, among other important considerations.
Send reminders for late payments.
It is no brainer that invoices get lost amidst the hundreds of emails some clients receive in a day. Furthermore, they might have seen it and probably forgot to clear it. Do not worry if your invoice hasn’t been paid after you sent it. Give it time – how long depends on your job’s nature, and contact the person responsible for clearing it with a reminder. This way, you can expedite the release of funds to your account.
When should you send an invoice?
Before you sign the contract, you should also iron out how often you need to be paid? For a recurring project, you should plan to bill either at the end of every month, biweekly, or if you’ll get paid every Friday. For one-off assignments, the invoice is to be sent once the work is completed and approved.
When you should invoice is totally up to you and your client and the nature of the job. However, ensure to get this out of the way before you begin working on any projects.
The growth in popularity for electronic invoices
Each passing year, the number of e-bills and e-invoices grows exponentially by 10% to 20%. It is predicted to hit the 30 billion mark within the year. Unlike paper invoices, electronic invoices are a lot easier to create and send, and receiving payments is often instantaneous. Using online payment platforms such as PayPal or Payoneer enables one to create an invoice within the site and send it to the recipient, who can, in turn, pay for it at the click of a button. Some of these providers, such as PayPal, keep track of all your invoices and which clients you send them to. This enables it to create relevant invoice numbers automatically.
Apart from these online payment platforms, you can also take a look at some of the best online invoicing platforms. Let’s take a sneak peek into some of them:
If you never thought you could create a professional invoice using a free tool such as Google Docs, then you are wrong. Unlike Microsoft Word, Google Docs is entirely free to use, and what’s more, it has numerous templates that you can use, including invoicing.
You can download your invoice as pdf and send it to your clients. Although this might look old-fashioned, it gets the work done.
This is yet another free invoicing tool that you can use for all your invoicing needs. You simply need to go to the website and get straight into the editing mode. Even though the tool isn’t so much customizable, at least you get a professional invoice created freely without having a watermark placed on your document.
For those that have been interacting with business tools for quite a while, you must have heard about Zoho software developers. This tool is easily customizable to fit your needs, and you can create your invoice and download it as a pdf to send to your clients. The free version is pretty impressive if you’re only looking for the basic features. The paid versions have better features and what’s more, is that you will not get the watermark branded on your invoices.
If you’re searching for the best feature-rich invoicing system, then hiveage is the answer for you. The tool allows you to design beautiful invoices while adding some cool graphics – with various templates to choose from. Furthermore, the tool also enables you to create estimates that you can share with your clients for approval before working on the project.
Hiveage also allows you to attach a payment gateway such as PayPal to your invoices to enable your clients to pay you directly on the invoice itself. If you’re not on a very tight budget and wish to come out as a professional to your freelance clients, an investment in hiveage would be a great idea.
Just like Hiveage, Invoice Ninja also enables you to create professional-looking invoices with the ability to integrate up to 45 different payment methods. There is also an auto-billing feature, which can come in handy for recurring clients. You can also decide whether you want the bill to be paid partially or in full by your client.
Creating an invoice for your freelancing business
Now you know what it takes to create a professional invoice for freelancers. Ensure that you follow a few basic rules, such as understanding all the important sections and other factors you need to consider. Creating an invoice is pretty simple, but investing in invoicing software is the road to take if you want to get more features.
Frequently Asked Questions
Q: What must you include in an invoice?
A: The main sections to include in an invoice are your name (and logo, if any), your address, the client’s name and address, an itemized list of all the services provided, the applicable rates and quantity, and the total amount due.
Q: Is PayPal a good invoicing tool?
A: PayPal has its own integrated invoicing tool, which you can use free of charge. It works pretty well, but if you’re looking for a more advanced system, you can scout for tools such as Invoice Ninja or Hiveage.
Q: How long should I wait to send in a reminder for an unpaid invoice?
A: It is recommended to keep an open line of communication with clients to avoid late invoice payments. However, it would be permissible to send in invoice reminders at least seven days after it was first sent.