There’s no two ways about it—balancing all of your responsibilities as a freelancer can be a bit daunting. But perhaps most daunting of all is keeping track of your finances – and invoicing in particular
We’ve teamed up with Joanne Harris at Easy Accountancy to put together a no-nonsense guide to invoicing, from crafting a well-designed invoice, to filing everything properly and chasing late payments.
What exactly is an invoice?
Put simply, an invoice is an accounting document that requests payment in return for goods or services. It should always indicate what is being paid for, how it should be paid, and when.
What other details should I include on an invoice?
There are several things every invoice should include. These are:
- The word ‘invoice’ displayed prominently (usually in the top right of the document)
- Your name (or business name) and business address
- The client’s name (or business name)
- Your contact information
- The issue date
- An invoicing number
- A breakdown of the fee
- Your payment details and terms
Should my invoice be designed a certain way?
It’s fine to use a simple template for your invoices. That said, it certainly does no harm to put some personal design touches into your document. Just remember that functionality should come first—if your design is so flowery that the client struggles to find your bank details it might be time to dial down the artwork!
A great tip is to send your invoices in PDF format. It’s a clean, simple way to work and, unlike Word or Excel docs, it’s super easy to open the file without the need for particular programs or suites.
How do I decide on payment terms?
Deciding payment terms really does depend on the individual. Some people are happy with a 30-day arrangement (where the fee is due 30 days after the issue of the invoice), while some people are not comfortable unless they have up-front, or part up-front, payment.
You’ll find that 30-day terms are the norm for most businesses. But if that doesn’t feel right for you, be sure to stick to your guns. After all, if a client isn’t willing to pay in the manner that you request, do you really want them as a customer?
What sort of organising or invoicing number system should I use?
As you’d expect, there are many ways to number and file your invoices. We recommend as a minimum that you include an abbreviation of the client name, the number of the invoice, and the date. So, for example, your third invoice to The Smith Society, sent on the 2nd July 2019, might have an invoice number TSS03 and then the following filename:
The Smith Society Invoice (TSS03) 02JUL19
That will make the invoice easy to find, and contains all the relevant details at a glance.
In terms of file systems, a simple method is to have two folders: unpaid invoices and paid invoices. Once an invoice is created, save it in the unpaid invoices folder, then move it over to paid invoices once the client has coughed up. Easy!
Any final words of wisdom?
The key with invoicing is to make it as easy for your client to pay you as possible, so make sure your payment terms and your payment details are clear. I would also suggest following up before the payment deadline as a reminder to pay. Remember, when you work for yourself you are also the credit control department.
It is also essential to keep records, whether paper or electronically so when it is time to submit your tax return, you have the information required. A spreadsheet with invoice numbers, amounts and payment dates is a good place to start.
If you’d like more information on how to control the finances of your freelancing business, Easy Accountancy have loads of information on their website.