How to Invoice: A Beginner’s Guide 💰📬
- Remote Working & Freelancing
As a freelancer, getting paid is a must. But not everyone knows how to invoice. Here’s how to create invoices with ease.
Every Independent offers a unique set of qualifications, but there’s one skill every freelancer needs: knowing how to invoice for their services. Invoicing may seem complex, especially if you’re not sure what information a client needs to pay for your services. Worry not! Here we’ll explain how to create invoices with ease.
What is an invoice? 🧾
An invoice — also sometimes referred to as a bill or a statement — is a document that outlines how much a client owes a freelancer for specific work or deliverables. The invoice is sent to an accounts manager or accounting department, where it is then approved and paid to the Independent.
How to make an invoice for my business: 6 easy steps 💵
When you first start freelancing, you’ll probably wonder how to write an invoice. Here are some helpful practices to explain the invoicing process and ensure you get paid on time:
- Provide contact information. Include a freelancer or business name, address, phone number, and email on every professional invoice. Also, provide a purchase order or invoice number. An electronic invoice may also include a hyperlink to a website or a Contra Portfolio. This information is required by accounting departments or banks to ensure that the proper person receives payment.
- Consider including (tasteful) branding. Although not strictly necessary, including understated design elements or distinct brand markers — a monogram with your initials or a unique logo, for example — can help your invoice stand out among all the others your clients receive. Just be cautious: At its core, an invoice must clearly state the services rendered and how much the Independent is owed. Personal branding should never obscure vital information.
- Specify dates. An invoice should clearly state what work was completed and when. In addition, designate the expected payment due date and outline any late fees.
- Describe services. Your client should know exactly what products or services you’re charging them for and how much they cost. It’s a good idea to break down different types of work (e.g., writing, coding, editing) into itemized sections. This helps the client understand precisely where their money is going.
- Calculate the total owed. Double-check that the invoice has a precise, properly added total at the bottom. It’s good practice to bold or highlight this figure; it’s arguably one of the most important numbers on the page, after all. If you’re an Independent who charges sales tax or other supplementary fees, these should be clearly outlined and included in the total. Any charges beyond the cost of products or services should be agreed upon in the initial contract.
- Provide payment information. Even if it has been discussed beforehand, an invoice should include clear directions on preferred payment methods. Most payments are handled electronically, so specifying an e-transfer or an online payments site (e.g., bill.com, Stripe, PayPal) helps ensure a smooth transaction. Be sure to take any service fees into consideration. If they’re unavoidable, negotiate how these fees are covered before a contract is signed.
- Include a personal note (if necessary). Provide a short, professional message at the end of the invoice explaining any specific circumstances beyond what’s been previously discussed, such as rate increases or potential work stoppages.
Creating and keeping invoices: Top tips 💪
The IRS suggests keeping employment tax records, including invoices, for at least four years after the date that the tax becomes due or is paid.
As such, good bookkeeping skills are essential for freelancers. Here are some suggestions to help keep Independents on top of their finances:
- Store invoices online. Some worry that information hosted online can be easily lost or stolen, but it’s hard to deny the convenience of accessing pictures and documents on the go. Storing invoices in an app, such as Google Drive, allows for easy sharing and revision.
- Establish payment terms. For many clients, default payment terms tend to be Net30, requiring payment within 30 days of the invoicing date. This doesn’t always work for Independents. Contra suggests having a 14-day payment term to avoid issues of late or nonpayment and prevent long stretches without income.
- Accept deposits or signatures prior to payment. Deposits or partial payment advances are a sign of good faith on the part of a client. Similarly, signing a document — be it in person or online — creates a legally binding contract between the client and the Independent. This is important if any disputes about the contract were to arise.
- Consider invoicing software. Some Independents have an easier time than others with financial matters and record-keeping. Fortunately, there are easy-to-use programs and downloadable invoicing templates. Contra suggests using an app to create and send invoices. Many Independents on our platform use Stripe.com, which automates online invoicing for freelancers and clients. Invoicing apps often track submitted invoices, providing an easily accessible billing record.
Here are answers to a few other commonly asked questions about how to make a bill for services rendered.
When does an invoice get paid? ⏳
The terms of payment for an invoice are typically agreed upon in the initial stages of contract negotiation. Initially, a freelancer will likely be paid monthly, within 30 days of the date on the invoice. This is known as Net30. It takes careful planning to ensure a steady cash flow month to month.
What is invoice accounting? 📊
Invoice accounting tracks which invoices have been sent, which need to be sent, and whether they’ve been paid or are still outstanding. This is vital for small business owners, especially around tax time. Reliable accounting software makes it easy to keep track of your invoices.
Are invoicing and accounts receivable the same thing? 🥸
Essentially, yes, invoicing and accounts receivable are the same thing. Here’s a helpful way of distinguishing the two: As a freelancer, you invoice someone for your time and labor. Accounts receivable is how the invoice is identified while you’re waiting for payment.
Are there different kinds of invoices? 🍎/🍊
“Invoice” is the catch-all term for a document outlining services and the money owed for them. Depending on the industry, invoices may look somewhat different. For example, an invoice for a shipping company may include the weight of the shipment and any charges or fees related to that figure. Another example is a “pro forma” invoice, which is not a record of sale but is used to provide a quote for services.
The Contra community’s got your back 🙌
Still unsure how to set up an invoice? Contra can help! You can send invoices on Contra for free and get paid commission-free. You can also try connecting with other Independents on Contra’s Slack channel, where you’ll find support and inspiration for all your freelancing. Connect with like-minded professionals, browse opportunities, and create a professional website with Contra’s portfolios. Our easy-to-use, commission-free platform has all the information you need to succeed as an Independent, whether you’re just getting started or a seasoned freelancer.
How To Manage Finances as a Freelancer 💵 by The Contrarian