Invoicing is one of those elements of running a business that freelancers either like or hate. It’s either a task that one can take some delight in (knowing payment will soon be on its way) or it can feel like a chore that is subject to procrastination (not that we’d ever admit to such a thing).
Invoicing doesn’t have to be painful, though, and even if you enjoy your time invoicing, there are a few things you can do to make your life easier.
1. Set aside the time
If you find yourself doing laundry or playing Farmville when you should be generating and sending out invoices to clients, then your procrastination is affecting a basic operation of your business. We’re all guilty of it. I’ve found several times at the end of the month that I have several invoices to prepare, some of which should have been sent out weeks prior, but Mario Kart comes a-callin’. Avoid the temptation to put invoicing off for another day. Instead, work invoicing into your regular business schedule and keep to that schedule. Set aside time once a week, every other week or once a month (whatever makes sense for your business) to do invoicing – and then do it.
2. Know your tax laws
Tax laws vary by country, state/province and municipality. If you’re new to being a small business owner, then find out what taxes you need to charge, what registrations you need in order to charge tax, and make sure you don’t forget to put the tax and any required information (like a business registration number) on your invoice. If you’re required to collect tax, you’re required to pay it (whether you’ve remembered to charge your clients or not). If charging tax is not necessary but still an option, doing so will make you look more professional (and maybe more legitimate) in the eyes of your clients.
3. Use a numbering system
Adopt a simple numbering system to keep track of your invoices, and then be consistent with it. This will make it easier to track and organize your invoices for accounting purposes at a later date. This will also be helpful if you ever face an audit, as you can account for all your invoices. I keep my numbering system simple, starting with the year and followed by a three-digit number that counts up with each successive invoice (i.e. 2011-001, 2011-002, and so on). If you prefer not to let your clients know how many invoices you’ve sent out, then feel free to start your numbering scheme at something besides 001 (say, 042, the answer to life, the universe and everything).
4. Don’t fire and forget
Successful payment lifecycle management requires attention to detail and, no matter how much you may dislike doing it, following up on unpaid invoices at regular intervals is necessary to ensure you get paid on a timely basis. As with a lot of freelance writers, my forte is in creating compelling content, not in bookkeeping, new business generation or accounting, but every job has things you don’t like. Following up on unpaid invoices (at appropriate times, of course; don’t start bugging your client the day after – at least, not if you want to keep that client) is necessary to being an entrepreneur.
5. Thank people for their business
It seems like such a minor detail, but writing “thank you for your business” at the bottom of your invoice is a nice personal touch that demonstrates to clients that you really do care for their business. At the very least, it shows that you’re a nice, polite person they’ve been doing business with, and it’s no secret that people like to do business with people they like. So be likeable.
6. Check for errors
If you’re using invoicing software, then you shouldn’t have to worry about any foul-ups in the math, but it doesn’t hurt to make sure all the math adds up and that all the decimal points are in the right place. I heard one story recently where a small business owner slipped up on his math and ended up neglecting to charge a client tax on services provided. That uncharged tax ended up coming out of his pocket. Don’t let it happen to you. Invoicing software can all but eliminate accounting headaches, but there’s no cure for data entry user error.
7. Payment options
There are a plethora of payment options available. Although a lot of freelancers still deal exclusively in checks, technological evolution now allows us to take PayPal (with or without credit cards), debit payments via email and other payment options. I’m old-fashioned, in that I prefer to deal in checks, but as more clients demand electronic means to make payment, I’ve bowed to pressure and started using PayPal (and quietly grumbling to myself about having to fork out PayPal fees). Outline what payment options you can (or are willing) to accept on your invoices so clients know what their options are (at least it saves a phone call and time if the options are obvious).
A few simple invoicing tips when I first started my freelance business would have saved me a lot of time and stress. Thankfully the days of tracking my invoices using a black book of lined paper and a ballpoint pen are over.