How to Invoice Your Clients | Smart Tips for Getting Paid on Time
To invoice clients and get paid quickly, you’ll need to create professional-looking invoices, set reasonable payment terms and communicate clearly with each client. If you don’t receive payment from a client by the invoice due date, you’ll have to reach out directly to the client about the overdue payment and charge late fees, if applicable.
Explore these topics for tips on how to invoice clients:
How to Invoice Clients
Invoicing is a crucial part of small business accounting because it helps freelancers and entrepreneurs get paid by their clients. Invoicing clients can be intimidating if you’ve never done it before.
Follow these steps to invoice clients in a professional manner and get paid on time:
1. Get to Know New Clients
When you enter a business relationship with a new client, do your research to make sure they’re legitimate. Visit their website to check out their online presence, get to know their business offerings and see a directory of employees. With new clients, you may wish to charge a deposit upfront, to make sure they’re willing and able to pay you. It’s common to charge anywhere between 10 and 50 percent as a deposit, depending on your industry and the scope of the project. Research what other freelancers like you are charging in your area.
2. Understand How Clients Want to Pay
To increase the likelihood of receiving invoice payments on time, get a better understanding of how your clients want to pay you. Be as flexible as you can, within reason. Offer multiple payment methods, like checks, PayPal, credit card and cash. Do some research into standard payment timelines in your industry: is it standard practice to offer a 30-day payment window? Offer a payment schedule that is in line with other businesses like yours and ensures you’ll have enough cash flow.
3. Set Your Payment Terms
Once you’ve done some research, establish your payment terms. This includes the methods of payment you accept and the due date for your invoices. Make sure all your payment terms are clearly outlined on your invoices. It’s also a good idea to talk new clients through your payment terms up front, before you send your first invoice.
4. Get to Know the Accounting Teams
If your client list includes larger companies, there’s a good chance that your invoicing contact will be different from your day-to-day work contact. If your client has an accounting team, get to know them and always be polite and friendly in your communication. If you stand out in a positive way, you may be more likely to get your invoices paid promptly and the accounting team will be more likely to lend a hand if issues or mistakes ever arise.
5. Create Professional Invoices
The most important factor in getting paid promptly by clients is to send clean, professional invoices. To do this, you can either use free invoice templates or you can pay a small fee to purchase cloud-based invoicing software. Whatever you choose, make sure your invoices clearly convey all the necessary information, including:
- Your business contact information
- Your client’s contact information, with the correct person listed as the contact
- Your payment terms
- An invoice number and issuing date
- Details of your services
- Total invoice amount due, including any applicable taxes
6. Follow Proper Invoicing Etiquette
Always be polite and concise when sending and following up on invoices. Use clear language in your accompanying emails when sending invoices: you don’t want to include vague instructions that could be misinterpreted by the client. If a client is late paying, don’t respond with anger. Instead, remain polite but firm in your communications.
7. Establish an Invoice Filing System
Once you start sending out invoices, you’ll want to create a filing system so you can easily reference invoices in the future. You may want to create an invoice folder on your work computer sorted by year and then create a naming convention for your invoices that works for you. Or, you can use invoicing software that easily files your invoices for you.
8. Follow up on Unpaid Invoices
If a client doesn’t pay you within the agreed upon timeframe, don’t be afraid to follow up with a polite reminder that the payment is due. If you don’t get a response to your email, give the client a call and ask for an update on your invoice. It can be uncomfortable to chase clients for payment, but it’s a necessary part of freelance life.
9. Charge Late Fees
You may want to add a stipulation to your payment terms that you will charge late fees on unpaid invoices. If you do choose to charge late fees on your invoices, be aware of the maximum levels of interest you can charge in your state.
10. Thank Clients for Payment
When clients do pay you in a timely manner, be sure to show your gratitude. Send a brief thank-you note for the payment and let them know you appreciate their business. A small thank you can go a long way to securing future business.
What Does It Mean to Invoice Someone?
If you run a small business, you need to collect payment from your clients for the services you provide. Invoicing clients allows you to bill them for your services. Invoicing involves providing clients with a professional document that outlines your payment terms, provides a billing date and an invoice due date and itemizes your services and fees.
Invoicing keeps a record of the sale of your service, both for your own records and those of your clients. Invoices are important accounting tools and can help you track your sales and understand how your business is growing.
What Are Invoices Used For?
Invoices are used for recording sales transactions in accounting. An invoice acts as a bill and lists all the services a business provides to a client.
Small businesses use invoices as a method of getting paid. Invoices provide documentation to clients of the services rendered and outline the terms of payment the client must follow.