Writing Your First Invoice: Don't Get Overwhelmed
If you start a Google search with ‘best invoicing software for a freelancer” (or something to that extent), you’ll be met with a whole lot of options. Everything from invoicing software templates to automation software. Do you need all these bells and whistles?
When you’re just starting off, probably not. The key to getting started with freelancing is to focus on your core skills and keep your costs low to start. No point in using up all your funds on something that can be done for free.
Why Send Invoices
First and foremost, why send an invoice? Invoices are a crucial part of doing business. They serve as a record of the services you provided and the payment you’re expecting in return. It’s not just about getting paid, but also for maintaining good financial records for your business. An invoice provides a professional touch to your work and helps build trust with your clients.
Basic Elements of an Invoice
- Client Information: This includes the client’s name, company name (if applicable), and contact information.
- Services Provided: A detailed description of the services you provided. Be specific to avoid any confusion or disputes.
- Payment Terms: Clearly state your payment terms such as due date, accepted forms of payment, and any late fees.
- Total Amount Due: The total amount that is owed to you for your services.
- Invoice Number: This is a unique identifier for each invoice that helps with organization and tracking.
Invoicing Software Options
As mentioned, there are numerous options when it comes to invoicing software. Some popular choices include FreshBooks, QuickBooks, and Zoho Invoice. These software programs offer a variety of features such as custom branding on invoices, automatic invoice reminders, and time tracking (I’ve found time tracking to be a helpful feature over time but more on that later).
The Importance of branding
Now here’s an interesting topic, your brand. As a freelancer, you are your brand and it’s important to maintain consistency in all aspects of your business. However, I’d say that depending on your level of client communication, this may not be a critical factor for you. For example, if you don’t have a team working underneath you (and you are the sole communicator with the client) you might find that just by interacting with them, you are already cementing your brand reputation. However, if you have a team or additional freelancers working with you on a project, it’s important to make sure that everyone is on the same page and presenting a cohesive brand image.
Almost all invoice software these days, both free and paid, allow for the uploading of a company logo and customizing the appearance of invoices with brand colors and fonts. My two cents is to think of your invoices as the way to make take in the money first and foremost.
Time Tracking for Accurate Invoicing
Let’s circle back to an important feature, time tracking. The foundation of any time tracking app or invoicing feature is to help you keep track of the time you spend on each project. Period.
This is crucial for accurately invoicing your clients and getting paid for every minute of your hard work. Many freelancers make the mistake of not tracking their time, leading to undercharging or overworking themselves. With time tracking, you can also analyze how much time it takes you to complete certain tasks or projects.
I myself actually split the two, I use a 3rd party software called Clockify to track my time, and just use the invoicing feature of Square Invoicing to attach exported PDFs of the time needed. Why do I do it this way?
I’ve found that Clockify allows me to split my projects out by client and pull time-specific reports that other invoicing software does not dedicate enough features to.
Automating Your Invoicing Process
Now, depending on what you’re freelancing it may make sense for you to automate part of your process. If you’re creating custom creations for every project and need the capability of custom line items, sometimes this can be a bit more laborious of a process. If you’re doing custom work, it might make sense to manually go through the invoicing process and make sure all line items are accurate rather than automating everything.
However, if you offer services such as website maintenance or social media management where the pricing is consistent each month, automation can save you time and effort. Many invoicing software programs offer automatic recurring invoices, saving you the hassle of manually creating and sending them each month.
Invoicing Without a Business Name
Are you doing business under your name (or a close variation)? It might be worth looking into a trade name or DBA (Doing Business As) registration. This is a simple and relatively inexpensive process that allows you to do business under a different name without having to create an official business entity. It adds a layer of professionalism to your freelancing career and makes it easier for clients to write checks or make payments to your business.
It’s important to note that I am not a lawyer so please be sure to check with a legal professional before making any decisions about registering a trade name or DBA.
Recurring vs. Milestone Based Invoices
If the types of projects you are creating require a milestone-based payment structure, you can set up invoicing to occur when specific tasks are completed. This way, the client knows exactly what they’re paying for and when to expect each invoice.
Recurring invoices are typically used for ongoing services that require a fixed monthly fee.
Invoice Due Dates
Invoicing due dates are important for ensuring that you receive timely payments for your work. It’s important to clearly communicate the due date on your invoices, and also offer multiple payment options such as credit card, bank transfer, or PayPal. This makes it easier for clients to pay their invoices and decreases the chances of late payments. Also, don’t be afraid to send out reminder emails for past due invoices. This can help ensure that you are paid on time and maintain a good working relationship with your clients.
Many invoicing software options include the feature of automated reminders, you’ll have to set these up but they are helpful to ensure you keep track of all outstanding payments. For example, Square invoicing allows for automatic reminders to be sent out at 1, 2, and 3 weeks past the due date.
invoicing for taxes
One important aspect of invoicing as a freelancer is keeping track of all your income for tax purposes. It’s important to keep accurate records of all invoices sent and received, as well as any expenses related to your freelance work. This makes tax season much easier and ensures that you are properly reporting your income. There are also many invoicing software programs that offer features for tracking expenses and taxes, making it even simpler for freelancers to keep their finances in order.
Dealing with late payments
It’s unfortunately common for freelancers to experience late payments from clients. However, it’s important to have a plan in place for handling these situations professionally and effectively. Some options for dealing with late payments include sending reminders, offering flexible payment plans, or even adding late fees to your invoices.
It’s also important to communicate with your clients and try to understand the reason for late payments, whether it be financial difficulties or simply forgetfulness. By addressing these issues calmly and professionally, you can maintain a good relationship with your clients while still ensuring that you are paid for your hard work.
If you have a contract set in place before starting your work, this can eliminate the need for dealing with (or figuring out what to do with late payments). Your contract can include clear payment terms and consequences for late payments, helping to protect you and your business.
Invoicing is a crucial part of freelancing, and it’s important to find the right invoicing software that fits your needs. Whether you need time tracking, automated processes, or tax features, there are options available for every type of freelancer. Remember to clearly communicate due dates and payment options with your clients, and have a plan in place for dealing with late payments. By staying organized and professional, you can ensure that your invoicing process runs smoothly and efficiently, allowing you to focus on the work you love.
Keep in mind that invoicing is not just about getting paid, it’s also a representation of your professionalism and organization as a freelancer. By using an effective invoicing system, you can impress clients and maintain a good reputation.