As I navigate the crazy adventure of owning and running my own business, one skill I’ve had to learn is the art of invoicing.
Invoicing is like getting your wisdom teeth out – it can be a real headache, but it’s a necessary part of life for many of us. (At least, it’s a necessary part of life if you’re a freelancer or solopreneur and you want to get paid.)
Thankfully, with a bit of know-how and best practice, invoicing can go from being a migraine of the give-me-general-anaesthetic variety to becoming a panadol-manageable affair. Occasionally, it can even be headache-free. So for all you solopreneurs and budding freelancers out there, here’s what I’ve learnt about invoicing.
ALWAYS get at least 50% Upfront (or risk being burned time and again)
One of the biggest mistakes I made when I started freelancing was not asking for 50% upfront on every job. The result was a cash flow crisis. I had several jobs underway, but with none finished (often due to waiting for client feedback on the drafts I’d sent), I had no money coming in. Thank goodness for credit cards. But living on a credit card isn’t the solution – making sure clients pay you upfront is.
Asking for 50% upfront isn’t just about cash flow though (although that’s a good enough reason to do it, in my opinion!). It’s also about protecting yourself. After all, by getting 50% in the beginning, you’ll always be paid at least half of what you’re owed – the worst thing a punk client can do is not pay the final invoice. That leaves you only 50% out-of-pocket, rather than 100%. And stipulating 50% upfront deposits is also a great way to weed out most punk clients in the first place.
Use Invoicing Software (it’s easier and saves time)
There are several great invoicing software options out there. Personally, I use FreshBooks – a cloud-based invoicing solution.
Using Freshbooks makes invoicing easier. FreshBooks stores all my clients’ relevant contact information, and provides a handy fill-in-the-blanks invoicing system, complete with easy-to-tailor form emails. If you’re more sensible than me, you can also use it to track time spent on projects, and do other nifty things.
So, why not just do the invoicing yourself? Well sure, you could. But it would take forever. With FreshBooks, I can create and send an invoice in under a minute. Even if you had a neat little form on Excel, I suspect it would take you a lot longer. And time is money – literally – especially for a solopreneur or freelancer. So do yourself a favour, and sign up for some invoicing software. It’s often free if you only have a couple of clients (FreshBooks is free until you have more than 3), so give it a go.
Don’t be Afraid to Chase Late Invoices (but do it politely)
Chasing late invoices can be scary, but you have to do it! Thankfully, most invoices remain unpaid because your clients are human, and they genuinely forgot to pay you. And even the ones that are probably evil and forgot on purpose tend to move their feet a little faster if you send them a reminder. Just make sure your reminders are always polite – no rudeness! You can read the story of my first late invoice, how I dealt with it, and what I learned, here.
Consider Incremental Invoicing (but don’t be daft about it)
In addition to stipulating a 50% upfront fee, it’s worthwhile considering further incremental invoicing for a big job. Obviously, what constitutes a “big job” will vary from person to person. I would argue that anything under $1000 is not a “big job”, and, depending on your industry, even $2000 mightn’t constitute a big job. So be smart about it – invoicing three times (e.g. 50% + 25% + 25%) for a quick, $300 job is stupid.
I learnt the value of incremental invoicing when I took on a big project for a big-ish company. Their draft-reviewing process moved more slowly than a three-legged hippo, meaning the job took a lot longer to wrap up than I originally expected it to (I’ve since altered my draft review policy by adding a 14-day limit, but that’s another story). Because the job took longer to wrap up, I was left waiting a long time for the second payment, meaning I had to dip into my savings that month while I awaited the second 50%. Since then, for big jobs, I always send a 25% invoice with the first draft. Not only has this solved my cash flow issues, it also encourages my clients to be quicker about reviewing the drafts I send them. Win-win!
Don’t make the mistakes I made – go forth, invoice “like a boss”, and get paid!
Have you got any invoicing tips? Perhaps an invoicing horror story? (We all love a good business horror story!) Share in the comments below!
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