An excellent invoice is so much more than just a legal document: it’s a record of the work you’ve done, an explanation of your costs, a promotion of your business and a request for payment – on time.
Your invoice should anticipate the delays or doubts your client may have by giving them all the information they could ever need to pay you quickly. But is your invoice completely comprehensive or is it missing some of the essentials?
Here’s what you need to take into consideration to cover your back:
Don’t assume they’ll remember all the details of the work
Fundamentally, it’s pretty essential to make sure that your client knows who the invoice is coming from. This might sound self-explanatory, but if the client sees five invoices a week and they all look the same, they might all start to merge in their mind. Make sure that your invoice has your business name, address and contact information displayed, along with your client’s business name and address.
You also can’t take it for granted that your client will automatically know what work they’re paying for just by seeing your name on the invoice. Play it safe and include as much information as possible about the work you’ve done, including any purchase order or project reference numbers, or even a general project name like ‘Mel’s Cupcakes website redesign’ on the invoice. It’s also a good idea to include the precise dates of the work (also known as the supply date) to head off any questions about exactly what you’re invoicing for.
Be prepared to defend the cost
If you quoted for a piece of work a few weeks or even months ago, the figure at the bottom of your invoice might not be quite what your client had hoped for. Even if your client initially knew precisely how much they were being charged, they might still try to question some of the work in the hope of reducing the cost. It's a perfect opportunity to remind your client about the great work that you’ve done and exactly what you delivered, using language they’ll be sure to understand. For example, instead of writing out “prototyping” for a line item on the invoice, you could write “Three workshops to develop website prototypes” to remind them of the time you’ve spent.
Don’t forget to highlight any discounts or special offers that you might have promised to your client - everyone loves to feel like they are getting a good deal!
Client queries cause delays – tie up your loose ends
Client queries going back and forth can result in the payment process dragging on and on. The notes section of an invoice is a great place to address any niggly little client doubts or unresolved issues that may keep them from paying straight away. A lot of projects end up with a snagging list at the end and heading off any questions before they arise can hopefully help close down a prolonged discussion. Something like: “Just a reminder that we’re meeting next Tuesday to agree on final changes” reminds the client that you’re on top of future changes, but they need to pay you for the work you’ve already done.
Another great way to answer any outstanding questions is to encourage your client to call you to discuss them. In which case, ensure that your phone number is always on your invoice. Sometimes a quick phone call can resolve an issue much faster than an email chain!
Know how quickly you want to get paid
Late payment is a serious problem in the freelancing world. A recent survey found that 78% of freelance UK developers and designers had to wait over a month for payment, with 14% of those having never been paid at all*.
With this in mind, think carefully about the payment terms that you set. 30-day terms might be the norm, but you don’t need to use them if they don’t suit you. Some clients will have their payment regulations that they insist on, however, if you’re setting your own payment due dates then remember that shorter terms (for example seven-day or zero-day) could get you paid much quicker than conventional 30-day terms.
Anticipate the payment excuses
If a client tries to stall by telling you that they haven’t used the work yet, then don’t be afraid to challenge this. You’re entirely entitled to be paid for the work that you did for the client, whether they use it or not. Having a strong contract in place before you begin work will give you the best chance of fighting back - your contract should make it clear that the client is paying for your time and the work you have produced not their ultimate use of the work.
Make it as straightforward as possible for clients to pay you by having all the necessary information right there for them on the invoice, including your full bank details if you’re accepting payment via online banking or BACS. Some accounting software makes getting paid even easier by including immediate payment links on invoices using services like GoCardless or PayPal. It means the client can click to pay you online via their bank account or credit card - meaning pretty much instant payment.
*Research carried out among 100 UK web designers and developers running businesses with 1-5 employees. Commissioned by FreeAgent and carried out by DJS Research Ltd
This article was written by Emily Coltman, Chief Accountant at FreeAgent, the online accounting software specially designed for freelancers, contractors and micro-businesses, covering everything from invoicing to tax. Emily features in A Field Guide to Freelancer Finances, a free ebook of business finance tips – download your copy.