Freelance invoicing: Tips and tricks for success
When I first started blogging, over 10 years ago, I didn’t even know what an invoice was! Let alone how to invoice as a freelancer! The concepts of blogging, digital nomad finances, digital nomad tax, and entrepreneurship were so foreign to me. Know though, everyone wants to live the dream. And with that, there is more info available. Too much sometimes. So I hope my post on freelance invoicing here, although boring, helps clear up a few things!
Table of contents
Why freelancer in the first place?
Many people choose to freelance because of the income potential. As a freelancer, you may not have the security of a full-time job, but you can earn more than your employee counterparts in most traditional business models. However, there is a big challenge when it comes to dealing with clients and managing your earnings in freelancing. To get paid, you have to actively send invoices to clients.
Invoicing is not a modern concept. Merchants have used invoices since medieval times. During the reign of the Roman Empire, businesses used clay tablets to record sales transactions and invoices. Invoicing has been a critical part of most businesses in the past and present. Therefore, understanding the basics of invoicing is essential to running a successful business.
When to send an invoice
You should send an invoice once you have provided goods or services to ensure prompt payment and clear communication with the customer regarding the amount owed.
However, not all businesses require invoices. Industries such as entertainment, retail, e-commerce, food, and hospitality do not necessarily need invoices as transactions are often tracked through credit or debit cards. For instance, e-commerce transactions are usually documented by the card issuer, making invoices unnecessary.
For businesses that provide ongoing services on a subscription basis, invoices may not be necessary. In these cases, the customer is regularly billed for the service and invoices are not required.
Similarly, businesses in the food industry often accept payment through credit or debit cards, which are already tracked by the card issuer. As a result, invoices may not be necessary for transactions in the food industry. Cash payments, which are also commonly accepted in the food industry, do not require invoices.
In general, it is important to send invoices promptly after providing goods or services to ensure timely payment and to avoid disputes or misunderstandings with customers. However, not all industries or business models require invoices.
In the digital nomad world, you’ll often have to invoice international freelance clients, so it’s important you know what an invoice must include.
Things to add to an invoice
When creating a freelance invoice, it’s important to include certain information. This should include your name, contact information, service details, client name, date, invoice number, total amount due, and client payment options. You should also indicate any applicable taxes or fees, as well as any discounts or promotions that may apply.
However, you should never include personal information such as bank account numbers, social security numbers, or passwords. The invoice should only include information related to the invoiced services or products.
There are various payment options available for freelancers. Clients can choose to pay through bank transfers, credit cards, PayPal, Payoneer, or other digital wallets. Some freelancers may also accept cash payments. It’s important to discuss payment options with clients before starting any work to ensure everyone is on the same page.
Discussing payment options with clients helps to avoid any misunderstandings regarding payment expectations. It also allows clients to choose the payment option that works best for them. Having clear payment terms can also help prevent potential disputes or issues down the line.
Dealing with client’s who don’t pay
Having a clear payment policy in place is crucial for freelancers to ensure timely and fair compensation. Most freelancers follow a standard payment policy that requires payment upfront or upon project completion. It is important to outline payment terms in any contracts or agreements with clients, including when payment is due and what happens if payment is not received.
In the event that a client does not pay, the first step is to contact them and politely remind them of the payment terms. This can be done through a friendly reminder email or letter that clearly outlines the payment terms and due date. It may also be helpful to offer payment options such as payment plans or discounts to encourage the client to pay.
However, if the client continues to refuse payment, it may be necessary to take legal action or seek the assistance of a collections agency. It is important to keep detailed records of all communication with the client regarding payment and to seek legal advice before taking any action.
If all attempts to collect payment fail, the freelancer may need to consider legal action as a last resort. This can include filing a lawsuit or hiring a debt collection agency. It is important to remember that legal action should only be taken after all other options have been exhausted and to consult with a lawyer before taking any legal steps.
Having a clear payment policy, including late fee and legal action provisions, can help avoid payment issues and protect freelancers from non-paying clients. It is also essential to maintain good communication with clients throughout the project to address any concerns or issues as they arise and to foster a positive working relationship.
As a professional practice, calling out clients who fail to pay on social media is not recommended. Such an action can potentially harm your reputation and even lead to legal repercussions. Instead, it is best to directly contact the client and politely remind them of their payment obligations.
Furthermore, it is crucial to establish clear boundaries and expectations with clients. If a client is difficult to work with, it is important to communicate their concerns and attempt to resolve the issue. However, if the client remains uncooperative, the freelancer may need to terminate the working relationship.
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