As a freelancer, you have to stay caught up with important things outside of marketing your talent. For example, freelancers have to adeptly manage projects, meet deadlines and communicate seamlessly across virtual teams. But of all these obligations, the highest priority must always be to maintain a positive cash flow.
It’s this cash flow that gets you through tough economic cycles. You’re already worried about income fluctuations from month to month. A lack of payments can mean the difference between paying your bills and not covering them on time. Not being paid can also impact how you save money for investments, taxes and retirement.
While you must work on marketing on a daily basis for steady work flow as a freelancer, you must also perfect your invoicing system to increase and speed cash flow. Not sure where to start? Here’s how to invoice like a pro.
Invoicing for freelancers
Following this invoicing guide for freelancers will speed payment and potentially attract new clients.
Here are actionable tips on how to send, receive, and manage your freelance invoice process:
Invoicing systems that involve a word processing program, printer, envelope and a stamp are archaic. Using one could delay payment for days, weeks or even longer. It is also an inefficient use of your time and money. There is also a greater risk that mistakes will be made or the invoice will be lost in the shuffle.
Instead, get an online invoicing system for freelance invoices. There are multiple online invoicing tools and platforms available that deliver efficiency, branding opportunities, and convenience for your clients.
Once you’ve chosen an invoicing system, follow these best practices:
- Use the database to store client information so that each invoice automatically populates for this information.
- Create a formatted invoice using one of the available invoice templates. Make sure that it matches your brand, including colors, and provides a way to upload your logo for a more professional look.
- Number every invoice. This is a good way for both you and your clients to track invoices that are paid and outstanding.
- Determine if you need to change the currency, taxation, and language on the invoices to accommodate any international clients. Keep in mind to check on the self employment tax rates for each State our Country
- Detail all of the services you performed. The more information you can provide, such as date, time, and project work, the easier it is for the client to agree with the invoice amount rather than just putting a total on the bottom.
- Describe your payment acceptance methods and terms of payment, including due date and any types of fees or discounts associated with payment timing.
- Always include a note of appreciation for the work and relationship. Be sure to change these up each month to provide that personal touch. Clients want to know that you value them.
How your clients receive the invoice is also critical to fast payment. You are migrating to an online system of invoicing. Now, you can offer your clients a few ways to receive their invoices based on their preferences. You may also need to explain how online invoicing works and why it will benefit them.
Sending your invoice within an email is one of the most popular methods. This method includes a button within the email correspondence that the client can click to review and pay the invoice.
You can get paid immediately with this invoice receipt method because it is something your client can do in a matter of minutes. Also, consider accommodating their preference to receive invoices via text message or through a link that is sent through an instant messenger.
Be sure to ask each of your clients how they prefer to receive your invoice. Then, keep track of that so you can deliver it that way each month. Write this preference tracking information down. When you have a large client list it can become confusing (seriously, some clients request unusual invoicing practices).
If your clients receive regular invoices for the same amount because you are on a retainer, then use the recurring invoice function. It saves additional time and “trains” your clients to expect their invoice on the same day each month.
While you wish you could just automate the entire process of invoicing for your freelance business, the reality is that you still have to manage the process. This is where your online invoicing system can also help. Here are some management tips to remember to stay on top of your invoices:
- Update any changes to client information. This includes adding any new people that are to be included on the invoice. Staying current on this information will ensure that your invoice gets to the right people so that payment is not delayed.
- Set up automatic reminders for outstanding invoices to encourage payment if a certain amount of days have passed.
- Develop an automated thank you email when a client makes a payment. If you prefer, you may want to send your acknowledgment via email or any instant messaging system you use like Slack.
- Establish a system for short-term or long-term projects. With this system, also add an accompanying agreement form for your client.
- Use the numbering system to help a client find their invoice or to call up so you can answer a question or concern they have about it.
- Track your cash flow by using available reporting capabilities to see how much you have received, what is still outstanding, and your overall revenue totals by month, quarter, and year. It’s important to follow these amounts because you can compare your productivity against your need or availability for more work.
- Weigh your options of integrating more payment acceptance methods into your invoicing system. The more payment options you offer, the greater your chances of attracting more clients. Not every client wants to pay the same way, so be sure to include a payment processing partner that works with your online invoicing system.Find a partner that can offer debit and credit cards, ACH/e-checks, and payments via email like found with the peer-to-peer payment tools. Maybe you are even willing to accept cryptocurrency if your clients seem to like that alternative payment method.
Work and Cash Flow
Be sure to include your invoicing and payment methods in your marketing approaches. You can use this updated process as leverage to differentiate yourself from other freelancers. As a freelancer, you may also want to mention that you can teach your new client about how to use this payment system.
If your new client is still using the old-fashioned billing and payment systems, you can accommodate them with these time saving hacks. But, try to switch them to the other system as quickly as possible for both of your benefit. Progressive clients may pick you over other freelancers to fit their updated invoicing and payments system.
Your payment partners and these changes are either free or low-cost. Plus, their easy-to-implement processes have you up and running in minutes with a whole new way to work, invoice, and receive payment.
Author: John Rampton