Never Miss a Payment Again With These Invoicing Tips
Payment is one of the most rewarding parts of a project. It signifies that a client has found value in the work you provided and the project is either completed or making great progress. However, it can also be a frustrating, uncomfortable, and complicated situation if the invoicing process is not streamlined and simplified.
As someone who has both issued and received invoices, here are my top four tips for invoicing made easy.
Understand the Pay Cycle up Front
Invoices marked with “Payment due upon receipt” are preferred for all service providers. It assumes that the moment you fire off an invoice marked as such, the receiving accountant goes to work on cutting your check. However, that’s not always how it works. Larger companies, or those who follow more corporate procedures, tend to have longer billing cycles. These billing cycles can be net 30, 45, or even 60 days. That means that you may not be paid for up to two months after you submit for payment.
It is up to you to understand the company’s payment cycle before filing the invoice – and even sometimes before agreeing to start the job, depending on how much of a concern that is for you.If a company (usually smaller) does not have a designated billing cycle, it’s customary to mark your invoice as “Payment due upon receipt” and note a due date of 30 days from the date it is issued.
One other thing to decide on during this phase is whether you will invoice the project upon completion in full, or a portion of it up front to signify the start of the project. It is customary to bill a portion of the project up front if it is costly or farther out as a way to confirm and hold your services. Either way, you must discuss these terms with your client before invoicing.
Download a Template or Create Your Own
For those who use popular programs like PayPal or QuickBooks to manage their businesses, there are options within both to create invoice templates. Opportunities to edit or customize vary by software, so if you’re looking for something totally custom, you can make your own in Microsoft Word and save and send it as a PDF when done.
Pro tip: Invoices do not need to be slick or pretty, even if you are a graphic designer. In the end, they wind up in the hands of the accounting or finance departments and those people are looking for clear payment terms and information – not pretty colors and flashy graphics.
Set the Terms for Payment Clearly and Correctly
As noted, finance and accounting departments will be handling your invoice. So what’s important for them to see in order to get you paid?
- A clear headline stating that what you are sending is an invoice as opposed to anything else (statement, contract, addendum, etc.). Bold the word invoice and center it in large font at the top of the page
- An invoice number. This is for their records (and yours). An easy way to assign an invoice number is to adjust the date. So for example, if it’s July 6, 2016, an invoice number could be “070616”
- Clear payment directions. Double check your address is correct if you are expecting a check and double check your email address is correct if you’re expecting it electronically (PayPal, Venmo, etc.). Make the due date for the payment clear. Also, detail what happens if a payment is not received within your terms (like, if it’s late).
- Provide a W-9 if needed/requested.
Be Consistent With Your Billing and Follow Up
For on-going projects, such as a social media retainer or website maintenance services, decide what day you will bill and send your invoices on that day consistently, regardless of weekends or holidays. For example, if you bill the first of the month, do not skip sending your invoice on New Year’s Day just because it is a holiday.
If someone is late to pay you, follow up with their accounts payable department with an email so that the correspondence has a “paper trail,” and then a phone call if you do not receive the desired response.
As you can see, invoicing properly has a lot of nuances to it, but once in a routine, it should be easy to keep your books straight. Not only does that ensure a good client relationship, but also makes keeping your finances in order when it comes to tax time. What invoicing tips have you found that work for you?