If you've got the right system in place, invoicing your clients is exciting and fun. It's invigorating to tally up your hours and click 'Send', politely asking someone for hundreds or thousands of dollars in exchange for your services.
But if you don't have the right system in place, invoicing can be a confusing mess. I've received invoices from vendors that look like they were made in Microsoft Word. If this is you, fear not: Let's get your invoicing up to snuff.
Using invoicing software is essential. It ensures you are tracking every dollar your clients owe you and whether or not they've paid. It also makes your end-of-year tax filing a breeze. Okay, not a breeze. Maybe a mild wind.
How to Pick Invoicing Software
When shopping for invoicing software, be sure it has the following functions:
The ability to track your time worked and allocate it to billable projects
You'll want to be able to input your hours directly into your invoicing application and have it generate an invoice from the billable hours logged. This way, you're not tracking hours separately and there's less room for error.
The ability to track expenses for reimbursement
You'll want to be able to track the expenses you accrue on behalf of your clients and have them appear as line items on your next invoice. These could be things like special software, commercially-licensed images or video, or equipment you needed for your client's job.
The ability to send a client an invoice for the hours you've logged
Being able to click 'Create Invoice' and have it auto-populate based on your uninvoiced hours removes the administrative overhead of manually transcribing your hours and sending an email. Because you're a hustler and will be sending a ton of invoices, we might as well streamline the process!
The ability to generate reports about your invoice history
When tax time finally comes around, you'll want to be able to export all of your invoice data so you can report your earnings and accurately pay your taxes.
My favorite invoicing software at the moment is the fabulously simple and intuitive Harvest. To me, the sign a tool is fantastic is when you don't notice you're using it. For me, Harvest makes that cut. Oh, and it has all the features above.
Invoicing Etiquette
Bill the time you work. Always.
As freelancers, we're constantly juggling multiple projects and often have to address multiple clients in a single day (sometimes within the hour!). It takes an average of 23 minutes to regain your focus after being interrupted. So if your client calls you with a quick 5-minute question, they're costing you 28 minutes of productivity! It was your decision to pick up the phone, but it's important to shield your business from the risk incurred in doing so.
Even if it's just 5 minutes, be sure to bill your client for the time and itemize the call on your invoice.
Be honest and transparent.
Send invoices regularly with praise.
Think of the last time you received a bill from a small business. Maybe it was your doctor or auto mechanic. Chances are, you felt a slight feeling of annoyance knowing you now owe someone money. No one likes to settle their debts. That's why it's imperative you take steps to make your clients comfortable with paying you.
First, send your invoices on a regular and agreed upon schedule. If your client is an individual, sending invoices weekly or biweekly is best. It ensures they won't feel alienated by the large dollar amounts and they'll be better equipped to plan their finances because they'll know how much they owe you. Better to do that than to surprise them all at once at the end of the month.
Second, always add a note with praise for whatever work you both conducted during that billing cycle. I usually say something like this:
Hi Tom:
Attached is the invoice for this week's work. It was such a blast to implement that new chat feature last week. I'm so excited we're working together and can't wait until we launch!
Have a great weekend and we'll talk Monday!
Teejay