What Is An Invoice? A Guide To Billing Clients And Securing Repayment
Keep Track Of Your Bottomline: All About Invoices
Having a steady supply of available cash is crucial to the success of any business. Every business or freelancer needs a way to bill customers and facilitate easy payment for orders. The simplest way to monitor your finances is to set up a reliable invoice system that keeps track of every client payment.
But what is an invoice anyway? And do you really need to make them?
In this guide, you’ll learn more about invoices and you’ll find out why they’re so useful in getting your finances in order. Whether you’ve been running a small company for years, or you’re a first-time freelancer, this guide has tons of useful tips on how you can use invoices to make payments easier.
What Is An Invoice?
An invoice, at its simplest, is a bill that says two things:
- The details of the service or product you have given to a client.
- And how much it will cost them.
It’s a commercial document that you give to a customer after the service has been performed or the ordered goods have been delivered. They’re basically proof that now that you’ve done what you were hired for, your customer needs to pay up.
Traditionally, invoices are issued on paper with a copy for both the buyer and the seller. With that said, online invoices are becoming more popular and accepted by businesses, because they’re less expensive to produce and easier to track and file.
Why Should I Use Invoices For My Business?
Making a business profitable requires you to know how much money is coming in and out. How much are you owed by your clients? How much do you need to make by the end of the month to meet your bills and business costs? Will there be enough left over from your total sales to cover personal expenses and set savings aside?
Those are all questions that can be answered if you maintain a well-organized invoicing system. Invoices let you know how much your clients owe you, and when their payments are due. Financial recordkeeping will be a breeze if you use invoicing, and it also makes collection easy because you have a document you can quickly refer to at a glance!
Can’t I Just Write It Down In A Notebook Or On Some Paper?
Well, you could do that. But that would just be an internal document. When you make invoices, your client also gets a copy, so there’s proof for both parties that an order has been made and needs to be paid on an agreed date. It’s quite difficult to collect from clients when there are disputes about the job order, and an invoice can put to rest any issues because all you have to do is refer to the numbers and terms there.
Without an invoice, it can be challenging to track down payments. This is magnified when you’re dealing with some clients who don’t want to be penalized, or are inclined to try to skip out on paying for the order itself. Don’t run the risk of someone trying to get away with non-payment; if you’ve issued an invoice, it’ll be a lot harder for customers to avoid what you’re owed.
Invoices are convenient for the client too! Remember that just as you’re sorting out your own finances, clients also have multiple personal and business payments to handle. We can all be pretty forgetful when we have to deal with several companies or people at a time! By giving clients invoices, you remind them to allocate enough from their monthly budget to pay you on time.
Invoices are also a way of presenting a more responsible image to clients. When you show them that you have an organized system for tracking your finances, they’ll take you more seriously and feel reassured that they’re dealing with a professional.
What Should I Put In An Invoice?
Every invoice will have certain basic elements. Here are some of the things that every invoice should contain.
A Tracking Number
No two invoices should have the same number. The number is meant to distinguish one job order from another. Everyone has their own numbering system. It can be as simple as labeling invoices 415, 416, 417, et cetera. It can also include alphabetical codes so you know which client order is described by that invoice.
The Due Date
An invoice should be able to tell you at a quick glance when payment is due. Don’t rely on the contract or on your calendar: put it there so both you and your customer have a clear reminder. Include any agreed grace period for repayment without incurring penalty fees.
The Names And Contact Details Of Both The Buyer And Seller
Putting your names and contact details will make it easy for you and your customer to reach each other if there are any questions. Include phone numbers, email addresses, official websites, and business addresses. Make sure there are no typos!
Subtotals Per Item And Total Amount Due
Even if there’s an agreed price for your work in the contract, put the amount in the invoice. Make it easier for yourself and the customer by putting down the price per item done, then the final total as well. In case you slipped up with your calculations, this will make it simple for you to cross-reference and correct any errors.
Descriptions Of The Items Delivered Or Work Done
Don’t just put down “3 Articles” on your job order! Be a bit more descriptive so your customer knows what deliverables you’re referring to. If you’re a blog writer, indicate the title of the post and when it was posted. If you’re a baker, indicate how many cupcakes you baked and what kind they were.
Any Additional Agreements About Penalty Fees And Payment
Though the contract may already have the terms for late repayment, you should indicate these anyway. They’re a subtle nudge to motivate the client to avoid paying extra, so you are more likely to be repaid on time. Double-check if these terms match the ones in your contract.
If you’ve agreed with the client on certain payment methods, it also has to be in the invoice. This can include agreements on payment by installment, whether you prefer to be paid via bank deposit or online payment apps, or the currency for payment.
Invoice Creation Is A Lot Easier When You Use The Right Apps And Sites
It can be a bit difficult to learn how to make an invoice from scratch or tweak existing details. Luckily, there are plenty of websites or programs that you can use to make one for your business, so you can focus on completing work for clients instead of fiddling with logo placement. The Free Invoice Creator is a site that lets you make a personalized invoice template and download it for free, so it’s worth checking out and giving a try! If you want to take things a step further, check out FreshBooks, an online tool which lets you create invoices and send reminders to clients when it’s time to pay up. The app can also get due payments through pre-approved collection methods, so you don’t have to deal with chasing overdue invoices yourself. Check out our free invoice templates to access beautiful free invoice templates.