How and When to Invoice Successfully

So you found some clients who didn’t baulk at your prices and have hired you for some projects. Congratulations! The only concern on your mind now should be providing excellent service to the clients you have while continuing to build your network. But in the beginning, wondering how and when to invoice can cause undue worry. Don’t let invoicing be a stress point. Here are some pointers to help you get paid as painlessly as possible.

 

First, Please Remember To

Be consistent with the way you bill each individual client. You may find that some need to be billed in a unique way for you to get paid in a timely manner or want to keep it simple on yourself and bill everyone in the exact same manner. However you bill, make sure it is a consistent experience for each individual client so they know what to expect and when to expect it.

Be honest. This should be painfully obvious, but I’ve seen the backside of many businesses where a little rationalizing gets in the way. The best way to ensure your invoices are accurate is to keep meticulous records. Track your time and what you did daily and itemize your receipts. This will not only ensure that you don’t run into an awkward confrontation with a client over an inconsistency, but will also provide your business with excellent records to help you forecast your future earnings and expenses from.

 

How to Invoice

There is quite a variety of ways to invoice clients and as many opinions on which is best. I believe that you’ll want to invoice in a manner most common and comfortable for your clients. If they are mostly of an older less-tech-savvy generation, you may find paper invoices more appropriate. If they are young, you might find online invoicing with credit cards is more successful. Here’s the points to think about when setting up your system. I’ve given my recommendations, but remember that only you know your clients.

• Checks vs. Credit Cards – It’s plainly clear that both have pros and cons. Checks require more effort on both sides (to write and mail, to deposit), but do not cost you a fee. Credit cards are instant money in your bank account, but you lose a portion of your hard earned profit to the merchant service provider. Now you could pass the credit card fee onto your clients, but they won’t appreciate that. Personally, most of my clients still prefer checks and I like the extra money so I only offer payment by credit card to those that specifically ask for it.
• Online vs. Mailing Invoices – You need to do whichever one gives you a higher success rate. I never had a late payment until I tried to bill via online invoices. Seems people would forget the email in their inbox, but would have to deal with the paper invoice on their kitchen table. If you choose online, ensure that your online invoicing system has automated reminders if payment has not occurring in a particular time period. If you choose to mail your invoices, include a stamped envelope with your return address.
• Tools to Use – There are so many invoicing solutions out there, from handwritten and excel word docs to comprehensive software solutions. I only recommend two: Freshbooks and Quickbooks.
• Freshbooks is excellent for simple invoicing. You can either mail or email the invoices, provide full invoice history to your client via an online customizable client portal, track time, and easily accept credit cards. It’s free if you only have a couple clients and is a minimal monthly expense after that. For many small businesses, it can provide all the accounting you need.
• Quickbooks is the top business accounting software for a reason. It not only will help you keep your books balanced, manage payroll, review your financial forecasts, run purchase orders, and track time, but also provides you with customized invoices that you can mail or email. It is more expensive and I strongly recommend the online version so you (or your staff) can access it at any time, but worth it.
• Devil in the Details – While it may seem like overkill, providing your clients when your hourly breakdown is a great way to show how hard you’ve worked for them and how worthy you are of the fee you are charging. If you use a good tool and track your time with it, it takes no more than a couple clicks for all of that information to be transferred onto the invoice. This is particularly helpful if you have given them any free work as they’ll be able to see what exactly you have discounted.

When to Invoice

There are so many thoughts on this…50% up front, 50% upon completion, bi-weekly, monthly, retainers only…When you invoice will depend greatly on who your target market is and what services you provide.

If, for instance, you usually only provide large organizing and party planning projects, you’ll probably want to do the 50/50 to help you cover costs and cover your bases no matter who your client is. If you are targeting the middle-class workaholics, you may want to do something up front or get a credit card number to ensure your are paid in a timely manner.

However, if you are invoicing businesses or wealthy clientele, the end of the month is the most logical time to invoice. Why? It keeps things simple for everyone and why would they hire you if you didn’t simplify things? They know your invoice will come at the end of the month for everything completed in that month and you only need to deal with invoices once a month. Not to mention, you’re trying to build longterm clients so, if you know they’re good for it and, better yet, know some of their friends, trust they’ll pay you and don’t push them into paying you in advance.

You’ll find some will want to pay you on the day of. If you’re never going to work for the person again, that is probably just fine. However, if you are, tell them not to worry about it as you’ll be sending them an itemized invoice. That way you’ll be able to remind them of your great work a couple weeks later when they receive that invoice and may find you get more work in the process without having to be obvious that you’re marketing to them.

When I started writing this article, it became a monster as I realized there was so much to share and so many different perspectives. In the end, I tried to cut it down to what was most useful so you would actually take the time to read it! If you have a different opinion or specific question, please ask.