Most designers don’t particularly enjoy the financial side of running a business, but handling it properly is a necessary part of being a freelancer or running a design agency. The financial side of the business includes invoicing clients, and in this article, we’ll look at some tips and best practices for invoicing.
1. Decide on an Invoicing App or Software
There are plenty of online invoicing tools and apps available that have been created with designers and freelancers in mind. Additionally, there are some software options as well. Using either an online app or software to handle your invoicing will allow you to save time and to have better organization over your invoices and receivables, as opposed to using a manual system or spreadsheets.
With so many options to choose from, you should be able to find an app or software that includes all of the features that you need, and ideally, not a lot of those that you don’t need. Online apps are available in a wide range of prices, some are even free. Prices will usually rise as more features are included, and most invoicing apps will have a few different plans according to the number of invoices and clients that you need to manage.
If you’d like to avoid monthly or yearly fees of online apps, you can purchase invoicing software for a one-time fee and manage an unlimited number of invoices and clients.
2. Set Your Policies
In an ideal world, all of your invoices would be paid on time. However, most designers have to deal with late payments, or even no payments, every now and then. You should be prepared and set some policies for how you will handle your invoicing and payments.
Some things you need to consider:
- How much will you charge up front?
- How many days will you give clients to make payments?
- What late fees will you charge for late payments?
- Will you provide completed files or work before or after final payment is received?
- What types of payment will you accept?
Of course, there will be situations when you’ll want to make some adjustments or exceptions to your policies, but it’s a good idea to establish the policies in the first place and then deal with exceptions as needed.
3. Avoid Surprises
Clients should be made aware of your policies and they should know when they will be invoiced for your services. Clients who are surprised by anything on the invoice (whether it is the amount due, the payment terms, the hourly fee, or not knowing what the invoice is for) will be much more likely to pay late or not pay at all. Part of having an invoicing system that works efficiently is to make sure that there are no unpleasant surprises for clients.
4. Include Your Contact Information
Your invoices should always include your name (or your company name), address, and preferably your email and phone number.
Depending on the client you are dealing with, there may be a number of different people that handle the invoice before it gets paid. If it gets passed to an accounts payable department and they have some questions about the invoice, it should be easy for them to get in touch with you.
Any delays in being able to contact you will result in a delay of the payment as well. Additionally, some of your clients will need your contact information on invoices for legal or record keeping purposes.
5. Have a System for Numbering
Most designers send out invoices on a frequent basis. It doesn’t take long before it becomes difficult to track them without having a system for numbering. Most online apps and software will include this by default or will allow you to customize the invoice numbers.
Having numbers will allow you to easily record payments accurately as they are received, it will help for tracking down late payments, and it will make it easier on your clients’ record keeping as well.
6. Include the Recipient’s Information
In addition to including your own contact information, you should include all of the same things for the recipient. This can help for making communication easier, but more importantly, it can be important for legal purposes if you are having issues with not receiving payments. The less information you have on the invoice the harder it is to prove that you are owed any money.
7. Provide the Details of Services and Charges
Each invoice should specify what the charges are for and what services have been performed for the client. This will help both you and the client. For the client, it will help to avoid confusion over what has been done, what they are being billed for, and what they have already paid for. This can especially be an issue for projects that involve multiple invoices or for clients for whom you do on-going work.
From your perspective, a detailed description can help you for record-keeping and to know what clients have already been invoiced for and what they will need to be invoiced for in the future.
8. Include the Due Date
Each invoice should include a due date for when payment is expected. Without a due date it can be difficult to assess any late fees or to establish that a client has not paid on time. Due dates are helpful even for your clients that always pay on time, as it can help them to know what you expect and when they will need to process the payment.
9. List Methods of Payment that are Accepted
Clients should not only be aware of how much they owe, what services they are being charged for, and when they need to pay, but also how they can make a payment. Some designers prefer to receive checks, while others accept online credit card payments.
Your clients should be aware of how they can get you the money that is owed. Making it easier for them and communicating clearly is always a good thing for increasing the likelihood that you will be paid on time. If you are accepting payment in the form of checks, clients should also know to whom they should make out the check.
10. Send the Invoice as an Attachment
Most designers send their invoices by email rather than snail mail or fax, and this is a good practice for saving paper and speeding up the process. Generally, the easiest way for clients to receive and view an invoice sent by email is a PDF attachment. Most apps and software will create PDF versions of invoices for you.
11. Be Sure to Send it to the Appropriate Person
Before sending an invoice to a client, be sure that you know who should be receiving the invoice. Especially if your client is not a small business, sending the invoice to the wrong person can slow down the process and increase the chances of the invoice being lost or ignored.
12. Record Payments as They are Received
Sending out invoices is really just the start of the process. You’ll also need to have a system for recording payments as they are received. This way you’ll be able to easily, and accurately, see who has paid you and what invoices are outstanding or past due. If you fail to record payments accurately you’ll waste time trying to identify unpaid invoices, and you may even wind up contacting clients about a late payment that has already been made.
13. Follow Up
As your unpaid invoices reach their due dates, take a moment to follow up with the client, remind them, and see if payment is on the way or if there are any problems. As was mentioned earlier, it’s a good practice to have some sort of policy for handling collections of late payments, and follow up will probably always be a part of the process.
In some cases the invoice may have slipped through the cracks and the client will quickly pay when they realize this. In other cases, a gentle nudge or the possibility of a late fee will be enough encouragement.
14. Indicate if it is a Partial Payment
Because most web design projects involve more than one invoice or payment (for example, 50% up front and 50% at completion), it’s a good practice to indicate this on the invoice. Doing so can help to avoid potential confusion and disputes that could lead to difficulty in collecting payments, plus clear communication is always a positive.
15. Address any Problems
Whenever you experience a problem or issue that a client has with an invoice or charge, address it as soon as possible. Don’t wait to see if they’ll make the payment, make an effort to get it resolved. The longer it goes the less likely you are to receive payment.