The gig economy is here, and it’s here to stay. In 2019, 35% of workers in the United States made their living by freelancing. With the major changes we’re seeing in the economy thanks to COVID-19, there’s solid evidence that this will continue to grow even more rapidly in the coming years.
Whether you’re a new freelancer, a seasoned gig worker, or a small business owner, you’ll quickly learn that you can’t succeed unless you get paid — and you can’t get paid unless you know how to prepare an invoice.
Not only does a proper invoice make you look more professional, ensuring that you include all the necessary information that will help ensure that you get paid!
Here’s everything you need to know about how to create an invoice – the right way!
How to Prepare an Invoice in 5 Simple Steps
If the thought of writing an invoice stresses you out, take a deep breath! It’s easier than you think, as long as you learn the basics.
Follow these five simple steps and you’ll have the perfect invoice every time.
1. Make It Professional and Add Personalization
When making an invoice, it’s important to put your most professional foot forward. First, you’ll want to decide if you’re going to use a program to create your invoices, or if you’ll create PDF documents yourself. Bother are fairly user-friendly, so take some time to learn more about your options.
Once you know how you’ll create your invoice, it’s time to customize it by incorporating your company’s colors and adding your logo.
Include the word “invoice” in bold print at the top. This will help it stand out from other documents – like estimates or quotes that the client may also receive.
You’ll also want to include a unique invoice number on every invoice you create. This will allow you to easily pull up the invoice if a customer has a question or reference it if you have to follow up on payment.
2. Add Your Contact Information
This is often an overlooked point, but you’ll want to make sure that your contact information is clearly listed on your invoice. If a customer has a question or an issue with the invoice, the last thing you want is them getting even more frustrated when they have to do dig up your contact information.
It’s also likely that your customers are receiving many invoices every month. When your contact information is clearly listed, they’ll easily be able to tell who the invoice is from.
For these reasons, it’s important to always include your business name, address, phone number, and email address.
3. Define Your Payment Terms
Another important thing you’ll want to do is understand your options when it comes to payment terms and decide which you’ll use. You can simply choose a due date or use terms like “Net 30.” This means that the bill is due 30 days from when it’s received.
Depending on your industry and business, you may also want to describe the late fees or interest rate that will be added to the bill if payment isn’t received in time. This could be a flat fee (ex. $15 per month past due) or a percentage (ex. 2% per month).
When choosing your payment terms, it’s a good idea to check and see what the industry standards are. If you stray too far from what customers are used to, you may end up getting some pushback.
Most importantly, make sure you stick to your decision and stay consistent. You certainly don’t want to send a bill with a due date one month, Net 30 the next month, and Net 15 the following. You’ll just frustrate your customers and may lose business.
4. Detail Each Item Billed
Next, you’ll want to provide a line-by-line detail of each product or service you provided and the cost. For example, if you wrote three blog posts and charge $25 each, you don’t want to just send an invoice for $75.
Instead, you’ll want to list the name of each blog post and a $25 charge on each line. The invoice should also include a breakdown of any taxes that have been added and the total amount due should be shown in bold so the customer can easily see how much they owe to you.
5. Provide Payment Instructions
Finally, clearly list the payment methods you accept and how the customer can remit their payment. For example, if you want them to mail a check, add the mailing address again at the bottom of the invoice with the words “remit payment to…”
If you accept credit cards, PayPal, or online payments, give the customer the exact instructions they need so they can easily pay you. This is a win-win and shouldn’t be neglected!
Protect Your Business During This Trying Time
Now that you know how to prepare an invoice, you’re one step closer to making sure your business thrives. Use all of these tips to create a template that you will use every time.
This way, you can be confident that each invoice will contain all the necessary information. Consistency is also important for maintaining your professionalism. Once you create one or two invoices, you’ll see just how easy it really is!
But, don’t stop there.
At this time, more than ever, it pays to do your research and learn from the pros. Take a minute to browse through a few more of our blog posts for even more great business tips!