Unlike a paid employee, freelancers aren’t paid out salary or wages on payroll. Instead, they bill for the services they provide, either on a per project basis, hourly rate, or monthly retainer.
The invoice serves two purposes.
First, the invoice is a formal billing and request for payment sent by the freelancer to the business. Once a business receives an invoice, they begin the accounts payable process which ends in paying their independent contractor.
Second, the invoice is a record of the goods or services provided, the price of the services, the tax rate, and the total billed amount. This is an essential receipt for both the business and the freelancer. Invoices may be requested by the IRS as part of an audit or independent contractor tax filing process.
Even once an invoice has been paid, it should be kept in a safe place either online or physically.
Invoices are a legally binding contract. But in order for an invoice to be considered valid, you must include certain details.
The essential components are the client details, freelancer details, invoice date, invoice number, an itemized breakdown of services and rates, and total payment amount requested.
For an invoicing to be legally binding, these details need to be easily verifiable. If somebody can raise doubt over who was billed, when they were billed, and what they were billed for, it will cause complications.
Using a freelance invoice template ensures you don’t miss any of these essential details. Alternatively, you could use invoicing software (like BILL) which helps keep consistency across all of your invoices.
Generally, invoices are sent after the services have been provided, although some freelancers will bill in advance of the services being completed but after the services, amount, and payment terms have been agreed to.
In the case of larger, long-term projects, it’s common for freelancers to invoice on a recurring basis such as weekly or monthly. For example, a web developer who is taking on a 3 month project may invoice monthly to help with their cash flow.
Overall, freelancers have some leeway in how they want to invoice. Discuss what makes the most sense for both you and your client and come to an agreement before you begin any work.
Here are a few reasons why you should use a freelance invoice template.
As a freelancer, your time is immensely valuable. Any hour spent billing clients is time that could be completing billable work.
With an invoice template, you don’t have to worry about the time required to bill clients since invoice creation is reduced to just a few key details.
Getting the details right on an invoice is incredibly important from a reporting standpoint. Not only could it affect the payment you receive, but it could cause complications with your financial reporting and tax filing.
But an invoice template prompts you to fill in the necessary details so you don’t miss a step. And with formulas that help with the math, you don’t have to worry about a potential mistake affecting your billed amount.
Our freelance invoice template is ready to use as is, but you could take it a step further and add a personal touch. Use your personal brand colors, add a logo, or make other adjustments to make the invoice really pop as your own.
In general, your self-employed invoice should include the following:
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Some additional things you may include are your business logo and, if applicable, a discount to remind your customer that you gave them a deal. Different businesses may have specific needs, so don’t be afraid to customize your invoice and add new sections.
Follow these steps to edit your freelancer invoice template:
To speed up the process, save one template with your branding without additional details. Copy this document and edit it whenever you need a new invoice instead of downloading a new template every time.
Freelancers should discuss when the invoice is sent with the client and both parties should come to an agreement. Typically, invoices are sent after the work has been completed, but there are other options.
Depending on the client’s invoice approval process, they may request the invoice before the services are rendered or bill for work-in-progress throughout the engagement. Exceptions may also be made if you’re a freelancer on a monthly retainer.
As a freelancer, you should always be following these best practices in your invoicing procedures.
By following these tips, you’ll get the most out of your invoicing process.
Not all invoices have the same functions. Throughout your freelancing journey, you may encounter some of these different types of invoices.
The best way to automate your invoicing is to use a dedicated invoicing platform. They come with functions like time-tracking, automated follow ups, setting up recurring invoices, and invoice tracking.
Making a switch to a platform (like BILL) will help you quickly generate invoices, give your customers easy ways to pay, and automate the tedious aspects of invoice management. Reach out to schedule a demo and see for yourself how we can optimize your invoicing.