3 invoice practices for the freelancer that will change your life
The difficulty with a lot of freelancers and self-starters is that they decide to break away from the corporate machine precisely because they loathe its bureaucracy. Ironically, working for yourself usually means more paperwork than ever.
These three basic invoice practices will help you tame the red tape and make working for yourself that much more empowering.
Put a logical numbering system in place and stick to it.
When you’re not sending enough invoices to justify the expense of a professional invoicing system, you may end up erratically assigning numbers to your invoices or not using numbered invoices at all. The date is enough to keep track of them, right? Not really.
Lee Allen, e-billing specialist and director at e-billing company Netsend, suggests the single most effective change you can make to your invoices is to employ a logical and transparent invoice numbering system. Then ask your clients to reference the number when they pay you. It will help you tick off payments against invoices, quickly detect any discrepancies in payment and will make it much easier if you ever need to be audited or decide to take on an accountant.
Allen should know. Netsend handle the automation of over £60-billion worth of company invoices every year. You may never start to approach those kinds of figures, but with effective tracking, you’ll have a much better handle on the money you have and the amounts you’re owed.
Use a professionally designed template.
Unless you’re a designer, pfaffing about the look of an invoice may seem a bit besides the point. But you’ll be surprised what a difference a good looking invoice can make.
For a start, they give your clients a reason to take you more seriously. A designed invoice gives the impression of a business that pays attention to detail and can go a long way to improving overall trust.
Remember that an invoice usually also travels inside a company – from recipient to accounts and then filing. This makes your invoice part of your marketing material. Treat it that way.
A professional template won’t have to cost a fortune. Sites like Master Proposal have a wide range of templates starting at only £4.00 and you can use them repeatedly to, as their slogan says, “look the business”.
Send it ASAP and stay on top of overdue invoices.
There is some evidence to suggest that delaying sending an invoice by a week can double the time it takes to pay. This relates to what researchers call the recency bias – the brain is wired to give preference to events that have happened more recently and pay less attention to more historic events. Take advantage of this by sending out invoices immediately after the work has been completed.
Unfortunately, not all invoices are paid on time – or paid at all. For small businesses the cost of pursuing unpaid debt, first by means of dunning letters and eventually potentially with site visits can quickly overtake the value of the money owed in the first place.
To add injury, debt recovery is expensive and not always effective. Fortunately, the internet may offer a solution – at least for some. Alternative debt collection agency Still Due is a debt publishing platform that uses the internet to incentivise debtors to make good on their overdue bills.
The process starts with a creditor submitting an overdue invoice. Still Due then get in touch with the debtor and give them seven days to clear their debt. If this has not happened in the allotted time, the details of this debt are published online.
Though still very new, this platform has already proven a success – with 19 unpaid invoices resolved in the last week and close to 60 currently in dispute.
It probably won’t be able to eliminate debt entirely, but for £3 per submission, it is a very good place to start before calling in the debt collectors.