In order to get paid, you have to invoice first — but does the process have to be so painful?
Invoicing is one of the troublesome, real-life issues that gets freelancers and small business owners in trouble. 44% of Freelancer Union members reported challenges in collecting payments, and on average they each accrued over $10,000 in unpaid invoices. In New York state alone, researchers estimate that $3-5 billion in freelancers’ wages were lost in due to client nonpayment and the cost of time spent chasing unpaid invoices.
Delays and runaway clients happen, leaving you without your pay, even while others benefit from your services.
With digital tools putting old-school bookkeeping out of business, it’s easier than ever to harness technology to strengthen your invoice game. Here are our top tips for invoices that bring home the bacon ASAP:
1. Create Clear Contracts
When you sign a contract with your client, you build a strong foundation for financial transactions. Establish positive boundaries, such as when, why and how your payer will pay you, tackling the challenges of invoicing before they even begin. It’s also a good practice to include an incremental penalty for late payments.
2. Always Include a Due Date on Invoices
Would a NET 10 or 10-day turnaround for invoices make a huge difference to you? Develop a policy about your pay period, and build it into your invoicing protocol. You can also incentivize payers with a 2% discount for a NET 10. Most businesses can expedite payments, even if they usually work with 30-day turnarounds.
3. Identify a Single Point of Contact
If you’re dealing with an individual customer, it’s clear who needs to pay the bill. When collaborating with big companies, though, it can get confusing. Where do you send your invoice — accounting or your usual point of contact? Invoices get lost in the shuffle. List oneperson on your invoice, and allow him or her to manage communication internally. By putting the onus on an individual, you increases accountability.
4. Track Your Time
A lot of independent contractors, from limo drivers to graphic designers, charge clients on an hourly basis. This pricing model requires to-the-minute records of time spent on the job. Instead of using your watch or a separate time tracker, enlist an invoicing system that allows you to seamlessly track your time. Payable automatically syncs tracked hours into your invoices, minimizing errors and saving you time!
5. Send a Quick Reminder
A lot of clients forget to pay invoices, just as they may forget to pay their bills at home. It’s not intentional or personal, but it strains your revenue stream. Five days before the due date on your invoice, send a reminder email to your client. Better yet, automate your follow-up emails to cross an extra task off your list (Payable automates invoice payment reminders so you don’t have to worry about following up after a late payment).
6. Incorporate an Online Payment Method
An old-fashioned invoicing system adds time and extra logistics to an already long process to get you paid. Rather than relying on the post office and a brick-and-mortar bank, offer clients an online payment option. Payable’s integration with Stripe means that your client deposits money directly into your bank account — companies will appreciate the simplicity of the system, too.
The ideal invoices check each of these boxes, facilitating open communication and helping you to get paid — and quickly!