How To Invoice As A Freelancer: A Step-By-Step Guide For 2024

Simplify your invoicing and get paid faster with less hassle

Chasing invoices and getting paid can eat into available work time, leaving you frustrated, anxious, and often short of cash. 

This guide eliminates any confusion, teaching you exactly how to invoice as a freelancer creating professional bills that get you paid quickly. 

Even if you're a complete invoicing novice, we'll walk you through the process step-by-step, including how to create or select a freelancer invoice template.

How To Invoice As A Freelancer - A Step-By-Step Guide For 2024

Before going through the invoicing process, you need to understand the difference between a quote and an invoice, and how they're related to each other.

To give your client an idea of how much a project costs, you need to draw up a quote before you start working.

Your billing may be based on an hourly rate for the entire project, per word, or periodic payments after reaching agreed-upon milestones.

A quotation is then sent and negotiated before starting any work, and once payment terms are agreed, invoices are sent according to your contract.

Each invoice must specify the exact amount owed in terms of the signed contract and, usually, any changes are agreed upon either verbally or in writing.

If you're billing by the hour, make sure that you keep track of time spent using an app like Toggl Track to back up your invoice.

When accounting for small businesses, every minute you spend on a client’s work is important and must be paid for.

How To Invoice As A Freelancer

Billing a client requires you to provide a great deal of information, especially if they are a large company with a specific procurement policy.

Make sure that you know when to send your invoice each month, to whom it is addressed, your email address, and any specific information required.

Pass these details to your accountant but, if you handle your own billing, use a checklist to ensure you don't forget anything.

What Should Be Included In The Invoice?

There is no federal tax, such as VAT or Sales Tax, in the USA, but each state has its own set of rules and regulations.

Despite this, the rules regarding what must appear on an invoice in the US are much less stringent than in most other countries.

Creating your invoice will not be difficult as long as you collect all the information you need before you start.

These are the steps you must take if you don't know how to invoice as a freelancer:

Step 1. Document Name 

Make it very clear that this is an invoice, not a quote or proforma invoice, to avoid any confusion in your client's mind. 

At the top of the page, type "INVOICE" or "SALES INVOICE" in all caps to announce clearly what this document is.

If you're using an accounting package to create your invoice, then you can often choose a template relevant to your business.

Step 2. Your Name And Contact Information

Add your business name, address, and contact details, as well as your company's name and unique identification number.

Always provide your phone number and email address in the event that your customer wishes to get in touch with you. 

If your freelance business has a logo, include it at the top of your invoice to give it a more polished, professional appearance.

Some businesses want you to include the name of the person you're sending the invoice to, such as the bookkeeper or accounts payable clerk.

Step 3. Your Client's Name

Include your customer's name and address in the "Bill To" section, as well as their contact number and email address.

The reasons for this are fairly clear, as including your clients' correct name establishes a clear link between the invoice and the corresponding work completed,

It also aids in accurate record-keeping and reconciliation, enhancing transparency and accountability in financial transactions, and aligning with the best accounting practices and regulatory requirements.

Furthermore, it facilitates easier identification and resolution of any discrepancies or disputes that may arise, promoting efficiency and trust in your financial relationship.

Step 4. Invoice Number And Invoice Date

You should always keep track of your invoice numbers regardless of whether you create them manually or with accounting software. 

Invoice numbers are usually sequential, which is easier to keep track of, but you can choose a logical system that meets your requirements.

When you invoice as a freelancer, you may be required to follow up on unpaid bills or respond to client inquiries regarding your work. 

If queries arise, having well-organized invoicing records helps you locate the correct invoice in your manual or digital filing system.

Your customer will also benefit from a logical invoice number sequence, and you'll both be aware that you are discussing the same transaction.

Step 5. Work Order Or Job Code Number

If your client requires a work order number or job code, include it at the top of your invoice close to the invoice number.

This makes it easy to identify, and many larger companies won't pay an account if a freelancer invoice doesn't have this number.

Step 6. Payment Terms And Due Date

Including the issue date on your freelancer invoice is crucial since the payment due date is calculated from the day the invoice is sent. 

Referring to the issuance date also helps your client's accounts department locate outstanding invoices that may have been overlooked.

Don't forget to specify the due date when your payment is expected, as in accounting terms, this is an important part of your contract or agreement.

Freelancers often overlook payment terms until they realize their invoice is outstanding and need to follow up with their client directly.

Step 7. Description Of Service

The most significant information on the invoice is a breakdown of the goods or services you provide to your client. 

Include a detailed explanation of the job you completed, the goods you supplied, and the quantity and rate of each item.

Make a note of the hours if you provide hourly services, giving the total number of hours multiplied by your rate for each service.

Ensure that every distinct service has its own line item to avoid having to explain each entry on the invoice.

If the project is complicated or your client requires a breakdown of the time spent, you can include a timesheet with your invoice.

Using an app like Toggl allows you to keep a detailed record of the time spent on each task and helps you manage your workflow.

Step 8. The Invoice Total And Payment Method

Include the total value of the invoice as well as any tax due, depending on whether it's relevant in your state.

Make sure that paying you is as simple as possible for your clients by providing them with payment options to settle the bill.

If you take checks, be sure to include a precise location where they can mail the check and add any email connected to your company's PayPal account.

Include your bank account details for bank transactions, stating the clearing or routing code and your bank's name and account number.

Step 9. Additional Client Information And Discounts

Include a line for any discounts or rebates you may offer, together with a reference to late payment penalties or prompt payment incentives.

You can also include additional information on the project or write a personalized note of thanks to your client.

It helps to spell out your payment terms clearly, such as a specific due date, due on receipt, or net 30 days.

Step 10. Sending Your Professional Invoice

Once your invoice is complete and you have checked it against your contract, it's time to send it to your client.

Make sure that you have the correct email address or physical address when sending invoices out on the same day every month.

Include the invoice number in the subject line and clearly state in your email that you are attaching an invoice.

It's also a good idea to automatically request a read-receipt to notify you when your client has opened the invoice.

While this is not one of the basic accounting principles, it is a practical way to conduct your business and get paid on time.

Manual Invoicing Process For Freelancers

To keep things simple, you can create your invoices in MS Word or Excel, both of which provide templates.

When selecting a freelance invoice template, click on "File" and then "New" - you can then search for invoice templates related to your business.

It's best to keep all your invoices as simple as possible, with minimal graphics and colors except for your company logo. 

Automatic Invoicing Process (Software)

Using bookkeeping or accounting software for your invoices has numerous advantages, especially if you have multiple clients.

Online accounting software such as Xero and Quickbooks allow you to create invoices quickly and easily with preset templates. 

Your invoices can be set up in advance and have all the information necessary to ensure that you are paid on time.

Hire An Accountant

If the thought of creating your own invoices seems daunting, then consider hiring an accountant or bookkeeper to handle invoicing for you.

Apart from basic bookkeeping tasks, an accountant can help with financial management as well as budgets, projections, and filing tax submissions.

Many independent contractors choose to leave financial duties to the experts since they are primarily hands-on or creative. 

Keeping The IRS Happy

Hiring an accountant to help you with your invoicing helps keep clients happy and maintains your good standing with the IRS.

Although tax preparation software is widely used by freelancers, not all of these options will meet your specific tax requirements.

Assuming you reside in the United States, a single W2 form was all you had to worry about as an employee. 

However, as a self-employed individual, you must manage:

•  Several 1099 forms 
•  Profit and loss statements
•  Schedule C (Form 1040) submissions

An accountant can help you sort out your finances by calculating your quarterly tax payments, ensuring you take advantage of all available tax deductions. 

Avoid A Last-Minute Rush

Please don't wait until the last moment to appoint an accountant, as they are loath to take in clients when tax deadlines are looming.

Instead, decide to hire an accountant ahead of time so that they can get your bookkeeping done in order to avoid a last-minute rush.

Benefits Of Creating A Freelance Invoice Template

There are a few other, more specialized kinds of invoices you need to produce in addition to the regular or final ones for services rendered. 

Among them are the following:

Draft Bills

A proforma invoice and a quotation or estimate are similar documents and are initial estimates that you send to clients before completing a job.

Along with quotes or estimates, draft bills help customers plan their cash flow and are essential to financial planning.

These draft bills are not legally enforceable, so you must send out a formal freelancing invoice when the time comes to charge your client.

This is an accounting tip that will help build your business and prove to your client that you are professional and know what you’re doing.

Interim Invoice

In reality, interim invoices consist of multiple invoices with recurring payments spread out over time and help to ensure a more consistent cash flow.

Extended payment schedules are employed when working on larger projects that take longer to complete so that payments are made gradually.

Recurring Bill

An invoice that is repeatedly sent for services that the same client requests on a regular basis is known as a recurring invoice. 

These are often sent out once a week or once a month, and they always list the same goods and services. 

Any changes are usually limited to the invoice number and issue date and can be easily set up in accounting packages. 

Credit Note

A credit invoice - also known as a credit note - is generated if a client requests a complete or partial refund in the form of credit or returned monies.

It might also be sent in order to amend or cancel an earlier invoice that you sent out either in error or if you need to change it.

They are formatted similarly to a standard invoice template, with the exception that the prices are shown negatively and the original invoice is referenced.

If you want to maximize your gig worker tax deductions, then issuing credit notes helps to reduce your annual revenue.

How To Send Your Invoice To The Client

There are various ways to send invoices to your clients, including email, gig economy platforms, and the traditional postal mail method.

But whichever method you use to send invoices, make sure that you receive delivery confirmation and track your invoice status.

Don't forget to follow up on unpaid invoices; the longer the debt remains unpaid, the easier it becomes to ignore the problem.

Set a reminder in your diary for when invoices are due, and if you're using an accounting package, you can produce an accounts receivable report.

This report will provide you with an overview of which clients' invoices are outstanding, with columns for 30, 60, and 90 days in arrears.

Other Freelance Invoice Tips

Multiple payment methods are available to freelancers, and providing options to your clients makes it easier to get paid immediately.

You need to train your clients to pay you on time, so stick to a regular invoicing schedule and offer incentives for early payment as an incentive.

If you find that your clients continually pay late or fail to settle the entire bill, create a process to follow up with their accounts department.

It's usually easier to speak to a bookkeeper or clerk than it is to confront a client about outstanding payments if there is an accounts department.

If your only point of contact is the owner or your client, then ask a family member to call on your behalf, presenting themselves as your bookkeeper.

When that fails to elicit payment, you may have to confront your client directly, which may mean a difficult conversation and possibly the loss of the client.

Always remain cordial and try to see the problem from your client's perspective, as they may have cash flow issues you're unaware of.

Be open and honest about collecting the outstanding fees, and in the event that your client can't or won't pay, then move on.

Maintaining a positive client relationship is essential, but not at the expense of your sanity or bank balance - it's not worth it.

Summary

Learning how to invoice as a freelancer is integral to running a successful freelance business, and getting paid on due dates assures you of a positive cash flow.

It is vital that you have an efficient billing process for sending invoices on time so that you can concentrate on getting the job done.

Using freelance invoice templates simplifies your process, and sending professional-looking invoices helps ensure prompt payment.

If you follow the freelance invoice advice we covered above, you can send a professional invoice to your clients and receive payment without difficulty.