Every savvy freelancer knows that promptly invoicing clients and staying on top of cash flow are essential for financial health of any freelance business. In this blog we are going to explore how to create a perfect invoice and keep track of your activities.
Before you start working with a client, discuss approximate amount of hours you need to complete a project or task and agree how often and how much your client needs to pay you.
Once you start working on a project, record all your activities and time you spend on a task so you can report back to your client when your work is completed.
Time sheets are an indispensable tool. You can either create them in Excel or use various paid or free online tools. Here is a list of options available. Either method is fine as long as it keeps a record of your time.
You can invoice your clients once a week, once a month or when their project is completed but make sure it is consistent.
How to Create a Perfect Invoice
Follow these steps to create a perfect invoice:
- Write a word “invoice” on your invoice.
- Include a reference number. You can use a different reference number for each client, where the first part is your client’s name and the second – a sequence number. If you have a big list of clients and you invoice your clients more than once, this system will keep you organised.
- Write a date when your invoice is issued.
- Include your company name, company registration number, and VAT registration number if you are registered. If you are a sole trader, then include your full name only.
- Include your contact details and your address.
- Write your client’s name and address.
- Describe your products or services and include the amount of hours you have worked and your hourly rate.
- Include any expenses if applicable.
- If you are VAT-registered, include net amount, VAT tax, and gross of VAT.
- Specify how you want your invoice to be paid; most often freelancers write their bank details.
- Include your payment terms (7, 14 days or one month). This is very important to avoid delays.
Ask your client to use a reference number when paying so you can track the payment and update your statement.
For a quick retrieval, keep all your invoices in one place and in each client’s folder.
To keep a track of your invoices, balance, and any expenses, you can create a statement for each client.
It may sound time consuming but it will keep you in a good financial health, help you minimise delays in payments, and most importantly prepare you for self-assessment or tax return. For more advice and guidance on how to stay on top of your finances, get in touch.