When I first started out, I had no idea how to invoice properly. As a result, my invoices were horrible. I made them in Word. There were tables (ugh, so many tables) and big fonts where I thought big fonts should be, and the total amount due stated about five times. It was messy and painstaking and I hated it, but it was several months before I found a better way.
So I decided to put this guide together. (Because apparently it doesn’t exist anywhere else on the web. Why does no one talk about the really basic but important things you need to know as a beginner?) This is what I wish I’d known.
What Goes on an Invoice?
This is the big question, right? What the hell do you even need to include apart from the work you did, the amount you’re charging for it, and payment details? Well, there’s a whole bunch of stuff.
Actually, before I go any further, a quick disclaimer: I’m not an accountant or a bookkeeper, or anything else to do with finances. This is just my way of doing things, and it works for me. I’m based on the UK, so maybe things are different where you live. They probably won’t be that different — the basics will be the same — but things like company registration numbers and VAT numbers and stuff will be different. So you should make sure to find out the exact rules for your own country. If you’re in the UK, you can find some official-shaped info here.
Now we’ve got that over with, this is what needs to go on your invoices:
- The word ‘Invoice’ — preferably in big shouty letters.
- Your company name. If you’re a freelancer/sole trader/sole proprietor, you can just write your own name or, if you’ve been operating under a biz name but haven’t actually registered as a company, you can write ‘Karen Marston, T/a Untamed Writing’. But, you know, with your own information. T/a means ‘Trading as’, by the by.
- Your/your company’s address.
- The invoice number. We’ll talk about this more later.
- The date the invoice is issued.
- The date the invoice is due. There are a few options here — 14 days, 30 days, and 90 days out are all common. ‘Due on receipt’ means the invoice needs to be paid right away. Personally, I go with 28 days. This is because I tend to do all my invoicing on the first day of the month, and by the time my next invoicing session rolls around, I want to be able to say, ‘Hey, this invoice is overdue now. Please pay immediately.’
- The company you’re invoicing’s name and address.
- What you’re invoicing for, and how much each item costs. You’ll want to include the quantity/hours (‘units’), details/description of services or products, unit price, and total price per type of unit.
- The total amount due (all the unit totals added together).
- Payment details. This could just be your bank account information, or your PayPal address.
- Other information, such as your company registration number or VAT/tax number (if applicable).
And that’s it. You’re probably wondering how to piece all this information together in a way that looks presentable now. Don’t worry, we’ll get to that. (And it’s going to be way easier than you think, because you do not need to use Word like I did.)
How to Send Invoices
There are a few options here. If you’re just starting out, you’re probably on a budget, so you won’t want to spend money if you don’t have to. Nevertheless, the first option I’m going to tell you about DOES involve spending, because it’s by far the easiest, and if you can afford to do it, you should. It will make your life so much simpler.
Use Accounting Software
I was ecstatic when I discovered this magical thing. Pretty much everything I need to do finance-wise for my business, I do through my accounting software: sending invoices, bookkeeping, keeping track of bills, storing receipts, etc. I also keep all my contact info in it, so I can just click the person I want to invoice and the information will be filled in automatically. Seriously, it’s wonderful.
The accounting software I use personally is FreeAgent, and I can’t recommend it highly enough, especially if you’re based in the UK. (That link will give you a 10% discount, by the way.) Why if you’re based in the UK? Well, it’s a UK-based company, so you can directly link it to most UK bank accounts — meaning you can automatically import transactions. It’s also linked to the major US bank accounts. It doesn’t actually matter what country you’re from though, because you don’t HAVE to link your bank accounts. You can just upload statements manually. (And besides, we’re talking invoicing here, not bookkeeping.)
So — accounting software is the shit when it comes to invoicing. It will automatically fill in information like your business’ details (name, address, payment info, etc.) as well as your clients’ information. All that’ll be left to do is fill in the specific information for this invoice, such as what you’re charging for and how much. Invoice numbers are automatically generated too, although you can input your own if you want to be hyper organised. Again, more on that later.
If you’re serious about your business, you’ll start using it eventually. So why wait? Also, you’ll look way more professional than if you cobble together something in Word. There are, of course, plenty of other companies aside from FreeAgent, but I haven’t used them, so I can’t recommend them. I’ve only used FreeAgent and I love it. You get a 30-day free trial, too. (If you want to try a different one, I’m sure Google can help.)
There’s more than one way to skin an invoice. Here are a few other methods you can use:
- Create your own
Yeah, this is what I did when I first started out. I’m going to leave it at that, because this is really not the path you’ll want to go down when you see your other choices.
This is a very common way of sending invoices. PayPal is obviously widely accepted, and it makes the process of invoicing simple. Just enter your deets and away you go. The only problem? People will pay you through PayPal, which means you’ll be missing out on 3+% of all your sales. If you’d prefer to be paid directly into your bank account, see below. (Note: After speaking with some of my American friends, it’s become apparent that direct bank transfer is very uncommon in US businesses. So if you’re from the US, PayPal could be just what you need. You might want to investigate accounting software that offers deals on PayPal payments — I know there are some that offer 50 cent PayPal fees for ALL transactions, no matter how much.)
This is a free invoicing program from FreeAgent. It’s a great way to send invoices for free. It’s simple, but it gets the job done, and you won’t be limited to just PayPal for receiving payments. You’ll just have to remember to save all your invoices in an organised way so you can keep track of them & their numbers, because this website won’t save anything for you. It will email your invoices to you as PDFs though, which is nice. The only downside here is that you have to enter your information from scratch each time. Still better than using MS Word though, amirite? At least you won’t have to deal with tables and giant fonts.
How to Organise Your Invoices
Now, this is where it all gets a bit subjective. As far as I’m aware, most people go with the default setting when sending invoices, which is to just number them in ascending chronological order. So the first invoice you’d send out would be ‘001’ and the seventieth would be ‘070’. Some people choose to distinguish their invoices with letters at the beginning, to indicate different clients — so, for instance, ‘UW001’ would be the first invoice you’d send to me at Untamed Writing. (Troubles arise when you encounter two companies with the same initials. Not real troubles, mind — just the annoying kind.)
But neither of those is how I do things. When I told my accountant my method for organising my invoices, he determined that I was a ‘cross the Ts and dots the Is’ kinda gal. I love my method, because if a client wants me to resend them the work connected to an invoice (it happens occasionally), it’s super easy for me to find it. Also, I’m just an organising freak.
So this is what I do. Every client of mine has a number, and every project I complete for that client also has a number. So my invoice numbers end up looking something like this: 0001-0001 ([client number]-[project number]). (Why do I use 4 digits, you ask? BECAUSE THEN I WILL NEVER EVER HAVE TO START OVER. Unless I work with 10,000 clients in my lifetime, which seems… unlikely.) These numbers are directly correlated with my folders of client work. So I have a folder for client 0001, and inside that folder are sub-folders for every project.
Have some pictures:
How to Keep Track of Invoices
The final thing you need to know about invoices is how to keep track of them. You need to know who’s paid you, how much, who stills owes you, and when things are overdue so you can start pestering your clients for money. If you sign up for an accounting program like FreeAgent, you won’t need to worry about this — everything will automatically be kept organised. You’ll know at a glance who owes you what, and you can mark invoices as paid as they come in.
But if you’re not at the point where you can afford invoicing software yet, what do you do? Aside from the fact that you need to know who to chase for money, you also need to keep track of how much you’ve earned for bookkeeping and tax purposes. Things could get very messy around tax season otherwise.
When I first started out, with my ugly Word invoices, I had an ugly spreadsheet to go along with it. Ugly, but functional. And, because I’m in a giving mood, I’ve decided to share it with you. Click here to get it. With that template, you can keep track of all the money you’re ever paid (I recommend starting a new spreadsheet at least every tax season — although hopefully you’ll be ready to splurge on some accounting software before the end of your first season!). Most of the columns are pretty self-explanatory, but I’ll run through everything here, just in case you want to create your own spreadsheet instead of using my beautiful one.
So these are the fields in my spreadsheet, and the things I recommend keeping track of:
- Client – this is the company or person you’re invoicing.
- Contact – this is the person you actually sent the invoice to.
- Invoice number – for obvious reasons.
- Upcoming – this is where you can note down how much you NEED to invoice (handy if you invoice clients on a monthly basis, or just want to see how much money you’ll have coming in soon).
- Invoiced – this is how much you’ve invoiced that still needs to be paid.
- Paid – this is, um… how much you’ve been paid.
- Date – the date payment was paid. (Or the due date, if it hasn’t been paid yet.)
- Method – this is the payment method, e.g. direct bank transfer or PayPal.
- Notes – Useful things to keep track of, such as the name that comes up on your bank statements for each of your clients’ payments.
The row at the top will give you totals for each payment column, so you can see how much you’ve been paid in total, etc.
And that’s it! That’s everything you need to know to be able to invoice your clients efficiently and professionally, and to be able to keep on top of things.
If you have any questions, or you have your own great way of doing things/any recommendations, please do share in the comments section down below!