Setting up a freelance business requires a number of hefty processes which though are not quite that hard but requires effort. And finally you are done with all this and the business starts coming in. Either after quarter or half work, you get the payment from the client. And here comes another process, the process of managing the invoices. And this is the point where you need help again; how to go about managing the payments, how to be keen in getting everything right and where to go if anything goes wrong. And with our article today, we aim at providing you with the strategies that can help you get through it. So read through the article so take your web development or freelance designing business to the next level.
The Right Time to Invoice:
The right time to invoice is completely dependent upon the duration of the project, the feasibility of the client and the time with which you are comfortable. It will not be that big of a deal if the project is of one or two weeks as there won’t be a problem regarding the payment and invoicing. But if the project is going to take like 3 or 4 months or maybe more, then you will need to go through some payment plan agreement.
For example, if you have gotten a project of designing a website, you may want to split the payments in three as that is a standard way. One at the start of the project so that you can have the necessary expenditures to start off the project; the second one in the middle of the project and the last one when the project is all done and sent through to the client. This can be the way suitable for the client as he wouldn’t have to pay in one go and for the freelancer so that he has money coming in installments for security and for meeting expenses.
Keeping Track of the Miscellaneous:
Keeping track of things keenly which involves money is always important. If you think that you are working from home and so you don’t have to worry about electricity bills, rent of the office, work supplies and about the project etc, then you are wrong as every such expense makes up to cost which has to come out your pocket so keep track of it so that you know how much you have earned in a month.
Keeping track of things include stuff other than the costs and expenditures as well. You have to keep a track on what date you started the project, what date it is due and what are the requirements from the client etc. You can take help of excel sheets; note pads or even a full-on accounting system of your project is of such a big level. You will notice your work being managed efficiently by keeping notes.
Terms of Payment:
When you have estimated how much you are going to charge for the project, it’s time to settle the contract through agreement. The payment time is usually 30 days while some companies also work on 60 days. Although you can also take help from the law in signing a contract, in smaller cases, you should at least put the contract terms in black and white so that there is no inconvenience or loss of proof in case it is needed.
There are three payment methods you may use for receiving payments.
- One is PayPal. This is one of the ways which is growing in popularity as it provides easy transfer and withdrawals and contractors and employers all over are rapidly adopting it. However, there is one big downside to it. You get around 5% of your money cut off as service fee of Paypal. So for a new freelancer, even 5% counts a lot and it can get to significant level with big payments.
- The second one is the good old cheque. This method is suitable for freelancer and businesses of small level where the contractor just have to send the cheque at your address and you have to pay it in your bank.
- BACS (Bankers’ Automated Clearing Services) is also a method getting popular among medium to large sized businesses as this method is convenient. This is an inter bank transfer where you just have to submit the details of how much and where you want the payment to be transferred and that will be it.
Handling Due Payments:
In most cases than not, there will come a time where you will have late payments from one of your clients. You shouldn’t worry because you have to keep the calm or it will backfire. Send an email to the client, reminding him politely that a payment is due. If you still don’t hear from the client after a month, you should send another reminder, a little stricter yet polite tone this time. Most of the most there is no need for a legal action in this situation but there is always an option for it if things get drastic.
If you have made the contract legal, there will also be late payment charges you will be entitled to. You can skip these charges for the first notice and for a week but you can start adding them after a month has passed and mentions it in the notice. It ought to work. In case it won’t and you are taking legal action, even then you will get late payment charges out of your client. You also don’t have to worry about the entire fee which will occur in the process of taking legal action as it is the client who will be paying for it as well.
What to Put on in an Invoice:
Although you can get the already printed invoice slips from the market to save you the trouble but in case you want to save costs, you should know how to make an invoice. The invoice should have an invoice number for reference, your name and the name of the client, date, details of payment made and due, job description, address of your business and any other detail you might find necessary. Keep a copy of invoice with yourself and sending the original one to the client is the best practice.
The whole discussion can come down to the point that managing the invoices takes vigilance and efficiency as the money dealings are sensitive and should be handled with care. Keep a track on your cash inflows and outflows so that you can know easily what you have earned and how to optimize it. It is not frequent that clients turn out to be a bad debt as most of them pay on time.
No matter what the circumstances are, stay level headed and at the best of your professional self and you will get through this steadily. Invoicing is no big deal and can be done easily, you only have to make sure that your have yourself covered with everything documented and settled on with the client so you don’t have to go through all the court procedures.