Irrespective of how many freelance gigs you do, once a month or as a small business, receive tons of orders in a week if your clients are stubborn with money or sticklers to hierarchy. It can be really difficult for you to continue your work in harmony.
You must calculate how much your customers owe you and send them a bill. For a fact, surprisingly Many businesses wait until they get an invoice before paying a small business or freelancer.
These are common problems for a small business or a freelancer to not receive adequate remuneration or not receive it on time. Therefore, it becomes crucial for a budding business or a freelancer, like yourself to create an accurate invoice on time.
That implies you must be able to create an invoice. But where do you even begin? How do you make a bill that looks professional? What method do you use to transmit it to your client, and when do you send it?
Yes, because having an invoice protects you while also making tax filing and obtaining vital financial information easier in the long term.
Now you know what an invoice is all about. An invoice is a list of items that a person has delivered, as well as the sums payable for each of these items and services. It’s crucial because it organizes the work you’ve done into an itemized list and informs the client about how to pay you. A right invoice generator platform can put you to ease with the hassles of such tasks but understanding some vital elements of invoicing will help you gain an insight into how to build your brand better.
Freelancers that deal directly with clients will need to develop a bespoke invoice. Writing an invoice may appear intimidating at first, but this tutorial will walk you through the five items you should include in your invoice to ensure that you get paid promptly and simply.
Elements to include in an invoice
The following details form a professional and clean looking invoice:
- Title – Every invoice should be suitably named with the terms ‘Invoice,’ ‘Tax Invoice,’ or any other relevant title.
- Name and Logo – The name of the freelancer or firm, as well as any accessible logos, should display at the top of the invoice. Anyone viewing the invoice will immediately recognize who raised it.
- Contact details – Contact information, such as a phone number, email address, and postal address, should be included below the freelancer’s or company’s name. If you have a GSTIN number, include it here.
- Client’s name and client’s information – The client’s name and pertinent information, such as his address, contact number, and email address, GSTIN, and so on, must be mentioned in the same way as the freelancer’s/company’s name and contact details.
- Invoice date – The invoice date is the date on which the invoice is created. This is crucial to note since, depending on the contract, payment terms are often based on the invoice date. ‘Payment must be paid within 30 days after the invoice date,’ for example.
- Invoice number – The invoice number is the invoice’s serial number, and it is used to refer to the invoice by either the freelancer or the recipient of his services. When numbering invoices, it’s a good idea to add the year and month the invoice was created.
- List of services with the rate charged (before tax) – Following that is a list of the services. The goal is to be as detailed as possible so that customers understand exactly what they’re paying for.
- Tax rate and amount (if applicable) – If the freelancer is GST registered and must pay tax on the services performed, the tax rate and amount of tax owed for each service should be listed individually. Due to the central and state governments, a split of taxes such as IGST, CGST, and SGST should be made.
Note: If the freelancer is registered under the Composition system, he will not be able to send a tax invoice as there is no tax component. He must print the words ‘Composition taxable person at the top of the bill of supply he provides in this circumstance.
- Total amount due – This is calculated by multiplying the total number of hours/assignments billed by the rate per unit, plus any applicable GST.
- Money information – You must include the bank account number or other information that determines where the payment will be sent. If cash is the preferred method of payment, this must be stated. Rather than printing the payment method on the invoice, it is preferable to discuss it with the client ahead of.
- Signature – The person sending the invoice should sign it. Hence, an invoice must contain an assigned place for the freelancer’s signature at the bottom and, if applicable, the corporate seal.
Key elements to keep on the top of the checklist
1.) Header of invoice with contact information
For their business, your customer is likely to get many bills. It will be simpler for your customer if you include a header showing that the document is an invoice and identifying your firm at the top of the page.
Include your company logo in the upper left or right corner if you have one. Your contact information, as well as the contact information for the firm you’re invoicing, should be included on every invoice.
2.) Detailed breakdown of work
Work breakdown in detail
The breakdown of work is perhaps the most essential and biggest component of the invoice. This part, usually in the form of a table, gives a thorough list of what the customer is paying for. The items on your invoice should correspond to the job contract or agreement you have with the customer.
The customer should be aware of the line items for which they are being charged, and there should be no unexpected costs or surcharges. Hourly contracts will contain an extra column for hours worked, as well as a column for the total amount for each line item.
Though the payment calculation, whether by the hour or by the quantity of labor done, should be explicitly stated in the terms of the agreement, whether written or verbal. This part, however, should state whether the compensation is owed by the hour or by the quantity of labor completed.
3.) Due to the date
Also, be sure to provide a payment deadline as well as your payment information. You should usually negotiate payment choices with your customer ahead of time, or provide as many as possible – cheque, bank transfer, or even PayPal.
Be mindful of the transfer costs, and make sure you provide all of the information the customer will need to pay you. Don’t forget to include your terms – what happens if the customer fails to meet the deadline? Having it written down in black and white ensures that you receive your money and/or interest if the payment is past late.
Absolute perfection is a myth, however, near perfect is good enough. So, working towards that must be the final goal. Invest your energies and resources on giving attention to details. Also do remember an effective and efficient invoice generator platform can make your job easy. As by now it’s evident how crucial it is to create a well-crafted invoice on time for an effective receipt of payment and overall business cycle.
Bottom line is consider this step of the business cycle crucial, it can in literal terms, make or break your operational system.
Hetvi works as a Product Associate at Refrens.com – Online Invoice Generator & India’s most powerful platform for freelancer’s growth. She has worked for some renowned companies as a Brand and Digital marketing associate. You can follow Refrens.com on Twitter, LinkedIn and Instagram.