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As a contractor, there are a lot of things you need to understand and get right from the word go – some are complex, like your tax obligations and compliance. Others are more straightforward, like knowing how to invoice your clients correctly.
When it comes to invoicing, having a firm idea of what it is, how to do it and which details to include will help you get paid on time and avoid headaches further down the line.
In this simple guide to invoicing, we’ll run through everything you need to know.
An invoice is a document summarising the services you’ve provided to a client and the price of those services. Put simply, it’s the bill you send a client to get paid.
But while invoicing is a simple enough concept to grasp, there’s more to it than you might imagine.
There’s essential information that you should include on every invoice, which can go a long way to making sure your client pays on time:
Finally, make sure to provide payment information clearly (as evident as it sounds), so your clients know where to pay. You’ll want to include your payment terms alongside this, whether it’s upon receipt, 7, 14 or 30 days.
Most accounting software – like our partners FreeAgent – have invoice templates and guides you can use as a starting point.
Lots of contractors will invoice clients directly. This is a reasonably straightforward process. Once you’ve compiled your invoice, including all of the key information listed above, you simply issue it to your client, making sure you’ve sent it to the right contact in the right department.
If you work through a recruitment agency or umbrella company, you may be expected to complete a weekly or monthly timesheet. While this isn’t an invoice in the traditional sense, it serves a similar purpose – allowing the intermediary to invoice the client on your behalf.
Invoicing mistakes could lead to late payment, which can be a massive problem for small businesses. So here are some common pitfalls to avoid:
You might also consider invoicing on a regular date each month – typically the first or last day – so that your clients know when to expect your invoices.
So there you have it. You should have a clear idea of invoicing, along with why getting it right matters so much.
For more information or any other accounting support, please get in touch and see how we can help.
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