Becoming self-employed comes with a rainbow array of rewards—you control your time, you don’t have to deal with a boss, and you can pick and choose your work. Win, win, and win.
However, there’s one major pitfall: getting paid on time. It’s the plight of many freelancers and small business owners alike. You send your invoice. Then comes the wait. It could be 30 days or 30 years (okay, perhaps that’s slightly hyperbolic!). You just never know.
Should you find yourself chasing payments month-on-month, chances are you’re not alone. Over 40% of clients hiring freelancers consistently pay them late, according to a survey by YunoJuno. Yes, that means that just under half of the clients out there will drag their feet and kick their heels indignantly before they put their hand in their pockets.
Of course, there’s no surefire way to speed up clients when it comes to paying. You’re hardly going to hire a muscle man to turn up at their door and, while you can take clients to small claims court, it’s often costly and time consuming. So, what can you do?
Making sure that your invoicing game is on point is a good place to start. Whether you’re self-taught or have some accounting experience, there are some big mistakes that you could be making here. Luckily, we’ve got your back. Here are some issues to avoid.
Mistake 1: Not giving a clear quote
When it comes to money, you always want to make sure that things are crystal clear. If there’s any confusion here, you could find that you get yourself into trouble when the bill is due. Ahead of accepting a job, it literally pays to know how much to charge.
Of course, figuring this sum out will depend on a few factors. In some instances, the client will set the rate. For example, if you’re a writer working for a publication, the editorial team will have a budget and set rates. In that case, you should ask what the fee is early on.
On the other hand, you might need to give a quote. If you’re a self-employed electrician and someone asks you to fit new lights in their home, you will need to cost-up the parts you need plus the labor. When you’ve done that, you can give them a clear quote.
Either way, you may wish to get the quote in writing. You can formalise this aspect of your business by using a document but an email will do the trick too. That way, should there be any dispute about how much you’re charging, you can refer back to the original quote.
Mistake 2: Failing to invoice quickly
It’s a two-way street. If you’re looking for speedy payments, you’re going to need to be quick when it comes to invoicing clients. So, make sure you keep up your side of things.
Needless to say, everyone has their own system for this. You might use Quickbooks or other software. Alternatively, you may simply keep track of your own payments and produce invoices using Word. It doesn’t matter.
To boost your chances of getting paid on time, it’s worth creating your invoice as soon as you can. You might want to do it when your client has accepted your work or—should you agree to it—at the end of each month. The choice is yours.
Mistake 3: Not including a due date
Deadlines are everything. When you agree to take on work with a client, you’ll likely have a due date you need to work to. Return the favour when you’re creating your invoice.
Putting ‘upon receipt’ on your invoices could seem like the way to go but that’s not always the case. Sure, this tells the client you expect them to pay up ASAP. However, without a specific date fleshed out, you might find that ‘soon’ comes later than you think.
It doesn’t end there. There are also terms that could be a stumbling block. For instance, ‘net 30’ is business language or—as the rest of us call it—confusing jargon. If your client isn’t representing a huge firm, they may have no idea what you mean.
To solve this problem, you may want to put an exact due date for your payment. If you’re invoicing at the end of March, you may put ‘15th April’ as the date you expect to be paid. Be as specific as possible to avoid confusion. Of course, this tip doesn’t mean that clients will pay you when you ask, but it does give you something to work around.
Mistake 4: Creating invoices from scratch
Spoiler: Invoicing can be laborious. Whether you’re doing them all in a bulk or simply invoicing as you go, this chore can take up your much-needed time.
If you’re looking to save yourself some effort along the way, it could be worth using an invoice template. There are plenty of free templates you can use online.
Invoicing can be a big data-entry task. You need to include an invoice number, the date, your address, your payment details, your itemised work, the cost, the due date for the payment, and oh-so-much more. It’s a complete yawn-fest.
When you’re not using a template, you may find that it’s all too easy to miss one of these crucial parts. You may forget to add the date or even your invoice number. You can easily avoid this problem by using a template that has space for each item you need.
Mistake 5: Bulking your work together
Let’s say you’ve done three projects for a specific client and it’s time to shoot them a quick invoice. You’re busy and you’re in a rush… What do you do?
While you may be tempted to bulk all your work together under one fee, doing so may leave room for confusion. The clearer you can be about each charge, the better your chances are of getting the payment approved speedily. It’s that simple.
When you’re creating your invoice, why not take the time to itemise each part of the bill? You can do this for the separate projects or jobs you’ve undertaken and even any extra fees. For example, if a designer has to buy a copyright-free image for a project, they may add that as part of the overall invoice. The more meticulous you are, the better!
Mistake 6: Sending your invoice to the wrong person
Working with a large business? If your client represents a bigger company, you may find that you’re dealing with a whole host of departments. That means that the professional who offers you the work might not be the same individual who deals with the accounts.
For example, you may have an editor commission you an article. Well done! When you complete the piece, you could send them your invoice. It seems obvious, right? However, if there is an accounting department, the editor then has to forward your invoice. Simply put, that’s one extra step that may slow things down.
Side-step this issue by asking your contact who deals with the invoices ahead of time. Armed with that information, you can make sure the right person gets your invoice in their inbox immediately. It’s a small change but it could make a gigantic difference.
Mistake 7: Using harsh and/or cold language
The world of invoicing can feel cold. You send a document asking for money and—after a certain amount of time—you get some cash in your bank account. It’s transactional. However, it’s savvy to remember that there is usually a person making your payments.
Statements such as ‘pay by X date’ may seem direct and clear, but they could also come off as bad mannered. You might have better luck using more approachable language. Saying ‘please make the payment by X date’ is polite and gets the same point across.
It’s nice to be nice! Should you be feeling extra friendly, you can add a note at the bottom of the invoice thanking the client for their business.
Mistake 8: Forgetting to follow up
Invoicing and managing your accounts is unlikely to be your main job. So, you can be forgiven for forgetting to follow up on your outstanding payments from time to time.
However, an easy way to secure yourself a speedy payment is to shoot the person in question a quick email. You may want to devise a system to get this right.
One hack is to set yourself a reminder for 15 or 30 days after you send an invoice. When it pops up on your smartphone—*ding*—check your bank to see if your client has paid. If the answer is no, send them a quick and polite email to remind them that it’s due.
The truth is that there’s a certain art to invoicing clients. It will take some time to perfect it. Despite this fundamental fact, there’s no ‘right’ or ‘wrong’ system. Like most things in life, it’s likely to be a case of trial and error. Figure out what works for you and stick with it.