Getting paid for all of your hard work shouldn't be something you have to fight for. Yet, this is the reality many contractors, freelancers, and business owners face.
In the UK, it takes between 38 and 71 days for entrepreneurs to receive payment. And as you can imagine -- it can be difficult collecting money after services are rendered.
This is how many businesses (large and small) operate. They provide a service and then invoice for it later. In doing so, it allows them to remain competitive in a marketplace where other entrepreneurs in their industry are charging upfront.
But this trade-off can be unbearable if you don't know how to manage your business finances. A part of this is setting up an invoicing system.
So to help you along, we put together a quick guide for creating invoices for services rendered.
Let's have a look.
Setting Your Business Up for Timely Payments
You have to prime each of your clients, so they understand your billing process. Here are several tips to help onboard your customers, so they know how and when to pay your invoices.
Create a Billing Policy
Every project comes with its own terms and requirements, so it makes sense for each client to receive a personalized billing agreement.
Some items on your policy will change, such as the rates, billing methods, due date, and late fees. It's good to establish this at the beginning when you're preparing to sign the contract.
Be sure to take into consideration the billing processes of your clients' companies. You'll have to be flexible to work with the accounting practices of their organization.
Either way, there should be a billing policy created and signed by both parties.
Track All Billable Hours
It's good to track all the time you spend on a project -- even if you're not billing clients hourly. This will help you to see how productive you are and what your actual hourly rate is.
For instance, if you charge $50 per hour and agree to a $250 project, then you should take no longer than 5 hours on it. With a tracking app, you can see how much time you actually spend working.
Tracking your hours also comes in handy if you're charging strictly by the hour.
Make Your Invoice Clear and Understandable
One mistake some contractors and businesses make is using technical jargon and abbreviations in their invoices. This isn't the place for this, especially if your invoice will pass through multiple hands before approval.
You want to ensure that anyone who must approve the invoice can understand what they're being billed for. Itemize your services and include short descriptions for each.
Set Up a Predictable Invoicing Process
It's best to send invoices for services rendered on a predictable schedule. If you have a recurring client, then consider choosing a specific day you send out invoices.
Then if your billing policy requires them to pay within 10 days, then they'll become accustomed to paying by that specific date each month.
This can also work for new clients and one-time projects. Outline your process in the beginning, then follow through with it.
They'll know when to expect your invoice and how long they have to pay it.
Creating Invoices for Services Rendered
Making your own invoice is simple when you're using an online tool like invoicely. This allows you to create professional invoices quickly.
You're able to upload your business logo, manage client data, and accept online payments using credit cards and payment platforms like PayPal.
Here's a quick look at what your invoices should include:
- Your business name and contact details
- The customer's name and contact details
- Billing period
- Date invoice is sent
- Payment due date
- Unique invoice number
- Itemized list of services and descriptions
- Rates and fees
- Subtotal due
Using an online invoicing platform will streamline your business process. You can set up recurring billing for pre-determined dates. And you can schedule payment reminders at specific time intervals.
There's everything you need to look like the professional you are. And it'll gain the respect of customers, which is always a plus for when the invoice due date rolls around.
Deciding On Your Invoice Due Date
Since you decided to send invoices for services rendered vs. billing upfront, you have to come up with payment terms. There are typical billing cycles both small businesses and corporate offices use.
For example, there are the Net D billing periods, which include Net 7, Net 10, Net 30, Net 60, and Net 90. What this means is that you're giving clients a set number of days to pay your invoice.
For example, if you have a Net 7 term, then this means clients have seven days to pay you. Be careful about this -- you want to ensure they know whether payment is due seven days from the invoice date or project completion date.
You'll need to detail this in your invoice and billing policy agreement.
Also, you may want to stay away from Net 30, 60, and 90 terms if you're looking for quick payments. You can think of the Net D cycles as credit.
You're allowing your customer to benefit from the services you rendered for one week to three months before paying you.
Now, if you decide to go with the Net 30, then you can use tactics to help clients pay on time.
For instance, you can offer an incentive to pay before the date. Some businesses knock off 2% of the bill for customers who pay within 10 days.
Another option is to tack on a late payment fee to deter clients from clogging up your cash flow.
Here are some tips you can use to help keep consistent cash flowing in.
Offer Multiple Payment Options
Imagine going to a vendor to purchase a product or service. You're ready to buy but can't because they don't accept major credit cards or your preferred payment platform.
So you hold off on payment or decide to go to another supplier.
That's what will happen to you if you don't make it easy for your clients to pay. You need to be flexible in the types of payment you accept.
But rather than dishing out money on multiple payment gateways, you can opt for an online invoicing tool.
For instance, invoicely allows you to accept online payments from credit and debit cards, PayPal, Mollie, WePay, and Stripe. These are payment methods and platforms widely used by today's businesses.
Businesses that Invoice After Services Are Rendered
Most businesses you interact with daily don't bill customers after they receive what they ordered. This is especially true for businesses that sell goods.
Grocery stores, restaurants, and even movie theaters all require you pay upfront before you get what you came for.
There are also some service providers that do the same. If you need pest control, plumbing, or a mechanic, you have to pay in advance (in most cases).
However, you'll find some freelancers, consultants, marketers, remodelers, and a variety of other service providers with invoice due dates that are weeks after project completion.
This is usually the billing terms for corporate clients with an enormous budget. Obviously, you wouldn't want to entrust an individual to pay you back 30 days after performing a service for them.
Net 30 is prominent in the B2B (business-to-business) industry, while B2C (business-to-consumer) companies bill at the time of service or in advance.
Turning Services Rendered Into Recurring Work
In business, your most prized asset is your customer base. If you can retain clients, then you can maintain a consistent flow of money, without spending on ads and marketing.
To keep your customers long-term, you need to offer excellent services. Plus, you have to be courteous.
Your invoice is an ideal platform for displaying your courtesy. For instance, you can include a discount code to use for their next order.
It's also good practice to include a "Thank You" note at the bottom of every invoice. Personalize it, so the customer feels you're talking directly to them.
Then if you have a new service you're offering, inform them about it here. Upselling and cross-selling are essential if you want to keep customers coming back.
Start Crafting Invoices for Services Rendered
You have all the info you need to get started making your own invoices for services rendered. It doesn't take a lot of effort, as long as you're using a quality invoicing platform.
With this one tool, you can establish your brand as a trusted professional in your industry. All you have to do now is back up this image with quality services.
Are you ready to start getting paid for services rendered? Then follow the tips in this post and let us know how it all works out for your business!