How to Invoice Your Clients – Top 10 Must-Haves

When running your own business, getting paid for delivered products and services is key to your business survival.  In order to get paid, you should have a way to send customers and clients an invoice and receipt – both for their records, as well as your own for taxes.  While many entrepreneurs, independent contractors, and freelancers want to start lean and avoid the costs of subscriptions and software tools, having a good invoicing system is critical to running an effective and efficient business.  More importantly, making sure every client and customer invoice has all the key components will allow you to track the work delivered, follow up on outstanding invoices, identify your top paying clients, and understand your best-selling products and services.       

Here are the top ten items and information that should go on every invoice that your business sends out.   

Do your invoices have all the necessary information?

10 Things to Include on Every Client Invoice:

  1. Your Company Name & Contact Details 
    • Tip – Be sure to include your branding / logo at the top of the invoice by your company name.
    • Tip – Make sure your mailing address is correct!
    • Real-life Example:  One of my clients had an agreement / partnership with another business owner to share software and licensing tools, but they were essentially two separate financial entities and businesses.  The mailing address in their invoicing software tool only reflected the business partner’s mailing address. Every month, several of my client’s customers would forget and would mail a check to the address on top of their invoice…which was to his business partner’s address in another state!  When my client would follow up on outstanding invoices, his clients would reply that they had already paid him and mailed their check.  This resulted in unnecessary work in following up with his business partner’s financial assistant with the check numbers and amounts, and wait for his business partner to send him back the money.
  2. Client’s Name & Contact Details 
    • First and Last Name 
    • Company Name (if applicable) 
    • Address 
    • Phone Number 
    • Email Address 
    • TIP – When collecting your customer’s contact information, be sure to have multiple contact methods for your client, especially if mailing address or email address changes. Otherwise, find out what happened when this business owner couldn’t track down a customer who changed his mailing address.   
  3.  Dates 
    • Keep track of when the invoice was created and sent. 
    • Due Date – Make sure it’s clear when the invoices are due.   
    • Example: “Payment is due upon receipt.”  
    • Example:  “Payment is due in advance.”  
  4. Invoice Number  
    • Be sure to have unique invoice numbers for financial record keeping.   
    • Tip – If you are just starting out in business, try not to bill your first customer with “001.”  It will be painfully obvious that you are a newbie.  Instead, start somewhere like “201” and go up from there!
  5. Product / Service Name  
    • Tip – Make sure the product or service name is descriptive and unique enough so when you look at the reports, it’s easy to identify your best-selling versus under-performing products and services.  
    • Bad Examples:  Product 1, Bob Smith, Oak Tree Elementary Fall Festival Event
    • Good Examples:  Get Clear, Get Confident Coaching Program; Signature Talk Speaking Event, FreshBooks Coaching.
  6. Description 
    • Include a short description of the product or service for reference. 
  7. Cost / Price
    • Include the unit cost 
    • Include any discount given.  
    • Indicate if a deposit required.
  8. Terms and Conditions
    • Include statements of late payment or cancellation penalties, return or replacement policy, terms of sale, etc. 
  9. Notes
    • Include any notes as applicable to the client, or simply write, “Thank you for your business!”
    • Example:  If an existing client is renewing a contract, you can indicate that this invoice is for the next signed agreement.
  10. Method of Payment
    • Make sure it’s clear what method of payments that you accept, and how the customer can pay you!
    • Real-life Example:  I’ve seen (and received) invoices that didn’t have any instructions of how to pay. I once had to email a business owner, asking how to pay my invoice. There were a few days of emailing back-and-forth because the person only wanted to accept via PayPal.  Then, he said he would have to charge an extra fee for accepting a credit card.  Being upfront with customers on billing and payment options will save you time and help you avoid a negative customer service experience.

 

Sample invoice with a discount offered.

 

If you are currently creating your invoices in a Word document or writing down your services on a piece of paper, it will be hard to ensure these ten key components are in every invoice you deliver.  Using an easy to use invoicing tool like FreshBooks can ensure all of these critical components are covered in every invoice you send to clients, and allow you to automate this side of your business by sending follow-up notices on past due invoices, adding payment penalties or interest on past due invoices, and sending recurring invoices for clients on a retainer.  It also tracks the history of all the dates, including the date you created the invoice, sent the invoice, late payment reminder was sent by the system, date the invoice was viewed by the client, and date paid. 

Paper invoices don’t allow for easy financial reporting.

 

If you’re struggling to get paid because you’re having to chase down clients to pay their invoices, be sure to check out a free trial of FreshBooks. By having a good invoicing system in place, you can ensure you have all the right information to make the best business and financial decisions, focusing on your top paying clients, dropping any clients who are consistently late on payments, and promoting your best-selling products and services.   

I’d love to hear your thoughts!  What invoicing system do you use?  What challenges have you faced when creating invoices and following up on payments?  

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