Client invoice is one of those things that may appear flimsy. Except a client specifically is requesting one, you might never find it a necessity to provide one. If you are new to freelancing, this is probably one of the first things to consider. As a seasoned professional needing a reason to provide one, however, here is everything you need to know about client invoices. From understanding its meaning, the types, why you need to create one, and how you can create a client invoice.
When you initially started working for yourself, you probably had a lot of questions such as, “How do I acquire clients?” or “What is an invoice?” Fortunately, you are a professional at the trade and know all there is to know about running a freelance business. However, there is always space for improvement and learning.
Invoicing is one of the most critical skills to learn as a freelancer. Proper invoicing is critical in order to receive payment for the work you’ve accomplished. However, billing entails much more than simply delivering your client a list of projects and their associated costs.
Continue reading to find out why professional invoices are important and how you can make the process easier and less time-consuming.
What is a client invoice?
A client invoice or invoice is a document representing details regarding a service or product purchase. This for the part of a client creates an obligation to pay for a purchase and for the business details regarding what was sold and what is expected. Providing invoices for clients have tremendous benefits for both a business and its client. As a freelance professional, there isn’t quite any difference between you and a business owner. In fact, nothing quite shows professionalism like a freelancer that provides clients with invoices.
Why should you bill your customer?
To submit a payment request. Simple. But wait, there’s more.
An invoice assists you in documenting all aspects of the payment. It provides your customer with all of the information they need to make your payment, eliminating the need for back-and-forth communication about the pending amount, account details, your registration address, and so on. This one document handles everything and saves all details in one location.
This is especially crucial as a freelancer since a client invoice allows you to keep track of your pending amounts and eliminates miscommunication. So, rather than remembering: “I need to withdraw INR 7,000 from X client,” you may just say: “Invoice #0007 pending.” Simply open the invoice to see what amount is owed to which client.
Types of invoices
Contrary to common beliefs, there are quite the types of client invoices. These are classified based on the business type as well as the purpose. These include the following:
This is the most common type of client invoice used virtually by most businesses and professionals today. It is also the most flexible invoice type that can be used by almost all businesses and professionals. A standard invoice typically contains.
- Invoice number
- Business details
- Client details
- product/service information
- Amount due
A credit invoice also known as a credit memo is an invoice type used to offer clients a discount, a refund, or fix a previous invoicing error. This invoice type always comes with a deficient total balance.
A debit invoice also called a debit memo is the opposite of a credit invoice. This invoice type is used to correct a previous invoice in a case where you have to add more zeros to a previously issued invoice. This is commonly used by freelance professionals when they have to correct originally billed hours. As freelance professionals, it’s common to go above-stipulated work hours. A debit invoice is used to notify clients of the additional hours or bills incurred.
A mixed invoice is a type of invoice used in cases where you have to perform the function of a debit and credit invoice together. This is used for cases where you probably need to give a client a discount while also billing extra hours for work that wasn’t included in a previous invoice.
This is a type of client invoice used for goods/products shipped overseas. This invoice includes details of sales in order to obtain fees on custom duties for cross-border shipment. A commercial invoice includes the following.
- Shipment quantity
- Weight / volume
- Description of goods
- Total value
- Packaging format
An expense report or invoice is a type of invoice issued by employees to an employer for reimbursement. These are cases where employees have to spend their own money on company expenses. The invoice showcases what money was spent in order for reimbursement to be processed.
A timesheet invoice is used for hourly contracts. As a freelance professional working on an hourly basis, this is the type of invoice sent over to clients for payment. This typically contains your agreed hourly rate and the number of hours worked in a stipulated period. This of course is for those who do not use time tracking software.
Pro forma invoice
A pro forma invoice is a client invoice type used to inform a client about a service or product’s proposed cost. For example, this is what you send over to your client to inform him of the estimated number of hours a project will require. The final receipt can defer from the number estimated on a pro forma invoice.
This is the type of invoice required when you offer a fixed service price to a client. This means that month by month, nothing changes on your invoice.
An E-invoice is any of the aforementioned invoices sent electronically. As a freelance professional working with clients all over the globe, you require E-invoices for all transactions.
Why bother providing client invoice
Invoices serve as records for both a business and its clients. As a business or service professional, this is how you know how much you are owed and how much you make.
All businesses provide client invoices. Many professional freelance professionals also do the same. Providing one might not make you one of the top tiers, but it’s a step in the right direction. As you grow, this will help you better track your growth and previous clients you have worked with.
An invoice is a legally binding document that tells the third party a transaction was made. This helps protect both merchants and buyers against fraudulent claims.
Not reporting your appropriate earnings will affect your tax, which can affect your business during an audit. To avoid tax complications from the IRS, client invoices provide exact records of just how much needs reporting.
Many businesses make the mistake of not tracking earnings. This hinders business growth even as a freelance professional. Starting out can be tough but growth is imminent. Being able to track exactly what you charge and what you make will help your growth. You can analyze where your business has been and where it currently is to adequately plan for the future.
Bills Show Your Professionalism
Being a well-rounded freelancer is beneficial. Customers appreciate knowing they can rely on you for timely responses and high-quality work, in both your interactions and the services you deliver. Sending clients professional client invoices that don’t seem hastily put together is essential for developing into a more well-rounded freelancer.
While invoices don’t have to be overly complex, they must contain specific information so that clients (and you!) can track the figures over the course of months and years.
You should make sure to include the following details in your invoice before submitting it:
- Name and contact details
- Customer’s name
- Date of issue for the invoice
- Expires on
The line item descriptions and total amount owed should be provided in the most important way possible. The breakdown of the items and services you rendered throughout the billing period is presented in the line item descriptions.
Even if it would be simpler to bundle products and services together, it’s preferable to separate them so that customers can receive thorough tracking information. There should be a description, amount, rate, and subtotal for each line item.
If you work as a freelance writer, for instance, you might have written a number of blog pieces and social media updates for the client. You should include the title of the blog article and the predetermined per-word rate for each line item. You can group social media posts into a bulk assignment and only adjust the quantity when doing so.
The last stage in preparing a client invoice is to specify how and where a client should pay you after you’ve finished writing explanations for each line item. While some prefer to have cheques addressed to their homes, the majority of freelancers prefer to be paid via web-based methods like PayPal or Venmo.
Advice for Increasing the Efficiency of Invoices
You probably hate the idea of having to manually create invoices every few weeks now that you know what details you should include on professional invoices. Fortunately, there are numerous ways to improve the efficiency of the invoicing process.
Make a template first so you may use it for each client invoice. Utilizing applications like Microsoft Word, InDesign, or an invoice builder, you can generate an invoice template. In this manner, you can avoid starting from the beginning while making an invoice. Change pertinent information, including the client’s name and the invoice number, if you are charging several clients with the same invoice.
How to create a client invoice
Creating an invoice is as easy as pushing the power button in a Tesla when you know what to do. There are many templates out there that require a lot of time to edit to make a single invoice. However, service providers like Paystubsnow provide easy and fast online access to creating an invoice.
FAQ: What does invoicing mean
What does invoicing mean?
Invoicing is the process of providing a client with a document outlining details regarding a purchase. This can be done via electronic mediums or physical documentation.
Can an invoice be used to ask for payment from a client?
An invoice serves as a legally binding document showing a client how much they owe. This is also a medium of requesting payment due from a client.
How are client invoices paid?
Once invoices are issued, clients are required to pay the due sums to the merchant’s preferred method of receiving payment. This could be through PayPal, Stripe, or physical cash.
How to issue an invoice
Invoices can be issued in person, faxed, or emailed. Emailing is the most common method of issuing invoices today.