Making money is great. Congratulations if you’ve landed a new client or had successful sales. Do you want to keep it up?
Of course you do. That’s why you need to be careful not fall into the trap of messing up the invoicing process. It’s really common that businesses and freelancers will expect to simply send the bill and collect the money, but there are a few mistakes you need to avoid if you want to keep that business going.
Steer clear of these 5 invoicing mistakes and you’ll set yourself up for success.
1. Not listing the terms on invoices.
You spend time networking to get the meeting. You talk with the prospect about what you can do to help. You email the lead your proposal with all the specifics. You both agree on the terms and, finally, you land the client.
Now you just send the bill and get to work. Right? Wrong. It might seem redundant to include the terms of your arrangement on the invoice. After all, you discussed this with the client verbally, they signed the contract, and you’re both clear on what to do next.
Even when things seem like they’re packaged neatly in your contract and you both are on the same page, listing the terms on every invoice is absolutely critical for you for a lot of reasons.
The payment terms, for one, are important because you don’t know if the person paying this bill is the same one that you’ve spoke with. They may have no information on what you and the buyer agreed on let alone who you even are. Include the date when you expect to receive payment and how much of the total payment you expect on your invoice to avoid this confusion.
List the services you’re providing on every invoice and when you will deliver them by. This is for your own sanity as well as the health of your relationship with the client. When you have a list of what you’re doing each month it becomes easier to plan ahead for you and the client can’t use the lack of clarity as a reason to ask for more or claim that you didn’t deliver.
Seriously, include this information on every invoice. You’ll be preventing headaches down the road and keeping clients happy by doing so.
2. Not branding the invoices.
Let’s face it. “Many of the invoices sent today are not from agencies or large companies with established branding and logos,” says Deep Patel, the founder of Owlmetrics.
If you’re one of the thousands of individual freelancers or small businesses that regularly invoice clients, you shouldn’t use your size as an excuse to miss the opportunity to increase your brand awareness and appear as professional as possible.
If you don’t have a logo already look into getting one made using a site like Deluxe, so that you can include it in your invoices.
If you have a logo, but haven’t yet incorporated it in the header of your invoices, take the time to add it. Not only does this make you more professional looking, but you never know who’s looking. I had a client come to me to help market her startup simply because she noticed my brand on the invoices that she paid for her 9-5 job. It’s an important little detail that can get you big results, so make sure you brand your invoices!
3. Not accepting multiple forms of payment.
If you’re running an ecommerce business or other site where you accept payments online, you’re leaving tons of value on the table by limiting the types of payment you accept.
As the world continues to go digital and new options become available for both domestic and international payment you’ll want to be set up for success no matter what the next invoicing innovation might be.
Consider partnering with a company like Due for a quick and easy way to accept just about any type of payment online that the world can throw at you. It makes it easy to collect without having to learn about each payment option and do all the on-site implementation for each choice.
4. Not factoring in fixed costs and expenses
“Invoicing for the services provided and ignoring the fixed costs that you incur as you provide them can be a costly mistake to make,” says Mike Clum, the founder of a Facebook advertising agency.
Obviously, the fixed costs associated with your business are going to vary depending on what you do, but they always impact the financial results over the long run unless you account for them. Consider the tools you use for clients and how much they cost you on a monthly basis. Factor in the money you spend on marketing services like Facebook ads and other PPC campaigns.
Add up all of your expenses and fixed costs before you start quoting prospects on price. When you land clients, include a breakdown of the costs in your invoice to them.
Every business has operating costs, but it’s easy to forget about accounting for them when quoting prices. Don’t make this mistake. If you have several costs that can be spread between clients, make sure you include them in your invoices so you’re not shouldering the entire burden every month. By doing this you avoid any surprises down the road when you start accounting for your income.
5. Not establishing invoicing agreements or collecting retainers before starting.
When you’re a freelancer or just getting started with your business, landing those first few clients is a great feeling. It’s so important to keep things logical and systematic when you’re in business for yourself.
Without keeping up systems like your retainer collection policy and setting up clear and written invoicing agreements, you’re risking damage to your business and the relationship with your client.
This invoicing mistake can be avoided with a little planning and organization on your part before you go prospecting for new business.