Submitting invoices as a self-employed freelancer
Freelancers have got a lot on their plate. When you’re self-employed, you’re in effect taking on full responsibility for running a business yourself. There’s no one else to delegate to. It’s all on you.
That includes getting paid, writes Adam Home, senior collections manager at Safe Collections. When you work for a company (as one of their employees), there are whole departments there to take care of the financial side of things, whether it is collecting payment from clients or remunerating staff.
Financial responsibilities as a freelancer? They're numerous
But as a freelancer, you are solely responsible for agreeing fees, issuing invoices and then making sure the money you are owed actually makes its way to you.
It’s no wonder this is a side of freelancing that a lot of people find very stressful -- especially given the rampant culture of late payments, which inevitably hits the self-employed hardest.
We already know that half of all freelancers report feeling overwhelmed and anxious due to the extra stress placed on them by having to chase payments. Overdue invoices are a scourge that leave tens of thousands of self-employed workers facing regular cash flow problems.
What’s on your latest invoice providing an excuse not to pay you promptly?
All too often, companies use the invoice submission process as an excuse to hide behind not paying on time. Be aware freelancers -- they will look for any little fault like a small detail missing from the document, or just you as a supplier not following entirely the correct procedure, to try to put the blame for a delay on payment back on you -- the payee. No, it’s not fair and no, often it’s barely justifiable!
But while there remains so much leeway for companies to pay late and get away with it, freelancers have little choice but be meticulous with their invoicing procedures.
So what can the self-employed actually do to ensure you never give any client an excuse not to pay on time? Here, exclusively for FreelanceUK, we provide some top tips to make your invoicing processes watertight, before and after submission.
Preparing to issue invoices
The first thing you need to do before you send an invoice to any client is to get payment terms agreed in writing. This should be done even if you don’t have a written contract with a client and ideally before you start doing any work for them.
Payment terms govern things like when invoices will be issued and how long clients will have to pay. Don’t feel pressured into accepting whatever terms the client proposes, especially if they are suggesting long payment periods. Be clear about the timeframe you need to be paid within and negotiate as necessary. Getting agreed terms in writing means no one has any room to claim their understanding of the arrangement was different at a later date.
Get a client invoice rep’s name, and ideally their phone number too
Another important step is to know exactly who to send your invoices to. Nowadays, this mostly means the freelancer submitting their invoice to an individual’s email address, but a lot of companies will simply provide a generic ‘accounts’ email address. This opens the door to you having to do a lot of chasing around trying to find someone to take responsibility if you do have an issue with a payment.
So instead, push for a named contact and ‘CC’ them into every invoice you email across. Try to get their direct telephone number too. You might need it later on!
Next, take care to make sure the details are correct on every invoice. This includes asking the client what they need to see on every invoice.
Invoice PO numbers
Some companies, for example, will demand a ‘PO number’ for every job. A good tip is to get any PO numbers approved and provided before you start work. If you leave it until you are ready to invoice, you are bound to run into delays -- and it won’t even count as a late payment as you haven’t submitted the invoice yet!
Similarly, some companies will ask for itemised breakdowns of the costs of every job, assignment or piece of work you’ve completed. If you invoice for a lump sum, that’s an easy reason for them to hold up payment. Check to see if your client needs a job cross-referencing to the department that booked it in, too. Not being provided with that information is another common reason why accounts departments refuse to sign off on payments.
Remember, you might chase them -- but they won’t chase you
Lastly regarding pre-invoice submission, make sure your details are correct -- including your bank details. If you submit an invoice without your bank details, or with some information missing or incorrect, don’t expect the client to come chasing you. Take care over presentation too.
You want all information to be clear and unambiguous, leaving no room for confusion or query.
After your invoice has been emailed to the client…
Getting an invoice right before it is sent will go a long way to ensuring clients have no excuses for delaying payment. But there are steps you can take once it has been submitted too.
For one, we would always recommend following up soon after you send an invoice to check that it has been received and that everything is okay with it. The ‘it got lost in the system’ (or junk folder) excuse is one of the oldest in the book when it comes to late payments! This is another reason to insist on having a named contact, potentially who you can speak to on the phone (if you followed our previous advice above), which is vital should your emails be genuinely going astray.
First mover advantage
Being proactive and getting in touch first also minimises any delays if the client does have any queries about an invoice. You can act on any issues straight away. Otherwise, you are left waiting for the client to raise them -- which they might not do at all, until you get in touch to ask where your money is.
Finally, if payment is overdue, act swiftly. You are entitled to chase any money you are owed the moment the agreed payment period expires. If you don’t want the burden of having to check when every invoice becomes overdue, modern, small business-friendly accounting apps include automated ‘follow-up’ options for every invoice sent.
Late payment law exists for a reason. Even just mentioning it can help you get paid
As well as issuing reminders in a timely fashion, don’t be afraid to use all the tools at your disposal for pushing a client into paying what you’re owed. This includes applying ‘late payment charges’ from the very start. These charges exist for a reason and are sanctioned by law.
Telling a client that the longer they take to pay, the more they will be charged is a very good lever for making them cough up.
Lastly, be ready to back up your invoice nudges with actions
Similarly and finally, be clear that you are prepared to escalate the matter if payment isn’t forthcoming. Be polite but firm with your client that if they don’t pay within a specified timeframe, you will pass the matter on to a debt collection agency, or after that pursue it through a small claims court.
Again, these kinds of nudges are often enough to push intransigent clients into paying -- although you have to be prepared to act on your words if further deadlines do then pass. Now, what are you waiting for -- go submit that invoice!