You may not think invoicing is the most enticing topic out there, but let’s be real, in order to stay successful as a small business owner or freelancer you’ll need to keep the cash flow flowing. By improving your approach to your business’s finances and fiscal procedures you are paving the way for business success. Central to this idea is making sure you have strategic invoicing methods in place that ensure you get paid faster. Read on for a few of our simple, yet essential, invoicing tips for business success.
Know your worth – Create a strategic price list
If you are just starting out as a freelancer or entrepreneur, it is sometimes easy to undersell yourself and charge too little for the hours you put into your work. One of the most important aspects before you send out any invoice is to ask yourself: “How much to charge?” and come up with a strategic price list.
To come up with your price list it helps to perform some light research and consider the following factors:
- Expertise – years of professional experience
- Market location – consider regional affluence or psychological attributes of your target audience – Level of competition and cost (find some top competitors and study their approach to price structure; this can help you find a benchmark that is not too high and not too low
- Variety of services – depending on the services you provide, charge as either a fixed amount, an hourly fee, a sales commission, and consider the costs to perform your services if materials are needed
- Speed – consider the duration of a job and if the client asked for a shorter deadline
Brush up on invoicing terms
As well as reviewing these invoicing tips, becoming familiar with everyday invoicing terms will help small business owner and freelancers grow. Here are some essentials:
- Balance sheet – shows your business’s net worth by making sure the liabilities, assets, and owners equity of your business all balance out. By using your financial data, it tracks business performance, can help you build up your finances and find areas for improvement, and can help you determine the best ways to use credit to finance your operations.
- Profit & loss statement (P&L) – helps you check the vitals of your income and expenses over a period of time – usually a year – and shows whether you are making money or haemorrhaging it. If you are serious about making money and keeping your enterprise afloat, keeping track of these numbers is critical.
- Proforma invoice – Similar to an estimate or quote, a pro forma invoice is a preliminary bill of sale and outlines a seller’s intent to deliver products or services. However, as a price hasn’t been agreed upon, it usually is not considered a true invoice.
- Quotes & estimates – Often people use these terms interchangeably, however, it is useful to know the difference. An estimate is an estimation of what the product or service may cost and, in most cases, the end price will differ from the estimate; it also tends to be non-binding. A quote is a more detailed outline of what items will cost a customer. Quotes tend to be a fixed price and are used when you give a customer the exact amount of what they will spend ahead of time. It may be necessary to specify what the quote covers and also to make mention of situations which may lead to additional charges.
- Terms of sale (TOS) – the terms you have on an invoice when a customer makes a purchase. These terms should outline what’s expected of the buyer when they agree to buy, the payment methods you accept, information about taxes and fees, and possible penalties for not following through.
Knowing where your business finances and/or personal finances stand is vital to your success. They will help you grow your business and, ultimately, will shape your future.
Polite payment reminders & a phone call
Getting paid by your clients should be easy and considering the amount of time you put into a job you certainly deserve to get paid. However, for whatever reason, sometimes clients seem to forget to pay, not receive your email, can’t pay right now, or maybe just don’t want to pay at all. So to get the client to pay you faster it may be necessary to politely nudge them a bit.
Start by sending a polite, professional follow-up email. Remember to use words such as “please” and “thank you” which will not only make your emails sound more professional but will incentivize your clients to pay you quicker. Wait for about a week and then consider your next move.
If you still haven’t received payment after a week you could then send your client another email, but a better option would be to call your client.
Before you call your client, remind yourself to try to remain ‘cool, correct, and cordial’ over the phone. Services rendered should equal money paid – be firm in your attempts to collect what is owed.
Professional invoices can be beautiful & used to enhance your brand
Your invoice is a document that your customers will hopefully be seeing on a regular basis and can be used as a marketing tool to generate business and build brand recognition. So why be limited to standard and often plain invoice templates that don’t reflect your business or your personality?
Today there are so many invoicing options out there, like Invoice Home, that offer fast and affordable invoicing and billing solutions. Based out of Las Vegas, Nevada (USA) what makes Invoice Home unique to their field is they provide creatively designed, artistic invoice templates that can help any freelancer or small business owner enhance their brand. With over 200 beautiful invoice templates available on their website or mobile apps (Android and iOS) you’ll be sure to find a style that is professional enough for business and definitely not lacking in personality – think invoicing re-imagined.
Ultimately, whatever invoicing or billing solution you choose be sure to personalize your invoice by adding your logo, writing clear payment terms, entering all invoice details, and sending invoices out promptly.
To number or not to number? Assign invoice numbers
For the sake of keeping your financial documents organized and your bookkeeping inline for tax season, you (or your invoicing software) should assign numbers to your invoices. There are a number of ways to do this:
- Sequential invoice numbering
- Chronological invoice numbering
- Begin with a customer number
- Begin with a project number
Remember, regardless of the number system you choose, it is advised to not start your invoices off with “001”. By starting off with the “001” it will let customers know you are just starting out and may signal you are potentially inexperienced and perhaps unprofessional.
These are some of the best invoicing tips for business success, and while there are many more ways to help your business succeed, this is a good starting point. If used effectively, these invoicing tips can help you strategically maximise your business and set you up for lasting success. Ultimately, to succeed as a business person, you’ll really need to take charge of your finances and have a solid understanding of your business’s finances. Good luck!
These invoicing tips have been created in collaboration with the lovely team over at Invoice Home.