Solopreneurs all over the world know that being an independent worker doesn’t just mean that you are an expert in your chosen field, you suddenly also need to be extremely knowledgeable about finances, business law and contract management. One of the first hurdles to overcome is how to invoice your clients.
Invoicing and chasing payments are usually cited by freelancers as being the most time-consuming and frustrating part of their chosen career. It should be simple right? You provide a service, the client pays you… In all too many cases this is simply not the case.
Regardless of whether you have found a gig in addition to your full-time job or are an experienced entrepreneur, issues with how to invoice remain largely the same. So what are the most common problems individuals face when issuing invoices and how can you overcome them? Let’s find out…
Chasing payments is obviously a big problem. This doesn’t just cause financial woes, but it can also have a huge impact on a freelancer’s mental health and waste an awful lot of their precious time.
The Association of Independent Professionals and the Self-Employed (IPSE) published research recently showing that freelancers spend an average of 20 days a year chasing late payments, with 43% even letting work go unpaid as the process becomes so time-consuming.
This seems like an extreme outcome, but the reality is that many freelancers don’t want to rock the boat with clients and harm the relationships they have built. However, research from IPSE found that 71% of client-freelancer disputes are about late payment.
Invoicing best practice
So how can you avoid payment disputes and how should you send invoices properly? At the end of the day, a poorly written or badly formatted invoice could result in client confusion and significant payment delays so you should make sure you do everything you can to get it right at the beginning.
This means that invoices should:
- Be accurate with a detailed list of services provided and the subsequent fees being charged
- Be enforceable based on the agreement between you and your client (i.e. a contract or an agreed offer)
- Adhere to any sales tax laws for the countries you’re invoicing to and from
- Include your name
- Include your client’s name and contact details
- Include a unique invoice number
- Include the invoice date and the due date
- Prominently display the directions for how to make payment
You should also ensure that you are prompt in sending out invoices as soon as the work has been completed if possible. This means that the work is fresh in the client’s minds and they may be quicker to make payment.
If you have done all these things and payment is still late, then it is wise to not wait too long before politely reminding them. Setting up a payment reminder system where prompts are sent out automatically may be a good idea and will save you time and reduce stress. Don’t be afraid to take further action if invoices remain unpaid even after several chases.
Invoicing without starting a business
Unsurprisingly, many freelancers and entrepreneurs simply don’t have the time or the patience for such detailed invoicing procedures, they become overwhelmed and things very quickly start to fall through the cracks.
A significant number of freelancers are now turning to digital invoicing tools and business partners like Xolo Go.
Working with Xolo Go means you have a virtual company instead of a real one that allows you to invoice your clients, no matter where you are in the world. The concept is based on a unique partnership setup where you can use Xolo’s legal framework to enjoy the benefits of having your own company without ever registering one.
This means that you can avoid the headaches and complexities that can arise from operating your own business. You don’t have to think about creating the perfect invoice template or endless paperwork and you also don’t have to worry about things like taking dividends or getting your money ‘out’ of the business you set up.
Further to this, it gives freelancers all the fancy features of a full-fledged business – such as a dedicated bank account, expense management, invoicing tool and business dashboard – without the responsibility and headache of starting a real company.
It works by allowing freelancers to use its online projects function to agree on a particular service before committing to work, after which invoices can be sent and payments received.
As a freelancer, having a virtual company with Xolo Go means that it is totally paperless, the administrative burden is lifted, and you can spend your time doing business-generating tasks instead. You even get invoice templates and can easily receive payments from your customers to a business account.
Xolo Go is a no-commitment service meaning you can opt-out at any time, there are no fixed monthly fees and it can be set up under 10 minutes!