Common Invoice Mistakes Every Freelancer Must Avoid
More and more individuals are pursuing careers in freelancing as the typical nine to five workday is becoming a thing of the past. As a freelancer you’re in charge of every department in your operation. Sales, marketing, product, and most of all accounting.
When it comes to getting the bills paid it’s common for freelancers to overlook the hurdles associated with it. Send an invoice and get paid. Seems simple enough right? Truth is, invoicing and collecting payments is still something many freelancers struggle with today. With that said, here are a few invoicing mistakes that every freelancer must avoid.
Still Using Traditional Payment Methods
It’s important to try and cut costs wherever possible when you’re freelancing. Since you run a small operation you likely can’t afford fancy technologies for each department. However when it comes to accounting, it’s often worth it to shell out a few bucks for a streamlined solution.
If you’re still sending paper invoices and receiving checks you’re making a mistake. There are plenty of online payments solutions that offer features like expense management and online invoicing. These platforms allow your customers to seamlessly make payments online and the money will be deposited directly into your bank account. In addition many of these products offer extremely affordable packages for individuals. In fact, services like Due offer a completely free solution except for a 2.8% per transaction fee for credit card payments.
Settings Payment Terms to ‘Net 30’
First and foremost – using terms like ‘Net 30’ are a mistake to begin with. Sure it looks professional to use fancy terms but what’s the point if it causes even the slightest confusion. Net 30 means you’re giving your client 30 days to pay the invoice.
If you give your clients a month to pay you each time you’ll run into some serious cash flow problems. I suggest setting your payment terms no later than 15 days. In addition you should specify the exact date that you’d like to be paid by. For example “Due on January 15th” is much clearer than “Due in 15 days”. This may sound unnecessary but you really don’t want to leave any room for confusion on invoice due dates.
Being Too Passive with Clients
When you’re waiting on a payment you need to be disciplined about following up. Many freelancers are too passive with their clients, especially new ones. Nobody wants to come off as annoying. At the same time there’s nothing more annoying than an overdue invoice.
When an invoice becomes a few days overdue you should follow up with your client immediately. Start with a friendly email reminder and then move to a few phone calls if necessary. Typically a simple reminder is enough but you need to be persistent on getting it paid. If a client gives you too much trouble it may be a good idea to find others to work for.
Sending Invoices to The Wrong Person
If you’re being contracted by a single person this won’t be an issue. However if you’re contracted by larger agencies this is a huge one. When you send your invoice make sure it’s directed at the right person.
Often times the individuals you interface with while on the job aren’t the ones who are authorized to pay the invoices. Make sure you get that contact at the very beginning of the job and keep all financial related discussions with them. The more middle men you have the more you’ll delay payment.
As mentioned above a freelancer is fully responsible for their whole operation. It’s important to have proper control over each department or you’ll start to see problems. When it comes to invoicing and getting paid – you need to be sharp. Take note of these four common invoicing mistakes and make sure you don’t do the same.