Web Worker 101: Creating Your First Invoice
August 17th, 2007 (11:00am) Mike Gunderloy 18 Comments
No matter what sort of web work you’re doing, there’s one constant: you’d like to get paid for it. More than 99% of the time, this is going to mean sending a bill - more usually called an invoice - to your client and waiting for them to send you a check in return. If you’re using an accounting application such as QuickBooks, you can have it generate invoices for you. Alternatively, there are sites like SideJobTrack or BlinkSale that will help you build an invoice. But many web workers get by just fine with using a word processor or spreadsheet to bang out their own handcrafted invoices. If you’re pinching pennies and creating your own, you need to make sure to get these essential points on every invoice you send:
The word “Invoice” - Right at the top, in big, bold letters. Leave no doubt in the mind of your readers that this is a request for money that they must attend to in order to keep your services.
The invoice date - That is, the date that you sent the invoice to your customer. This is the date that the payment terms start ticking, and if you’re dealing with a company of any size, they’ll want to know this information.
Your contact information - Start off with whatever name you want the check written to (hopefully this is your company name), and include your address, phone number, fax number, email address, and any other means you want the accounting folks to use to get hold of you. Don’t assume that the accounting people have this, no matter how often you speak to your actual working contacts at the client. If you’re dealing with a big company, you’ve probably been assigned some sort of vendor ID number; if so, be sure to include that too.
Your Federal Tax ID Number - Put it on every invoice. If your state requires a tax registration (such as Washington’s Uniform Business ID) put that on too. Clients will want to track this for their own tax reporting purposes.
The Client - Who you’re billing. In a large company, it’s vital to include the name of the person you’re working with, so the accounting department knows who to ask for approval. If you were assigned a contract number, include that too.
Itemized work done - At whatever level of detail is necessary to prove that you’ve been doing the work that you were hired to do. This is something you’ll generally need to work out with your primary contact at the client, who’ll be signing off on paying your invoices. Usually a minimum is to list the date, number of hours, work done, hourly rate, and total for the day.
The invoice total - Highlight this somehow; boldface is good. Make it as obvious as possible what number you’re expecting them to pay you.
Your payment terms - You need to tell the accounting people how soon you expect to be paid and on what terms. “Net 15″ means that the bill is due in 15 days. “2% 10, Net 30″ means that it’s due in 30 days, but they can take a 2% discount if they pay it within 10 days. Include information on any penalty terms here (”1.5% interest per month after 60 days”) though frankly you have a low chance of collecting if your client is much larger than you are.
Always double-check your math before sending an invoice, and if you’re sending a paper invoice, it can’t hurt to add a personal note of thanks to the bottom of the page. By making sure that you have all the essential information on a single page, you can maximize your chance of getting paid quickly, and avoid the dreaded month of eating ramen noodles that characterizes the start of so many freelance careers.
18 Comments Post your own comment
Peter Garner says: August 17th, 2007 11:34am
Include information on any penalty terms here (”1.5% interest per month after 60 days”) though frankly you have a low chance of collecting if your client is much larger than you are.
My own terms are 30 days, but I have basically resigned myself to waiting at least six weeks to be paid by most large businesses. I only send out a second invoice with interest charges after 6 weeks, and it is my general rule that if a client doesn’t pay on time and then doesn’t pay the interest when they do pay, I drop them as a client. It’s just not worth the aggravation.
Fortunately, during the 10 years I have been self-employed in my line of work, this has only happened twice.
Liz Greer says: August 17th, 2007 12:15pm
If you have an ongoing relationship with the client, in addition to noting the itemized work done, I have found it helpful to include in a highlighted box two or three bullets of key accomplishments (during the invoice period), kind of a 100,000 foot reminder to the VP who’s going to eventually sign off on your invoice why they’re continuing to hire you. This is particularly true for people who are doing interim contract work.
Derek says: August 17th, 2007 12:16pm
FYI - SideJobTrack is not taking new accounts an sends you to Blinksale.
Mike Thatcher says: August 17th, 2007 5:28pm
A good place to get a jump start is the microsoft office templates page. (You pay the Microsoft Tax why not get a rebate… sorry)
Here is the the url
http://preview.tinyurl.com/26494h and here is the results page when you type the word invoice into search.
http://office.microsoft.com/en-gb/templates/results.aspx?qu=invoice&av=TPL000
Find something you like and modify it as the article details above.
I really like the highlight box with a few bullet items in it.
That is a ripper tip.
GigaOM GigaNet Headlines…Friday « says: August 17th, 2007 5:30pm
[...] by Carolyn Pritchard Friday, August 17, 2007 at 5:30 PM PT | No comments WebWorkerDaily: Web Worker 101 — How to create your first [...]
almostgotit says: August 17th, 2007 7:40pm
Thanks for another great post, Mike, and it’s always good to go over the basics one more time, even for those of us who’ve been doing it for a while. (For instance… wow, charging *interest!* Now that’s a very interesting thought! Especially if terms are stated up-front. Sort of like conferences charging “late registration fees” — the point being much more one of encouraging a prompt response than that of actually collecting any extra fees.)
Several of my freelance colleagues and I have been discussing the merits of a related issue, and that is whether to charge anything upfront or to wait until the bitter end before collecting our first dollar. Personally, I’ve been burned once too often by clients who, having paid nothing, have every incentive to drag the process out as long as possible, “forgetting” to send me all the assets I need, asking for yet another revision, etc… and all the while, even if I’ve been doing the work, I’ve got aip to show for it.
Our new policy, which is becoming industry standard, is to charge half up-front, thus literally splitting the investment between us and the client. Everyone’s motivated to get the project finished this way, which means a faster end to Ramen Days…
Clerical Solutions says: August 18th, 2007 9:46am
Informative article. It’s always good to reread an invoice and state things clearly even in bold letters so that there is no miss communication between you and your client. Clearly state all services or items in the invoice and why they are being charged.
J.T Dabbagian says: August 18th, 2007 11:36am
Not to sound like a n00b, but can you put up a sample invoice?
AJ says: August 18th, 2007 12:43pm
On our site, we have an Invoice anatomy page which visually shows a lot of the points mentioned in the article above.
http://www.billings2.com/anatomy/
We don’t show the tax ID in that pictures, but it is just a click in the options to show it.
This is a Mac only solution. You can get going in 5 minutes (we have a movie to prove it) and if you don’t like the included templates, you can create your own or have us do it for you for a small fee. These templates can be made to preserve your brand identity.
Sorry for the shameless plug. I couldn’t resist.
Patrick Allmond says: August 19th, 2007 6:02am
Thanks for the article. Don’t forget to look at the Freshbooks option in addition to the ones mentioned here (I have no affiliation). All of these are great options mentioned. But they are not ones I can use and you will find this out someday when you really start growing. They are just too simple, and as neat as they are they do imply a lot of double data entry outside of your accounting software. Yes - I am a QB addict. I need to manage things like subcontractors, and their line item vs what I bill for then, etc. These web solutions are great - but in the end you will always end up in an accounting program eventually.
Fresh Sunir says: August 20th, 2007 10:12am
Sunir from FreshBooks here,
Mike, this was really one of the best descriptions of how to create an invoice I’ve read so far. Patrick, thank you for the shout out. And hey, AJ!
I don’t want to disparage SideJobTrack, which is actually quite nice. However, R. Marie Cox has closed the service to new users as she has a wonderful new job at FaceBook that I am incredibly jealous of. http://www.artypapers.com/ap.log/thread.php?339
Also, I think
does not stand up to the statistics. We do surveys now and then at FreshBooks, and we consistently find that each and every one of our customers makes more money by using FreshBooks than they spend.
http://www.freshbooks.com/blog/2006/12/14/survey-results/
If you’re just starting out, it may seem like overkill to use an invoicing service, but you will not regret it. Form good habits early. Tracking time accurately and sending invoices on time does not only make you look good to your sceptical client. We found that because our customers never forgot an hour they worked and they sent invoices the minute a project was completed, they on average collected 7% more revenue and got paid 8 days faster.
So, not only will your client love you so much to refer you to new clients, but you will also earn more revenue per client. That is exactly the kind of thing you need when starting up and starving.
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[...] Creating Your First Invoice [...]
Web Worker Daily » Blog Archive Open Thread: Handling Invoice Reminders « says: August 21st, 2007 11:00am
[...] Thread: Handling Invoice Reminders As an independent contractor, it’s not enough to invoice for the work you’re doing. You also have to make sure that your invoices get paid. In the best of all possible worlds, all of [...]
neil says: August 27th, 2007 1:52pm
As mentioned SideJobTrack is closed to new signups - I’ve also been unable to get support on an issue keeping me from logging in.
Chris says: January 11th, 2008 3:39pm
If you are a one person shop I’d like to recommend Time59.
http://www.time59.com
It handles time and expense tracking, invoicing, payments and is only $19.95 per YEAR for unlimited use.
Cosmina Stefanache says: January 14th, 2008 6:08am
Hi Mike,
Fanurio http://www.fanuriotimetracking.com helps with the less appealing aspects of freelancing like invoicing and keeping track of time. It’s a useful application with a user-friendly interface.
Web Worker Daily » Archive Web Worker 101: Cashflow Management « says: May 2nd, 2008 11:00am
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invotrak blog » Blog Archive » How to get paid on time says: August 4th, 2008 8:35am
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