In a recent post about time tracking for freelancers—you read it, right?—I tried to convince you that time tracking is a mark of professionalism.
It is also a reliable way to increase your billable time by 15-25% by capturing minutes spent on emails, phone calls, and meetings that many freelancers miss or forget.
Right now, I use Harvest. Harvest simplifies time tracking, invoicing, and online payment processing for me. My executive assistant likes Toggl, my friend JD owns Ballpark, and Amy Hoy built Freckle. You’ve got at least four high-quality choices. If you haven’t already, spend fifteen minutes comparing them and pick the one that best fits your business.
Put it to work for you immediately. Better business structure contributes to a better client experience, and invoicing is one footer in that foundation.
Here are six recommendations to consider as you re-architect your invoicing process:
1) Bill your clients more often.
If you charge by the hour, then don’t wait until the end of the project to tally up time spent for one catch-all invoice. Bill every two weeks–more on that below. If you charge by the project, break up the total fee into multiple installments to be amortized over successive months.
2) Do your invoicing every other Monday or Friday.
Invoicing for billable hours twice a month helps you to better regulate your cashflow and avoid stressful weeks or months where you’re waiting for big payments to finally show up before your bank account hits zero.
Some companies pay quickly. Others have inconvenient accounting practices that you must first learn and then plan around. For example, maybe your client requires two signatures on checks above $5000. Waiting for two signatures can delay payment and pose a risk to your solvency.
Let’s say your client has a net-30 payment schedule. The client is supposed to remit payment thirty days later. You send an invoice on the 14th of the month, a Friday. Thirty days later, your invoice comes due on a Monday.
You barely missed the first Friday, and now you must wait eleven more days before the accountant gets around to your invoice. By the time you actually receive payment, you will have waited not the thirty days implied by net-30 but 30 days plus 11 days plus 5 more days in the mail—46 days total.
And that timeline assumes that both your client and your client’s accountant are organized and efficient. Plenty of times, I have followed up on an unpaid invoice only to discover that my contact at the company never forwarded the email to the appropriate person or department.
I know the above scenario is convoluted, so let me restate the point: Invoicing every two weeks ensures that delays or operational quirks on your client’s end have minimal impact on the health of your business.
Anxiety dampens creativity. It’s tough to do your best work while you worry about money. Nothing hits that pressure release valve like a check.
Though a single, I’m-so-relieved-it-finally-showed-up payment makes you feel rich for a day, a regular cadence of smaller payments is much more conducive to prudent planning and savvy spending.
3) Instead of specific project milestones or project completion, use dates outlined in your client service agreement to determine your invoicing schedule.
Ready for another repulsive hypothetical situation? (I just squeezed twelve syllables into three words. Don’t act like you’re not impressed.)
Let’s say you sell a web writing project for $2500. For the deposit you invoice 50% of the project total—$1250. You and the client kick off the project, and three months pass. You’re 75% finished, and the client goes on vacation.
“No problem!” you say. You’re happy to accommodate.
When the client returns, she has to play catch-up. There’s a backlog of other decisions and projects. She goes dark for a couple of weeks. You send one email. And another. You call and leave a voicemail. Three more weeks pass, and you finally get an email full of apologies. She’s now ready to re-engage. Phew. You were starting to think you did something wrong.
The initial $1250 is long spent, and now you’re really feeling the pinch. By the time you wrap up the project, another month has passed.
I once wrapped up a project only to get an email from the client saying that money was tight. Yeah? And you think I’m blowing my nose in Benjamins over here? I received a check for 35%, not the 100% discussed. Ouch.
Another client I had for several years always paid me with a bank draft, and bank drafts require a trip to the bank. Service at the bank was painfully slow. If my client got busy or wasn’t in the right mindset, then guess which to-do got pushed back and? Yep. Getting this guy paid.
To make matters worse, there were a few months when the bank drafts disappeared in the Bermuda Triangle of the United States Postal Service. I’d have to call my client and deliver the bad news: “No, the invoice still hasn’t shown up.” This reset the clock. I’d have to wait for my client to cancel the lost draft and mail a new one. Oh, and the client was in another country.
Someone else’s schedule or busyness or emergency or lack of foresight or cash flow issues can hold your money hostage.
If you’ve got a business or personal emergency fund, then the client’s delays won’t cause you undue stress. If, however, you really needed the money, then those delays can cause serious problems for your business, for your personal finances, and for your emotional and mental well-being. A cash flow shortage only compounds the stress and anxiety.
Send more invoices more often, and you’ll feel less stress more often.
4) Use regular invoicing to keep your clients engaged in the project.
If they keep seeing money leave their accounts, they’ll stay motivated. They’ll want to get value out of that spend. They’ll prioritize communication with you and critical decision-making.
In short you’ll have a rapt audience.
The faster you finish projects, the more profitable they will be. And you’ll bring them to a successful conclusion before your enthusiasm starts to ebb.
5) Invoice often to keep your clients in the habit of paying you.
You don’t want your clients to commoditize your services or work, but you do want to be a regular line item in their monthly burn rate.
As they grow accustomed to paying you, you can create value for them and drum up more work for yourself by staying embedded in their businesses processes and finding new problems to solve.
- You can sell a retainer on the tail end of a consulting gig.
- You can turn a one-off web content project into a regular blogging engagement.
- You can parlay an identity design package into marketing collateral, infographics, slide decks, and custom product page designs on their website.
If you proactively look for ways to solve a problem, meet a need, or otherwise make your clients’ lives better or easier, then continuing to send you money becomes a no-brainer.
6) Invoice often to get paid faster.
Hat tip to my friend Glenn Stovall for his insights into how marketing directors handle their budgets. Some big expenditures require approval. A controller or CFO has to sign off on them. This takes time, and you want a new project now.
Can you sell a productized service at a lower but strategic price point?
A Roadmapping session, code audit, or analytics analysis at $499, $1450, or $4750 could sneak under the maximum of the marketing director’s monthly discretionary budget or credit card spend and enable you to jumpstart a relationship with her while you sort out the details on a larger project with more red tape and decision-makers.
An invoice with a $X950 total instead of $X000–the difference of $50–could mean the difference between landing a new project right now or being punted to next quarter.
So what entry-level productized service do you sell? Make it part of your sales funnel.
Regular invoicing is all about regulating your cashflow.
Freelancers and consultants often bemoan the feast-or-famine nature of creative work and self-employment, and as often, we fail to see the part we play in our own problems.
You must heal your cashflow, and a better invoicing process is a step in the right direction.
Do you want to build a profitable business you love?
Duh. Pony up that email address, and you can learn from my failures. You can laugh at my mistakes. You can envy my success at croquet, slow running, and modest bank accounts. Let’s make good money and leave the world better than we found it.
No-nonsense business advice for content writers and freelancers. Served warm with a side of dad jokes.
Also published on Medium.