You’ve done the hard work. You’ve created your finest emote, put the finishing touches on a panel design, or rendered the last frame of your video. Now, it’s time for the fun part: getting paid. But before you fire off that final client email, understand that getting paid is sometimes just as challenging (if not moreso) than doing the actual work. Knowing how to send a proper invoice – and how to actually get paid – is paramount to becoming a successful “entre-creator”.
What is an invoice?
If you’re not a full-time “business-y type”, some of these concepts may be foriegn to you. An invoice is a document that serves as a payment request for services rendered (or goods sold). An invoice contains some combination of the following items:
- The ‘buyer’, or service requester
- The ‘seller’, or service provider
- Contact information for either/both parties
- A unique invoice number for record-keeping purposes
- The date of invoice
- The total amount to be paid
- An itemized list of the services provided and the rate/cost of the service
- Terms and conditions for payment
Why bother with an invoice?
We’re going to let you in on one of the dark truths about running a business: Sometimes it’s very hard to get people to pay you for things. It involves chasing people down through emails, DMs, and phone calls. And sometimes, even after doing all of those things, people will still refuse to pay you. Hopefully you’ve taken the appropriate steps to keep this from happening, but it’s an unfortunate part of being a business owner.
So why bother with an invoice? For starters, it adds legitimacy to your business endeavors. Coming to a customer or client with an official invoice shows that you take yourself seriously, and want to ensure that both parties are taken care of throughout the process of work and payment.
You could just send someone an email that says they owe you $100 for an emote set, but having an official document stating all the different pieces of the transaction will also give you (as the business owner) options and protections if worse comes to worse.
As you start to do more and more work as a creative professional, you’ll want a way to look through invoices to spot trends and see which services/goods are bringing in the most money. A true invoicing system (which we’ll explore later) will allow you to see monthly and yearly trends in sales, useful if you want to forecast what you may make any given time period. They also retain an archive of all of your invoices – both paid and outstanding – so you can see at a glance what is going on with your business.
Finally, if you do even a moderate amount of work, you’ll have to start looking into the tax implications of getting paid – your local governments all want their share, after all. A good invoicing software will allow you to keep all of this information straight, and may even generate the documents needed to quickly and accurately file your taxes.
Sending a Proper Invoice, The Right Way
Knowing you want to keep records of your work completed, and knowing you want to add legitimacy to your work, it makes sense to look for a service or app that will take care of most of the heavy lifting. But even before we get into that, there’s one important thing to consider.
Step 0: Find a “Business-Specific” Bank or Account
You may be tempted to start throwing money at your personal account once you start making it, but having a separated Business-only account for your business ventures will make accounting a LOT easier for you. Even if the money only serves as an input before you transfer it elsewhere, it’s important to have that landing place to keep your business transactions separated from your personal finances.
There are three decent options for a business account:
- Your Local Bank: If you already have a bank account elsewhere, establishing a second account for business purposes will be a simple procedure. Walk into a branch (or call/chat with an account representative), and tell them you want to open a business account. They will let you know any documents or procedures needed. Most of the time, you’ll need to ‘seed’ the account. Usually this means putting $50-$100 in the account to open it (you can redirect that money back to you as needed, once the account’s been created).
- PayPal: Love it or hate it, PayPal is an easy way to get paid. It’s accepted world-wide, costs nothing, and offers several benefits for account holders. As you become a ‘power-user’, they also offer “business” benefits like a connected debit card, the ability to cash checks, and even a built-in invoicing system. However, their fees are some of the most expensive in the industry. There aren’t any up-front costs, at least,
- Novo: Novo is an online-only bank – there aren’t any physical branches. However, they have a debit card and can ‘pay out’ to that account from your invoicing software. If you don’t have a local bank, and aren’t a fan of PayPal, it’s a solid third option. You will need to ensure that your invoicing software is able to send money to the account, but at least one of the ones I mention below are able to do that seamlessly.
Step 1: Choosing an Invoicing Software
Once you have a dedicated place to send your business revenue to, it’s time to choose your invoicing software. Based on the features we talked about above, here are my top three recommendations for invoicing services:
PayPal – https://www.paypal.com
We mentioned it earlier, but PayPal does have a built-in invoicing system. If you have a PayPal account, it’s worth looking into it to see if it will meet your needs. And, honestly, any basic-invoicing needs are more than covered. Some people do not like PayPal, and will refuse to use it, but PayPal will also take payments from Credit Cards as well, just in case.
WaveApps – https://www.waveapps.com/
WaveApps is another alternative software and, unlike some of the others, is absolutely free. They do take some transaction fees from accepting payments, which is normal for most software services. A single account lets you run multiple businesses, create and send invoices, see analytical trends in your sales and reporting, and will also generate any needed tax documents on the fly.
Freshbooks – https://www.freshbooks.com/
Like WaveApps, Freshbooks allows you to send invoices, has a robust analytics section, and will do most of the hard tax documents for you. Freshbooks also integrates with several other systems to help with accounting, inventory, and other systems. If you have a larger customer-base
There are several other options with their own pros and cons, but these are the three systems that wee have personally worked with and can vouch for. (and hey, if you have any other systems you use, shout out in the comments below OR let us know on Social Media!)
Step 2: Setting Up The Invoice
As you create your first invoice, make sure you are including the basics:
- The work being done, in detail. Include a short description of the work being done so all parties know exactly what is being delivered or sold.
- An hourly (or per-project) cost for the work done.
- A time-budget for any hourly work.
- The sub-total of hours worked x the hourly rate.
Most of the other things (invoice numbers, dates, etc) will be handled by the invoice software. Select (and create, if you haven’t yet) your client from the list of available clients. Make sure to include any/all relevant contact information so you can refer to it if you need to later.
Step 3: The Payment Terms and Conditions
Different people, and different business types, have different payment terms – the time period in which an invoice is required to be paid. Here are some common terms to consider as you invoice your clients:
- “Net X” – this means that the customer is required to pay the invoice as soon as it’s received, up to a certain date, or will be charged a late fee. Typically, the late fee is applied after 30 days, but you can set this term as long (or as short) as you like.
- “Discount, If Paid Early” – this is usually written “2/10 net X”, or something similar. In this case, it means that it’s due within X days, but that a 2% discount will be applied if paid within 10 days. This is good if you want clients to pay quickly, and are willing to pay less to ensure that happens.
- “Deposit & Milestones” – If you are working on a larger project, this can be useful to garner ‘buy-in’ from the client. Charge them a partial invoice as a deposit (either ½ or ⅓ of the final price) before any work is begun. Then, either before receipt of goods (or services rendered), charge them the remainder. You can release the goods/services once the final invoice has been paid. If the project is long enough to warrant it, you can even break up the total cost into stages or milestones.
Step 4: Add A Note, Then Send It!
Always add a personal note to your invoices. Even if it’s just a “Thanks for Your Business” sort of thing, it’s always nice for clients to see a personal touch on a “business” document, as a reminder you’re still a human being sending those things out. Ensure all of the information is as correct as it can be, and hit the send button.
Most invoicing softwares will send out reminders to clients automatically – either on a predetermined schedule, or customized to your specifications. That way you can send the initial invoice without having to worry about ‘chasing down’ clients, at least for a little while. Some invoicing softwares will even add the late fee automatically after a certain amount of time.
It seems like a lot of hassle just to tell someone they owe you money, but a legitimate invoice adds validity to the work you do. It allows you to see trends and forecast your profits and sales. It allows you to easily track who owes you money for which projects. And, finally, it allows you to chase down clients who are less-than-enthusiastic about paying you. Ultimately, and most importantly, it allows you to focus on what you do best – making goods or providing services.