Contractors, freelancers, sole traders, and business owners send invoices as part of their daily, weekly, or monthly admin tasks. It can be a chore but the only way you’re going to get paid is by sending an invoice yourself – it doesn’t just happen automatically. Remember, invoices reflect your work – if you send a scruffy invoice, you risk looking unprofessional, regardless of how good you are at what you do.
You run the risk of being discredited if you have poor business admin or lack transparency about fees. Before starting any work for a client, be sure they know your hourly or daily rates and any other additional fees you might charge. Some clients like to cap hours instead of paying for individual tasks.
Be open about required upfront payments to keep your integrity and maintain a transparent relationship with your clients. Specify important dates like estimate date of completion, invoice due dates, and the date the invoice is sent. Once the work and payment timeframes have been established and work has been completed, it’s time to get paid.
Note that a tax invoice is different from an invoice. A tax invoice includes the tax owing of the invoice, whereas an invoice contains the total amount owed by the client with no tax component. Specify when the invoice is a tax invoice. Those who are registered for GST must add their GST number to all their invoices to ensure that GST is being collected on their earnings. These will be declared on a GST return to Inland Revenue. Not all need to register for GST – if you earn over $60,000 a year, only then must you register for GST.
If you have one, add a logo and trading name to your invoice. You don’t really need to be registered as a business to use a trading name, logo or email address. You can also include your client’s name in the invoice. Add the description of services provided, such as the number of hours worked or software and tools used. Include the unit price with GST if registered.
If you offer various payment methods, you can include a list and all the payment details on your invoices. Remember that it can be a good idea to offer payment options such as Stripe or Paypal to give clients options other than cash – however these can come with extra fees, so it might be best to hold off on this if you only have a few invoiced clients. You can also add a section for additional comments, client contact details, and unique invoice numbers.
If you’ve made any purchases during the course of the work, list these down to get reimbursements as well. These must be approved and come with a receipt or proof of purchase. Unfortunately, these expenses are not subject to tax deductions and can’t be claimed as a business expense as they are being fully reimbursed.
After sending an invoice, communicate politely and clearly with your client, so you get paid on time. Using accounting software such as Xero, you can do automatic invoicing and follow-ups, so you can have more time to focus on the work and maintain client relationships. Remember to give us a yell if you ever need any help setting up one-off or recurring invoices.
If you’re using invoicing software, you would need another software to load expenses. Your accounting software can link with your bank accounts, so you can reconcile your invoices yourself. However, be sure to avoid costly mistakes such as forgetting to track hours, failing to send invoices immediately, inconsistent invoice format and not following up!
The Outside team are pretty onto it when it comes to all things bookkeeping. We help contractors, consultants, and freelancers save time and money, helping them get back to doing the things they love. Sing out and we can discuss all the details with you.
Your Outside Team
Address: Level 2, 182 Vivian Street,
Te Aro, Wellington 6011, New Zealand
Mail: PO Box 24-457, Wellington 6142
Phone: 04 889 2975
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