I’ve not needed to do many until now. All of my work has been through Upwork (or Elance and Odesk as they were until a year ago). Other clients go through PayPal which is its own record. Recently though, I’ve had a few clients off of Upwork which means I have had to compile invoices for my records and for there’s. Anyway, on with the advice. If you don’t know how to create an invoice, let me assist you.
Your Essential Details
There are some things that must go on the invoice because they are a legal requirement. You will need your business / trade name. Even if you are a sole trader (and you are if you are a freelancer) you need to put a business name. Mine is simply MG Mason Creative Services. I also put my address – an office address if you have a work premises, a home address if you don’t – phone number and email address. The latter two are not a legal requirement, but they are useful for your client.
To whom is the invoice being made out? You need a business name and operating address. Ideally, put the contact name too unless your contact works in a different department and they have advised you to make it out to a third party in accounts. Clarity is important here.
Each invoice needs a unique number. It can be simply start at 001 and go upwards, and that would be the simplest of all. I do recommend creating a sequential and simple code that would make logical sense. For example, I use a company name abbreviation, a year and number. Let’s say this week I completed some work for a company called Alan & Barry Cars. I will use the code ABC then 2016 and 001 because it is the first invoice I have sent them, or the first of this year. The invoice number will be ABC2016-01. You can use whatever you like but I recommend using one that is simple to use and simple to understand. There’s no point getting bogged down, just find a solution and stick with it.
It’s all about £, $ & € The point of an invoice is to state clearly how much they owe you. Break it down so that it is easy to understand. What is the rate of pay (are they paying hourly, by the word or something else?) and what is the unit rate (how much you are charging them per hour, word etc). The invoice should have several columns so they can easily see what they need to pay.
At the bottom of the payment box, you should put any the subtotal – the actual charge for services / products rendered. Beneath, you need to include monies for supplementary payments. This would be VAT, Sales Tax or equivalent (if applicable) and payment processing charges. PayPal charges around 3.4%. Whether you pass that PayPal processing fee to your customer is up to you, I certainly recommend it for small or one-off jobs. Then you need to finish with the total payable.
How To Pay
Finally, they need to know how they should pay. Make is clear just how long they have to pay it. 30 days is normal but most will settle in a shorter period than this. You should have already discussed how they will pay. When dealing with customers in your own country, bank transfer is the easiest, quickest and cheapest method for both of you. That is why I insist on it for UK based clients. For outside the UK, this can be financially costly for me or for them so we tend to aim for PayPal.
Either way, you need to provide an address. For PayPal, your email address. For banks, your sort code and account number. When working internationally, you may also need the BIC and / or the IBAN. What are they?
- BIC: Bank Identifier Code. This is a unique identifier code for your individual bank
- IBAN: International Banking Account Number. Easier to decipher, you will recognise an official code for your bank, sort code and account number
They should both be on your bank statement and are internationally recognised codes. That means American companies can send payment to a British bank without going through ewallets.