Setting up invoicing for freelancers—complete task list
Invoicing is critical for freelancers. Get it right, and you can efficiently charge for your work, speed up payments, track your revenue, and keep clients informed of your charges.
In this guide, I’ve gathered together many of the common tasks that freelancers may need to carry out when they’re originally setting up their invoicing and bookkeeping systems. I’ve tried to make this invoice task list as complete as possible, and it should provide a helpful starting point for getting your system ready to invoice clients.
Freelance invoicing tasks that you will find in this guide
This guide covers the following freelance invoice tasks for when you’re originally setting up your system:
Choose the right invoicing system for your freelance needs.
Decide whether to capture all revenue on invoices.
Create an invoice template in your invoicing system.
Create income categories to track your freelance work.
Add relevant payment methods to your freelance invoices.
Define how long you will give clients to pay your freelance invoices.
Decide if you will charge fees for late payment of freelance invoices.
Set up auto reminders for invoice payments.
You can base your invoicing tasks on these when you’re setting up actions as part of your freelance task management system.
Choose the right invoicing system for your freelance needs
Freelancers have the choice of many different bookkeeping, accounting, and invoicing systems. It’s helpful to define what your business needs are, so you can select the right invoicing solution for you.
Why is it important to choose a good invoicing system?
Helps you invoice clients quickly and easily, meaning that you get paid sooner.
Tracks all of your clients, invoices, and payments so you can stay on top of your revenue.
Integrates with various other systems and payment options to make it simpler for clients to pay you.
When should I choose the right invoicing system?
After you create your business and before you send out your first invoice.
How do I choose a good invoicing system?
Review what your business needs are from an invoicing system.
Decide if you want an integrated bookkeeping and invoicing system, or a standalone invoicing platform.
Experiment with different systems to see what’s right for your business.
Once you find a system you like, set up your invoice templates and other areas.
Notes about aspects of an invoicing system
Consider the following areas when choosing the right system for your freelance business:
Speed and simplicity of adding clients and raising invoices.
Ease of integration with other systems that you use to track freelance work.
See when invoices are overdue and send reminders.
Add multiple payment options to make it easy for clients to settle their invoices.
Amend invoices with discounts, fees, and other adjustments.
Reports on invoices as part of your bookkeeping system.
Reconciliation of invoices and payments with your bank account transactions.
Decide whether to capture all revenue on invoices
Freelancers may receive revenue from several sources, including directly invoicing clients, third-party marketplaces, and other income. You may decide to show all of this revenue on invoices to make everything easier to track. Alternatively, you may decide to show this as general income in your bookkeeping system.
Why might I capture all of my income on invoices?
Tracks all of your income in a consistent way, making it easier to see what’s due.
Reconciles your bank account transactions against your invoices so that you can resolve any gaps.
When should I capture revenue on my invoices?
When you know that you have income due to arrive from various sources.
How do I capture all of my revenue on invoices?
Review the income that you have coming in from various sources.
When you know you have income arriving, go to your bookkeeping or invoicing system.
Raise a separate invoice for each source of income to make it easier to track.
Once you’ve added all of the relevant amounts to your invoices, mark them as “sent.”
When you see income arrive in your bank account, reconcile it against the invoice and mark it as “paid.”
Review your invoices and income on a regular basis, and tweak as needed.
Notes about capturing all revenue on invoices
You might decide not to raise an invoice for all the income you get.
If you don’t raise an invoice, you still need to show the income in your bookkeeping system.
Review your income categories and bookkeeping system instructions to see how to capture that revenue.
Reconcile your bank transactions that show revenue on a regular basis.
Create an invoice template in your invoicing system
Bookkeeping and invoice systems use templates to create invoices for clients. These templates provide helpful information that make it easy for you to get paid for your freelance work. It’s worth spending time creating an invoice template so your client has the details they need to pay you.
Why is an invoice template important?
Provides a consistent layout and format for invoices that makes it easy for a client to understand what they’re paying for.
Includes important information on your freelance business, your client, terms and conditions for the invoice, dates, due dates, and more.
Saves you time when creating new invoices as each one will be based on the template.
When should I create a new invoice template?
When you start using a new bookkeeping or invoicing system.
If you make significant updates to your business and need to amend your invoice template.
How do I create a new invoice template?
Go to your bookkeeping or invoicing system.
Review their instructions on creating an invoice template.
Build your template, including your freelance business logo, name, address, format, layout, colors, design elements, and similar.
Add in your default payment terms, headings, subheadings, notes, footer, etc.
Set any other elements of your template, like reminder emails, estimates, line item, or column information.
Review your invoice template to check everything is working properly.
Use your template whenever you create new invoices.
Create income categories to track your freelance work
Income categories help you to categorize the money coming into your business as a result of charging for your freelance services. You can use these income categories for your invoicing, profit and loss reports, and other areas.
Why is it important to create income categories?
Tracks how you are generating your freelance income and what you’re charging for.
Allows you to review where your money is coming from so you can tweak or review your services to maximize income.
Lists out your services on your invoicing so that clients can see the areas that they’re being charged for.
Splits out your activities in your bookkeeping and Profit and Loss report to make it easier to manage your money.
When should I create or amend income categories?
When you first setup your bookkeeping or invoicing system.
When you add, change, or remove freelance services that you want to track.
When you want to tweak how you record income.
How do I create or amend income categories?
Decide on the specific income categories that you want to track.
Go to your bookkeeping or invoicing system.
Review their instructions on adding, changing, or removing income categories.
Add, change, or remove income categories in your invoicing or bookkeeping system.
Periodically review your income categories to ensure you’re tracking the information you need, and make changes as required.
Notes about income categories
You can create income categories in ways that make sense for your freelance business. For example, you might create categories based around:
The types of services you offer. For a designer this might be logo creation, illustrations, or marketing materials. For a writer, it might be blog articles, white papers, or website copy.
Where you get income from. This could be directly from a client, via a third-party marketplace, or from affiliate sales.
There are other ways to record your income, so experiment and find something that gives you the right balance of insight and ease-of-use.
Add relevant payment methods to your freelance invoices
Freelancers want to make it as easy as possible for clients to pay invoices. It can be helpful to add multiple options to invoices so that clients can choose the best payment methods for their needs. Popular options include credit and debit cards, bank transfers, and checks
Why is it important to have multiple payment options?
Makes it faster and easier for clients to pay you.
Gives clients payment options that align with their accounts department.
When should I set up payment options for invoices?
Set up your invoice payment options when you design your invoicing before charging clients.
You may want to add payment options later on depending on client feedback.
How do I add invoice payment options?
Decide on the payment options that you want to allow.
Go to your bookkeeping or invoicing system.
Review their instructions on adding payment options to your invoices.
Set up your payment services. This might be automatic within your invoicing system, or you might use external services like PayPal, Stripe, or similar.
Add all of the payment options to your invoices.
When you send invoices to clients, let them know how they can pay you.
Notes about adding invoice payment options
Some payment options may charge you a fee, for example, card payments typically attract around a 3% charge of the entire transaction amount.
You can learn more about different payment options and how much they cost in our guide to invoicing and payments.
If you work through a third-party freelance marketplace, they will probably take care of payment for you.
Define how long you will give clients to pay your freelance invoices
When you send an invoice to a freelance client, you will need to let them know how soon you expect payment. This is known as your invoice payment terms, and should be set to a certain number of days after the client receives the invoice. Common payment terms are 14 and 30 days.
Why is it important to set invoice payment terms?
Lets the client know how soon they need to provide payment and manages their expectations.
Prevents clients from delaying your payments for too long.
Allows you to review and chase overdue payments.
When should I set invoice payment terms?
You can define default invoice payment terms when you’re setting up your invoicing or bookkeeping system.
You can also set unique invoice payment terms for each invoice that you send, depending on your agreement with the client.
How do I set invoice payment terms?
Go to your bookkeeping or invoicing system.
Review their instructions on setting invoice payment terms.
Decide what you want your default payment terms to be and set them in your system.
Review your invoice template to check everything is working properly.
Use your default terms whenever you create new invoices, unless your agreement with your client dictates otherwise.
Notes about setting invoice payment terms
Most invoicing platforms will allow you to set overall, default payment terms, and also set alternative terms for each invoice.
You can set your payment terms to anything you want, although the most popular ones are “Net 30 Days” although you might choose “Net 14 Days” or “Due on Receipt.”
Bear in mind that your client team may not always be able to meet your payment terms, especially if you set them for very soon after you send the invoice.
You should set the payment terms for each client based on how soon they expect to pay you. It’s a good idea to define this in your contract, or talk about it with your client ahead of time.
In the absence of anything more specific, 30-day payment terms are a good default.
You might also seek a deposit before you start work. In those cases, you might want the deposit paid immediately, and might make the invoice “Due on Receipt.”
If your invoice isn’t paid on time, your invoicing tool may allow you to send reminder payment emails to clients.
You might offer discounts on invoices that are paid quickly. Consider if you want to do this, and see if you can set up these discounts in your invoicing tool.
You might also charge penalties for payments that are not made within the specified number of days. Bear in mind that this might annoy some clients!
Decide if you will charge fees for late payment of freelance invoices
Some freelancers may decide to charge late fees if clients do not pay their invoices within a specific amount of time. In these cases, a client will pay a penalty that is a percentage of the invoice total. This may annoy some clients!
Why is charging late fees important?
Encourages clients to pay your invoices on time.
Ensures you are financially compensated for late payments.
When should I charge late fees?
You may decide not to charge late fees at all, as this could annoy some clients.
If you do charge late fees, you should let clients know ahead of time and send early reminders to their accounting departments.
Set up late fees in your invoicing system when you set it up.
How do I set up and charge late fees?
Go to your bookkeeping or invoicing system.
Review their instructions on setting up late fees.
Decide what you want your default late fees to be and set them in your system.
Arrange to charge late fees if invoices are late.
You may decide to suppress late fees for certain clients.
Notes about setting late invoice penalties
Most invoicing platforms will allow you to set overall, default late fees, and may also allow you to set alternative fees for each client or invoice.
If you are going to charge late fees, ensure these are defined in your contract and agreement with your client.
Set up your reminder emails to let clients know about upcoming or impending late fees.
Late fees are typically 1% - 2 % per month.
Set up auto reminders for invoice payments
Most invoicing systems allow you to set up automatic reminder emails if invoices become overdue. These emails can encourage clients to make payments, so they are worth setting up.
Why is it important to set up invoice auto-reminder emails?
Lets clients know if an invoice is due or overdue for payment.
Encourages them to make payments, especially if the invoice is late.
Means that you don’t need to remember to send payment reminders.
Notifies clients if you’re going to charge late fees.
When should I create reminder emails?
Add reminder emails when you’re setting up your invoicing system.
How do I set up auto-reminder emails for invoices?
Go to your bookkeeping or invoicing system.
Review their instructions on setting up reminder emails.
See if they have default reminder emails.
If you want to adjust your emails, decide on the wording for each one.
Add or update the emails within your invoicing system.
Tell your invoicing system when you want it to send out each reminder email.
You may decide to suppress auto-reminder emails for certain invoices or clients.
Notes about auto-reminder emails
In many cases, the default emails you get with your invoicing system may be suitable for your needs.
It’s especially important to arrange for reminders if you’re going to be charging late fees.
See our freelance guides on related topics
Accounting and Bookkeeping: Accounting, taxes, and bookkeeping for freelancers.
Invoicing and Payments: Invoicing clients, taking payments, credit cards, and related topics.
Revenue and Income: Understanding the revenue that’s coming into your business, bookkeeping, and similar topics.
Please note that I am not a qualified professional and I do not provide tax, legal, accounting, or similar advice. These guides are provided for informational purposes only. Always consult with a qualified professional on your unique circumstances. You can find more information in my disclaimer.
By Paul Maplesden