How to Issue an Invoice: Invoice Example and Advice

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One of the most daunting aspects of starting a new business is trying to figure out how to issue an invoice once you’ve completed work for clients.

There are plenty of options to choose from – from manual Microsoft Office documents, to invoicing portals, to professional accounting packages like FreshBooks.

What’s more, there are many small details you need to consider. Getting them right can make the difference between being paid on time with no issues, or irritating and confusing your clients.

However, once you learn the ins and outs of freelance invoices, it’s all pretty straightforward.

Read on to learn how to invoice a company for freelance work.

How to Issue an Invoice

You have a few options when it comes to creating invoices. You can:

These options all have pros and cons, so will consider each in turn.

Manual Invoice Templates

Word or Excel templates are a simple option, especially when you have clients who don’t use systems like PayPal. They are a good fit if you do business with clients in more traditional, non-digital settings.

You can customise your invoices and choose all the fields you need by designing something yourself or choosing from a wide variety of templates. If you scroll down a little, we’ve even provided a free, downloadable XLS invoice template you can use to get started.

Invoice template

What to Include on an Invoice

If you decide to create your own invoice template, there are several things you should be sure to include. These things will make record keeping easier and ensure clear communication with clients:

  • A unique invoice number.
  • Your own detailed contact information (if somebody owes you money, you will want to ensure they can get in touch with you!)
  • Contact information – for the person or company being billed.
  • The date the invoice is issued.
  • A description of the work you are invoicing for (e.g. “Article Writing, April 2019.”)
  • An itemised description – so the client knows exactly what they are being billed for. This can reduce confusion and speed up payment.
  • Payment terms and due dates (usually expressed as NET 15 or NET 30. This simply means that the client has either 15 or 30 days to pay, starting from the date of the invoice).
  • A note stating how the client can pay. This could include multiple options, such as via PayPal (with your PayPal email listed), by check, or to a specified bank account.
  • (Optional) A description of any late payment penalties – such as interest added after a certain period, if payment is delayed.

Starting out with a clear and professional invoice makes chasing late payments easier. You can read more about how to handle late payment here.

Organising Manual Invoices

If you decide to produce your invoices manually, be aware that you’ll need to work out your own ways to keep everything organised. You won’t be able to look up outstanding invoices in one place, or view historical payment data. You can with fully digital systems.

An easy way to stay organised as you issue each invoice is to save the documents by invoice number, client name and when the work was completed.

For example: Invoice100_ClientName_April2019. I often also put my own name after the month the work was completed, for easier organisation on the client’s part. You can then store the freelance invoices in a folder on your computer dedicated to each client, and the documents will arrange in order by invoice number. You can also print them, mark them when they’ve been paid, and file them in a physical client file.

Filing

Invoice Template XLS

We’ve provided an invoice template XLS file you can download for free, to use and customise as you wish. Download it here.

Pros and Cons of Manual Invoices

The Good

  • Free to create using any Office software.
  • Invoices can be customised to look exactly as you want them.

The Bad

  • Manual filing required – either physically or electronically.
  • No automated way to accept and track payments.

Billing Websites

Many clients nowadays prefer you to issue an invoice through an online system like PayPal.

PayPal and similar systems are convenient, because they allow you to create an invoice directly within their system. You simply select “create an invoice” in PayPal, and a pre-set invoice template gives you the ability to set due dates, itemise the work completed and even enter information like payment terms.

The invoice then sends through PayPal’s systems. Your client gets notified via email that you have invoiced them, and they can pay through the website. You also have a built-in means of tracking who you’ve invoiced, who has paid, and who has invoices outstanding.

PayPal

The key downside is that sites like PayPal usually collect a fee – either a flat rate or a certain percentage of the transaction. If you work in multiple currencies, the conversion rates aren’t always fantastic either. You also have less ability to customise the invoice template.

Pros and Cons of Billing Websites

The Good

  • A digital invoicing system you don’t have to pay for.
  • Gives customers the ability to pay online, and by debit / credit card.
  • Good at handling multiple currencies.

The Bad

  • Most services charge fees.
  • If your clients don’t all use PayPal, you may have to operate another invoicing system in parallel.

Accounting Packages

The most professional way to issue invoices is by using a professional accounting system like QuickBooks or FreshBooks. (Editor’s Note: This is what I use personally and have done for many years).

If you’d like to try creating invoices with FreshBooks, you can grab a 30-day free trial here. 

The biggest benefit to using a proper accounting system is that you can do plenty more beyond just issuing your freelance invoices. For instance, you can track sales and expenses, reconcile your bank transactions, and even prepare tax returns. Using a system to its full capabilities can leave your accountant with less to do at the end of each year, resulting (technically!) in a smaller bill!

However, you will have to budget to pay for the service itself. In years gone by, accounting software was something you’d typically buy “off the shelf” as a one-off. Nowadays, you generally pay a monthly subscription, based on the services you need.

The costs aren’t prohibitive. If you just need a basic system for accounts and invoices, you can typically buy the lowest-tier package, and this will generally cost about ten bucks per month.

FreshBooks

Pros and Cons of Accounting Packages

The Good

  • Usually you can design invoice templates exactly as you need.
  • Allows you to track historical invoices, who owes you money, and much more besides.
  • Lots more functionality to manage your business finances.
  • Invoices are easy to issue and send out.

The Bad

  • Monthly cost.
  • A small learning curve in the early days.

When should you issue an invoice?

Companies and freelancers usually invoice on a set date each month, or immediately as work is completed or products are supplied.

Determining exactly when you will invoice for your work is an important matter to address with each client. Within reason, it’s best to work with them and accommodate when they would prefer for you to issue your invoices. Some will be OK with you sending invoices as soon as each piece of work is complete.

Others will want you to stick to a more rigid schedule. It’s common to invoice for completed work on the first of the month, the 15th, or the last day of the month. Some freelancers also schedule payments to become due as certain milestones of a project are reached. This is a great system for larger tasks.

Calendar

It’s important to have an upfront conversation about invoicing right at the start of a client relationship. If you draw up contracts, you can include invoicing schedules. I usually tell each client what my typical invoicing schedule is, and say that we can work something else out if that works better for them.

What is the difference between an invoice and a receipt?

An invoice tells a company what needs to be paid to someone who provided a service or product, while a receipt tells what has been paid.

On the topic of receipts, it’s important to keep a file of any receipts for goods or services or goods you paid for as part of running your business. You can usually deduct these as business expenses against your taxes.

Examples can include domain registration and hosting fees for your professional website, office supplies, computer software, and any other costs that went into running your business. If your business has lots of overheads, an accounting system like QuickBooks makes sense, as it can pull these transactions from your bank for you to categorise.

Conclusion

As you can see, there are a lot of moving parts to consider when learning how to invoice a company for freelance work. However, once you choose the system that is right for you and have some invoice templates set up, it’s actually a fairly painless process to issue an invoice.

A Long-Term Freelancer’s View

(Ben) I found it interesting reading and editing this article, because in over 15 years of freelancing I’ve used all of these systems. I started off creating templates in Word and Excel, migrated to various accounting systems, and still use PayPal invoices on occasion. I now use Quickbooks for almost everything.

Personally, I do think that – if budget permits – it’s worthwhile getting used to using a proper accounting system from the start. As years go by, it’s great to have proper records of all of your past invoices. My own reluctance to spend money in the early days means that I have some invoices in folders, some stuck in the (now discontinued) Microsoft Office Accounting package, and everything from recent years in Quickbooks. I do rather wish I’d just bitten the bullet and paid for a proper system from the beginning.

But, obviously, your individual mileage will vary. If your business only issues a couple of invoices each month, that’s a lot different from having a dozen clients spread across different countries.

Anyway, you now know all the different ways to issue an invoice, and can choose which works best for you!

Want more freelance tips? We have a bumper post containing 50 here!

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About Author

Michelle Lovrine Honeyager

Michelle Lovrine Honeyager is a freelance writer who has written features for a number of consumer and industry print magazines, as well as stories for niche websites, digital lifestyle magazines and general news sites.

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