Many people like the idea of being self-employed because this gives them more control over their career and life. Self-employed people are really their own bosses when it comes to how and when they decide to work.
However, there’s one aspect of being self-employed that may dampen that kind of enthusiasm—knowing how and when to generate and send an invoice to clients.
When it comes to invoicing the right way, many self-employed individuals have problems. Here are some of the reasons this always seems to happen:
1. Some Self-Employed Professionals Lack Training in Invoicing
This may seem commonsensical but it’s true. If you were previously employed full-time, you might have never heard of an invoice before because you were just an employee. Usually, invoices are sent out by the accounting department. Just because you took a leap of faith into being self-employed doesn’t mean you become an expert at invoicing overnight. The good news is that there are now free templates you can use to create even simple invoices.
2. You Don’t Consider Yourself a “Numbers Person”
The problem with some people is that they may be so focused on their main skill that they tend to “ignore the numbers”. For example, if you’re self-employed and your business is all about making bespoke guitars, you probably just focus on customizing guitars. No problem there—you won’t need much numbers for that. But if you’re self-employed, eventually you will need to get paid for your service. Otherwise, how could you keep your business running? That brings a major headache, especially when you remember that your little company will have to pay taxes, too, at some point. This is where invoices will come in handy.
3. Computers Muddle Your Thinking
You may be willing to try and learn how to invoice, but you get easily confused by computers. This is especially true for self-employed professionals who rarely use computers in their line of work. For instance, if you’re planning to sell plants and gardening supplies, you’ll usually be more concerned with how plants grow, the different plant diseases your customers may encounter, and the proper products to eradicate those plant illnesses, rather than invoicing and numbers. There’s not much use for a computer there, unless it’s just about keeping track of loyal customers and their favorite products. If you’ve been in business a long time without having used computers much before, learning how to invoice could be a daunting experience, but one that’s necessary.
4. You’re Uncertain About The Different Kinds Of Invoices
It can be a bit confusing trying to familiarize yourself with the kinds of invoices that self-employed professionals need. The good news is that you can learn as you go along. There are actually seven kinds of invoices that apply to self-employed people, namely:
Standard Invoice
This is the most direct kind of invoice. It only lists down how much a customer is expected to pay the supplier (you).
Recurring Invoice
This applies to customers who have to keep paying over the timeline of a project. For example, if the customer is paying in monthly installments, you issue a recurring invoice.
Prepayment Invoice
This is issued when you need to be paid for certain goods and services. You only send this before you opt to collect on the final payment and determine the total amount paid.
Time-Based Invoice
This kind of invoice becomes necessary if you’re billing your customer on an hourly basis. This is appropriate for service-oriented businesses such as being an academic tutor.
Credit Invoice
This type of invoice is needed if you owe your customer a certain amount. It’s appropriate for times when you are obligated to indicate a refund.
Debit Invoice
You make this kind of invoice when your customer’s pending payment to you increases, or if the customer actually owes you money.
Mixed Invoice
This invoice can be confusing for some because it notes the positive and negative amounts for correlating with the other invoices that you have.
5. You’re Unsure When You Should Send An Invoice
As a self-employed professional, you’re probably a bit uncertain if you should send your invoice before you render any service or deliver a product, or if you should wait until the product or service has been received and acknowledged by the client. This is something you have to negotiate with your client about.
Some clients are more accommodating than others so it pays to be careful about how you approach this. Hopefully, you’ll be able to set an appropriate timeline for sending the invoice so you can proceed to do the work that the client is banking on you to do.
6. Your Client Disputed Your Last Invoice
It can be unnerving when you send out an invoice expecting to get paid and get a call from an irate customer instead. This may feel frustrating, especially if you think you’ve delivered a satisfactory product or service, and that your invoice is sufficient to merit a payment.
You can opt to keep sending the same invoice until you get paid, or resolve the issue with your customer. Worst-case scenario, you might even have to file a lawsuit against the customer. But, of course, if the amount being disputed is quite small, it might make more financial sense to simply write off the transaction as a loss and move on to other work.
Final Takeaway
Making an invoice shouldn’t be that hard to do if you’re self-employed since much about it is common sense. Don’t be intimidated by the prospect of making a complicated invoice since you can rely on the simplest invoice there is, which is the standard invoice. If you’re not well-versed with numbers, you can check out different invoice templates that can help you generate the appropriate invoice for a specific transaction. If you’re still a bit confused, you can ask for help from an accountant who can help you design an appropriate invoice for your business so that it will be easier on your part.