Sold your client a product or a service? It’s time to write them an invoice! However, if you haven’t written one before, it might be a little intimidating. Read on to learn how to invoice for freelance work, plus snag a free downloadable invoice template to make your life even easier.
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Why You Need Invoices as a Freelancer
Sending an invoice is a way to make sure your client makes an accurate payment within an agreed-upon period. Not only this, but you’re obliged to give your clients an invoice by law if both you and the client are VAT-registered (a business to business transaction) as well as in certain business-to-consumer (B2C) transactions.
While running your business you need invoices, in particular, because:
- An invoice is a notice for your customers to pay you for the goods or services that youâve provided.
- An invoice gives your customers and clients a record of their purchase.
- Issuing specific invoices may be required by law.
- Proper invoicing helps you protect your businessâs cash flow, improve your freelance business liquidity, maintain good records, and meet your tax obligations.
Properly managing the invoice process is one of the most important ways to protect & improve your freelance business liquidity.
Apart from stating how much and when the customer needs to pay you, the invoice needs to include some other specific information.
How to Write an Invoice for Freelance Work
Your invoice should consist of:
1. The Title “INVOICE” / “TAX INVOICE”
Write a title indicating the type of the document it is, such as “Invoice” or “Tax Invoice”. The title should be prominent on the documents so they can be easily identified.
2. The Date of Issuing the Invoice
Add a date that shows when the invoice was issued, i.e. when you submitted the invoice to the client. Many clients prefer when this is the last day of the month in question.
3. A Sequential, Unique Invoice Number
Assign a unique invoice number to each invoice you issue. The invoice number is a sequential identification number based on one or more series, which uniquely identifies the invoice. In many countries, including the US, there are no specific requirements for how to format your invoice numbers. The sequential number may be based on one or more series of numbers, which may also include alphanumeric characters. This means that your invoice numbers can include letters, numbers, and special characters such as â/â and â-â.
The choice of how to format your invoice number lies with you. However, for accounting purposes, I highly recommend choosing a format that’s simple and easy to understand. We like to use one that includes the date (or just the current year) and a clear identifying tag for each client.
Most accounting software will automatically assign a new invoice number to your latest invoice. However, if you’re creating your own invoices and doing the numbering manually, we recommend checking it a few times and making sure that there are no typos or duplicated invoice numbers.
Some common invoice number formats are the following:
- 2022/02/20-001 (Format: YYYY/MM/DD-001): The first part of this format is the date (the year, the month, and the day), while the last part identifies the number of the invoice which goes up by one with every new sale of goods or services rendered.
- INV/2022/02-001 (Format: IN/YYYY/MM/DD-001): This format reflects the document type (invoice), the year, the month, and the number of the invoice within that month. It’s beneficial if you create several invoices each month, but also issue different types of documents such as proforma invoices or delivery notes.
- XYZ/2022/02/20-001 (Format: XYZ/YYYY/MM/DD-001): If you want to personalize the invoice you may also add the customer number consisting of letters identifying the client’s company name. The rest of this format reflects the year, the month, the day and the number of the invoice within that month.
4. Your Business Name, Address and Contact Information
If you’re a sole proprietor, write your name and the business name you’re using. If you’re running an LLC, write the formal, registered name of your company. In both cases, also add your full address. I highly recommend adding full contact information in the case of any queries about the invoice or any potential dispute in this regard.
| Sole Proprietor Invoice | LLC Invoice |
| The invoice must also include your full name and any business name being used. | You must include the full company name as it appears on the registration documents and your registered office address. |
If you haven’t decided on which business structure to adopt as a freelancer, I’ve written a comprehensive summary of sole proprietorship vs an LLC, which are the two most popular types of business structures for small businesses.
5. The Clientâs Company Name and Address
Add customer information, such as the name, billing address, and sometimes business and/or VAT ID of the client that’s the recipient of your goods or services.
6. Goods Supplied or Services Rendered
Indicate which goods or services were supplied and the quantity of these goods or services. The description of quantity and type (nature) of goods supplied or services rendered should be brief but clear, so the client knows exactly what they’re paying for. In case you’re providing multiple products or services, make sure you add each one separately to a new line, so your client has an easy overview of everything. Being detailed and clear in your item description field can help prevent potential disputes in the future.
7. The Date the Goods or Services Were Provided (Supply Date)
Add the day/time period of the delivery of your goods or other services (if it’s different from the invoice date).
8. Payment for the Goods or Service and Applicable Tax Rate
Make sure to add the correct:
- Amount of the individual goods or services to be paid.
- The total amount payable.
- Applicable taxes (such as VAT) – if you’re exempt from taxes, reference the exemption.
- The invoice currency.
- In the case of any discounts offered, remember to add the rate of any discount per item.
VAT
You have to use VAT invoices if you and your customer are VAT registered. A VAT invoice sets out the details for establishing your VAT liability on the supply of goods or services.
You need to include the following in your VAT invoice:
- Your VAT number.
- Breakdown of VAT amount payable by VAT rate or exemption:
- VAT rate applied charged per item
- If an item is exempt or zero-rated make it clear that there’s no VAT on this item
- Total VAT amount payable.
9. Payment Details and Terms
The payment terms should specify, in particular:
- Payment due date.
- Acceptable payment methods, e.g. bank transfer, credit card etc.
- Acceptable forms of currency (especially when working across borders).
- Potential late-payment fees.
- Any discounts available for early payment, if applicable.
You should agree on these payment methods and terms with your clients in advance. However, you should also clearly state these terms on the invoice so the client immediately knows how and when payment should be made and doesn’t have to look for this information.
List the different acceptable ways that an invoice can be paid and include your bank account or other payment details (if you’re getting paid through PayPal, Payoneer, etc.). Additionally, for invoices to international customers, you should include your IBAN/BIC/SWIFT details.
When choosing a payment method, you should think about which best fits your business, is the most common in your market, and whether your client will be happy using them.
There’s nothing to stop you from providing additional information on your invoices in addition to that described above.
How to Send an Invoice for Freelance Work
You have quite a few options when deciding how to send a freelance invoice – you could send them by email, e-invoicing, post, or even deliver them in person. The two last options are quite rare, especially among freelancers, and require some additional effort compared to the faster and easier digital invoicing.
To send an invoice for your freelance work:
- Ask your client for the name and contact details of the person who will be making your payment to encourage prompt payment.
- Send the invoice through an accepted method (by email, e-invoicing, post etc.).
- Even if you choose to post or deliver the invoice in person, I highly recommend sending a digital copy as an uneditable PDF by email. This will ensure there’s proof you’ve sent the invoice in the event there are issues with your physical copy. You can download our free PDF invoice template for freelancers here.
When it comes to the form of the invoice, paper and electronic invoices should be treated equally, and contain the same elements as required by law. As a rule, the decision to use electronic invoices ultimately remains a matter of agreement between you and your client. However, in some countries in B2G (business to government) transactions, e-invoicing is mandatory for suppliers, and in coming years in other transactions (B2B, B2C), e-invoicing is expected to become mandatory as well.
While some businesses prefer to create invoices themselves, many opt to use software to speed up the process, stay organized, and in line with current legal requirements. Word and Excel can be enough to create invoices, especially if youâre just starting out. However, you should check the invoicing requirements of the country (and even state) where your business is registered to confirm if you should add any additional information. If you’re using accounting services ask your accountant to check if your invoice is acceptable.
Invoicing software, on the other hand, is designed specifically for creating invoices. This means that all of the local legal requirements should be automatically added for you, and you can even email the invoice to your customer directly from the software.
If you’re looking for invoicing software solutions for your freelance business, check out Bonsai. Besides offering automated invoices with multiple payment options, you can use Bonsai to create proposals and contracts for your clients, track your time and tasks, do your accounting, and more. They offer a 2-week free trial with no commitment so you can see if it’s for you.
Example Invoice for Freelance Work (FREE)
To help you get started, we’ve created an example freelance invoice template with some annotations to help you fill it in. Click below to start your download!
Keep in mind that when you submit your invoice to a client you should save it as a PDF and not send them the original excel. This prevents your invoice from being editable so no information can be changed once you’ve finalized it.
FAQ – Creating an Invoice for Freelance Work
You need to create and submit an invoice in line with the invoicing and payment terms agreed with your client. The invoice must include certain information such as, in particular: accepted payment terms, invoice date and number, your and your client’s company name, address and contact information, description of what youâre charging for, supply date, the amount(s) being charged, and the tax rates applicable.
You can use Word or Excel to create your invoices by yourself, or try invoicing software to automate your invoice creation process. In any case, the invoice must include certain information such as, in particular: how much and when the client needs to pay you (accepted payment terms), an invoice number, your and your client’s company name, address and contact information, description of what youâre charging for, supply date, the date of the invoice, the amount(s) being charged, and the tax rates applicable. If you decide to create an invoice by yourself, you should check your local invoicing requirements, and whether your invoices have to contain any specific information.
