I recently wrote an article on how to manage your finances as a freelancer, in that article I touched on invoicing, but didn’t go into the depth I wanted. So in this article, we’re going to take an in-depth look at invoicing as a freelancer. We’ll cover everything you need to know to invoice like a pro, including the key elements every invoice needs, what to do with invoices once you have them, and some tools you can use to streamline your freelancer invoices.

What is an Invoice?

This might sound like a silly question. But many people genuinely don’t know what an invoice really is. So what is it?

An invoice is a document that itemises and records a transaction between you (the freelancer) and your client. It could be a piece of paper, or it could be digital. It serves as a formal request for payment, detailing the services or products you’ve provided, their costs, and the payment terms. Interestingly, the word ‘invoice’ comes from the French word ‘envois’, meaning ‘dispatches’ or ‘things sent’. But the earliest known use of what we now know of as an invoice dates back to 3000 BCE.

Getting your invoices right will help with your legal compliance, keep you looking professional and your records in order, it’ll help prevent disputes and increase the chances of getting paid on time.

The Key Elements Every Invoice Needs

So we know what an invoice is now, and we even know where the word comes from. But did you know that all invoices need a few key elements? Not just to keep your invoice looking professional and help with your record keeping, but also for legal and tax compliance.

Invoice Header

So starting from the top of your invoice. Every invoice is going to need a header of some kind. Here you’d include your business information (such as name, address, email, phone number, logo etc). You’ll also want to include your clients information. Having all this in the header makes the invoice easily identifiable, and makes it clear who the intended recipient is.

freelancer Invoicing header example showing the top half of a freelancer invoice including business logo, invoice number and addresses

Invoice Number and Date

Every invoice should have a unique, sequential, identifying number. You can add a prefix to this if you’d like, but it’s sometimes best to keep it really simple. Something like INV-001 for your first invoice, INV-002 for your second, and so on.

The important part here is to keep the numbers unique and sequential. Why? Well firstly, it helps with your record keeping (you’ll never get confused by using the same number twice), it also helps with ensuring you don’t lose an invoice. If the numbers are sequential, you’ll always know if one goes missing. This also helps your local tax authority. If they ever come to audit your accounts, one of the things they’ll at are your invoices. They’re going to want to see unique, sequential numbers. And if you have a number missing, you’ll be asked for an explanation as to why.

The date is another important element, though it doesn’t have the same legal implications as the invoice number. You’ll want to ensure your invoices include the date they were sent. This will help both you and your client track the timeline of your transaction.

Payment Due Date, Terms, and Instructions

Your invoice should have the due date clearly marked. I find it’s best to add an actual date, but some companies will use terms like ‘NET-30’ (meaning the payment is due in 30 days) or ‘Due on Receipt’ (meaning it’s due as soon as it was sent). But adding a specific date the payment is due just avoids any misunderstanding.

You’re also going to need to clearly outline the payment terms. Your terms might include penalties for late payment or details of interest that may be added. Then you’re going to need to let your client know how they can pay the invoice. I personally prefer bank transfers, so I include the details needed for a direct bank transfer, along with the reference number they should use (so you can track the payment). You might want to include a link to a payment gateway too so your client can pay using a debit or credit card.

The Services or Products Provided

This is the section where you’d add the services or products you’ve provided (or will provide). There are a few ways you could do this, and it doesn’t need to be super detailed. But it does need to be clear. If I’m invoicing for a website build, I’ll generally just have a single line item (something like ‘Website design and development’).  But if I’m billing for distinct tasks, I’ll add each task as a line item. You’ll also need to add the associated cost for the relevant line item here. If you’re VAT registered, you’ll need to consider your tax implications too… this usually needs detailing per item (as not everything attracts VAT).

In this section, you’re also going to want to list the quantity of the product/service provided. If you’re billing by the hour, you’d list the hours taken for the item. Your line item totals would be adjusted based on this quantity. For example, if I’m providing 5 hours of work at £50 an hour, I’d make this clear on the line item, and the subtotal would be £250

freelancer Invoicing example showing how to display line items on an invoice

Your Totals, Discounts, and Amount Due

This bit is pretty self-explanatory. You’ve added all your line items to your invoice, so now you need to add everything up so you can give your clients a clear number that they need to pay. If you’re charging any kind of tax or giving a discount, your totals will break down into 3 or 4 sections…

  1. Your subtotal – this is the total amount for the services or products you’ve provided, not including any taxes or discounts.
  2. The tax – you’ll need to up all the tax you’ll be charging. This number should just be the tax (don’t add your subtotal or anything else here)
  3. Discount amount – If you’re giving your client a 10% discount, you’ll need to calculate the amount and list it here. The same if you’re giving a set amount as a discount, you need to make a note of how much.
  4. Total – finally you need to add everything together. So add your subtotal and tax together, then subtract any discount. This is the number your client actually needs to pay you.

Image showing the totals section from a freelancer invoice including sub total, discount, VAT, total and amount due

Tax Information

If you’re charging any kind of tax (which depending on where you are, you might legally have to), you need to add details of the tax to your invoice. This allows your clients to potentially claim that tax back at a later date. For example, if you’re in the UK and your turnover for the last 12 months (that’s rolling turnover, so January to January, February to February etc) is over £90,000, you need to register for VAT (even as a sole-trader or freelancer). That means you need to start charging and paying VAT. So you’d add this to your invoice, but you also need to display your VAT number on your invoice. This helps clients validate that you are VAT registered and allows them to claim the VAT back from HMRC. It’s a similar story in many other countries, so it’s best to just include these details as default.

Notes and Additional Information

Finally, we have notes and additional information. Now this section isn’t required, but it’s a nice touch. You could use this section to just say thank you to your client or give any further details on the invoice. I often use it to remind customers to use a certain reference number when paying the invoice, or to direct them to my client portal to see an online version.

The art of freelancer invoicing. This image shows an example invoice with arrows pointing at the key invoice elements along with descriptions of what those elements are.

When Should a Freelancer Invoice

The short answer here is, you should send an invoice anytime you are due to be paid. But that’s a bit of a wishy-washy response to a perfectly valid question. The truth is, it depends. It depends on how you’ve agreed your client will pay you (a conversation you should have already had).

If I’m doing a large, fixed-fee, project for a client, I tend to take a deposit with the remaining balance due on project completion (or before the site launches if it’s a website build). So in this scenario, I’ll actually send two invoices. The first is for the deposit, and that gets sent as soon as the client agrees to move forward (usually after signing a contract). The second invoice, for the remaining balance, gets sent whenever it was initially agreed. So this will usually be at the end of the project. For particularly big projects, I sometimes break the payments down by milestone instead. So that’s even more invoices that need sending, but always at set times agreed with the client.

For ad-hoc tasks or support (like when a client just asks for help with something random), I’ll invoice as soon as the job is done. I’d use the line item section to note what the task was and how many hours it took. Again though, depending on the client, I might know there’s more random tasks to come, so in this instance, I’d just record everything and send a single invoice at the end of the month.

For retainer projects or consistent work, I set aside a couple of hours on the 1st of the month to create all the invoices and send them all out.

Freelancer Invoicing Tools

There are so many tools available to generate and send invoices. I currently use Perfex CRM to manage my clients and projects, and this comes with invoicing ability built right in. It’s incredibly simple to use. You can use it to record all your project work, time tracking, and random tasks and either automatically generate invoices when needed, or manually do it. I’d highly recommend checking it out. On my invoices, I list my bank details for direct transfers but also have the CRM connected to Stripe. Using Stripe gives my clients the option of paying with a debit or credit card, or setting up a direct debit – and as soon as they pay, the CRM automatically marks the invoice as paid.

Other Tools You Could Use

Not everyone needs full project management combined with a CRM. So here are a bunch of other tools you can use to generate your invoices

  • Stripe – Stripe has invoicing abilities baked right in. I’ve never personally used it, but I know people that do and they’ve never had an issue.
  • QuickBooks (and other accounting software) – I do use QuickBooks for my accounting and have dabbled with its invoicing tools. They seem pretty solid and have the added advantage of being directly tied to your accounts. I know other accounting software like Xero have similar functionality built right in.
  • Zoho Invoicing – It feels like Zoho does a bit of everything! They have a free invoicing tool for freelancer invoicing and small businesses. If you’re looking for a low-hassle, cost-effective way of doing invoices, this could be the one for you.
  • Invoicely – Another tool that has a free version available for small businesses. I know a few people that use this one, and they’re all extremely happy with it for their freelancer invoicing needs.