Invoicing is a vital financial tool for both large business enterprises and contractors. But mastering the art of creating independent contractor invoice is essential as they keep juggling with different projects. Not being ready with the invoice may result in delayed payment or may also result in missing out on payment from a particular client. Creating accurate invoices with detailed information is a key factor of financial accounting for small businesses. Hence, contractors must be aware of the process of creating invoices such that they have a smooth business transaction.
Check out this article to learn how to invoice as a contractor!
So, let’s come to the point and discuss how to do a contract invoice!
How to invoice as a contractor in few simple steps
As contractors work on different projects that have various billing terms and timelines, invoices must be framed accurately. Invoices should clearly state the billing information, services provided, payment deadlines, and various other business details. Here we have listed some of the important points that need to be included while creating an invoice.
1. Highlight the Document as Invoice
The invoice itself is an important document, but you need to emphasize it more by highlighting it. Mention in the document the word “Invoice” in bold and a bigger font than the rest of the details. This will make it very clear to the clients what they are looking at and its purpose.
2. Include Business Information
Do not miss out on the business details. An invoice without this information would make no sense. Even if you are a contractor you can add your company logo as a sign of identification. Mention all the contact information in detail so that it becomes easier for the client to communicate in case of any emergency.
3. Include Client’s Contact Details
Mentioning the client’s contact details is also very important. In some cases where you transact with bigger companies, they might have separate billing departments and you need to communicate with them only. Hence mention the name of the specific department and all other contact information in the invoice.
4. Assign Invoice Number
Assigning a unique invoice number to every invoice you send is important. This will help you to keep track of every transaction for future reference. Assign sequentially so that it becomes easy to maintain the order of the invoices.
5. Mention the Details of Your Service
Create a table to itemize the list of products or services that you have provided. It should include a brief product description with the quantity supplied. The number of hours worked should also be mentioned, besides the rate of pay and total amount.
6. Include Payment Terms and Method
Sending an invoice is all about making your payment process faster. The invoice created should state the payment terms clearly along with the payment method. Outline the payment policy along with late fee consequences to ensure there is no further delay.
7. Add Invoice Date and Payment Deadline
Don’t forget to mention the invoice date. Make the payment deadline very clear in the invoice. It should be in an easy-to-read font so that it is very clear. Mention the full date to avoid confusion.
8. Mention the Amount Due
Though you mention the rate per service or product, do mention the total amount for clarity. It becomes easy for the client to understand and make the payment. The amount should also be in a bold and bigger font so that it can be easily spotted in the invoice.
So, let’s brief the above points and make it clear as to what includes in a contract invoice!
What is included in a contract invoice?
- Contractor’s company names and contact details
- Client’s name and contact details
- Invoice date
- Itemized list of services and price for each
- Total amount due
- Payment due date
- Payment policies
- Payment method
‘Mistakes make a man perfect’, but it may sometimes cost you more. So, let’s understand what are the probable mistakes so you can avoid those easily while creating contractor invoices.
Mistakes While Invoicing as a Contractor
It might seem simple and easy to generate an invoice. But most often contractors miss out on certain things that may cause a delay in their payment. Besides learning how to invoice as a contractor, learn to recognize the probable mistakes to avoid those in the future.
1. Failing to Track the Hour
As most of the contractors charge their clients hourly basis, it is important to establish a system for tracking hours. This can be done both manually or digitally. But to process this task smoothly you can implement cloud-based accounting software that streamlines your work.
2. Failing to Send Invoices Immediately
It is not wrong to send the invoice immediately after the completion of the project. Rather, this would reduce the chances of getting overlooked. Sending an invoice immediately will remind your client about the payment as the project would be fresh in mind.
3. Forgetting to Add Payment Terms
Make sure you outline the payment terms and conditions. Neglecting these or missing out will lead to serious issues. Your client must be aware of the payment methods that you use. Missing out this point while creating an invoice or during a contract may create unnecessary misunderstandings and delay in payment.
4. Missing out on Follow-up for Late Payment
It’s your right to get paid for your work and for that you can follow up in case of any delay. Missing out on your follow-up may delay the process further which may lead to an awkward situation. A friendly message or a polite reminder may help you in this case.
5. Failing to Maintain Invoice Format
Being a contractor you will have to deal with different projects that include different job descriptions. Due to the variation in job requirements, it is natural that invoices would vary as well. Maintaining the format, in this case, is important and it also eases up your work. Taking the help of any accounting software can reduce your load.
- Make sure you create an effective invoicing policy to set your rates, deadlines, payment methods, late fees, etc. This helps in organizing the task and avoids misunderstanding later on.
- Keep in mind your client base before you prepare your contractor invoice. Make the invoice client-friendly to ease up the procurement process.
- Keep track of time to ensure that your data is both accurate and up-to-date.
- Review the invoice details to avoid errors or mistakes.
- Establish an effective invoicing process that is easy and has a low-cost process.
Billbook Invoice Template
Creating frequent invoices and maintaining proper format may seem tedious. To help you out Billbooks has come up with a customized invoice template that can be crafted as per your need. Moreover, there are various free templates available for contractors that are tailored to meet specific needs.
This is all about how to invoice as a contractor. Follow the above steps and create an invoice that suits your requirement and speed up your payment process.