Freelancers in India commonly face issues of not receiving the correct amount billed or delays in payment. Therefore, it is crucial to follow a systematic way of raising invoices as a freelancer and following up for pending dues.
An invoice refers to a document containing the list of goods or services provided by a person with the amounts charged for them. Apart from the supplier’s contact, it also provides other information such as the taxes charged, the date of the transaction, the buyer’s billing and dispatch address, the tax identification number, invoice payment due date, etc.
Understanding a freelancer and invoicing
A freelancer refers to an individual who is not under the employment of a particular company but picks up multiple assignments for different companies or individuals. Freelancers need to raise invoices for their clients and send them. Freelancers mostly do not maintain any separate records or books. In such cases, invoices or bills help them determine the amount to be received and ensure that the payments are collected on time. It also helps them avoid confusion or misunderstandings with their clients.
Invoice contents for a freelancer
The following details should be included in a freelancer’s invoice:
1. Title
Every invoice must be titled clearly as ‘Invoice’ or ‘Tax Invoice’ or ‘Bill of supply’ or any such similar title, as may be applicable.
2. Name of the freelancer and their logo
The freelancer’s or their company name, and the logo, if available, should appear on the top of the invoice. It allows anyone having the invoice to know who issued it at first glance.
3. Contact details of the freelancer
The contact information, such as the telephone number, email ID, postal address, etc., must appear below the freelancer’s/company’s name. The client can easily contact the freelancer during discrepancies. The freelancer must also mention tax identification numbers such as the GST Identification Number (GSTIN) wherever obtained.
4. Client’s name and contact
The client’s name and other information such as his address, contact number and email address, GSTIN, etc., also need to be mentioned.
5. Date of the invoice
The date of the invoice must be the date on which the invoice is raised. It is a required field to mention since sometimes the freelancer contract, if available, contains a condition that the payment terms must be based on the invoice date. For instance, one can have terms such as ‘Payment to be made within 45 days after the invoice date’.
6. Invoice number reference
The invoice number refers to the serial number in the invoice and acts as an important field to refer back to the invoice. It is useful for both the freelancer and client and must be accounted for in their books. Freelancers must mention the year and month the invoice is raised while numbering invoices for quick reference. For instance, an invoice raised in December 2021 can have an invoice number like 12345/12/2021.
7. List of services with the rate per unit charged (before tax)
Next up, freelancers must list down every service rendered to the client. If the freelancer happens to be a content creator or copywriter, they must mention the topics written along with the word count/hours spent and rate per word or hour.
If the freelancer happens to be a graphic designer, then it is a list of creative projects and the same job or the hours spent on it and the price per project or rate per hour worked. One must be specific so that clients understand what they are paying for.
8. Tax rate and amount, if applicable
If the freelancer has obtained GST registration, they can pay tax on the services provided. The invoice must contain the tax rate and amount of tax due to the government against every line item.
If all services get classified under the same tax bracket and services accounting code, mention the applicable rate towards the end and compute the gross value and tax thereon. Bifurcate total taxes into Integrated GST, Central GST and State GST.
If the freelancer is registered under the composition scheme, they will not be eligible to raise a tax invoice since there is no tax involved. But they need to print the words’ composition taxable person’ at the top of the supply bill.
9. Total invoice amount due
The total hours/assignments billed are multiplied by the rate per unit and GST charged.
10. Details of payment
The freelancer must mention their bank account or other such details so that client is clear about whom to pay and the account to be deposited. If the payment mode is cash, then that should be mentioned. Hence, the freelancers must fix the payment mode with the client before printing it or adding it to the invoice.
11. Signature of the freelancer
Every invoice must be signed by the person issuing it. Therefore, an invoice should contain a designated space at the bottom for the signature and company seal, if any. Also, as per the standard business practice followed, if the invoice is computer-generated, it need not have the signature of the freelancer.
How should a freelancer raise an invoice?
In today’s fast-moving world, freelancers must raise professional invoices to impress their clients. They can use invoice software available over the internet to create error-free invoices and bills with a click of a button. Eventually, invoice software helps freelancers easily track the status of invoices raised, payments and arrange reminders to clients.
Timely communication of invoices is essential for faster payment. Freelancers may print their invoices in black and white rather than communicating orally to the client. It ensures that no dispute arises in the future regarding work done or the payment due. Once raised, the invoice must be mailed to the client’s postal address.
Even better, sending the invoice via email is a popular and convenient alternative. One can also resend invoices via email where the client claims to have lost the paper invoice or bill. Invoice raised and signed can be used as proof of payment delays.
When should a freelancer raise and send an invoice?
Since freelancers usually work on an assignment basis, it is advised to raise and send the invoice to the client soon after the work gets completed. Since the assignment is fresh on the client’s mind, it is easier to follow up for payments. However, in the case of long-term projects or contracts, billing can be weekly, monthly or quarterly.
Qualities of an ideal invoice software for freelancers
As discussed in the earlier section, invoice software must be the choice of freelancers in today’s fast-moving and competitive world. A freelancer must look for the following qualities while choosing the invoice software.
1. Ability to create masters
An invoice or billing software allows one to maintain a master list of products offered, services rendered, GSTINs, clients’ contact and addresses, purchase orders, etc. A master set of inputs facilitates faster and error-free invoice generation every day.
2. Log and activity trail
The activity log allows better tracking and verification of the activities done on the billing software. The activity log helps users follow tasks during a specified period, especially during client discrepancies.
3. Safety and security
Invoice software in today’s market generally is SSL encrypted and certified. For example, ClearOne supports 128-bit SSL encryption on its cloud backend. This encryption protects the software from hackers and ensures that no unauthorised data-sharing happens with external parties. The information is not readable to anyone outside the server and ensures no breach of sensitive data.
4. Cloud-based software with data backup and retrieval
Invoice software stores data on cloud-based servers hosted over the internet. Users can access data from any device and at any time. For instance, if your mobile phone crashes, you can always log in through a laptop and recover the data instantly.
5. Varied template options
Pre-defined templates are available on the billing software from which freelancers can choose the suitable ones. The format and contents are mostly fixed. Some documents include export invoices, tax invoices, credit and debit notes, and estimates.
6. Document sharing and payment collections
Freelancers can share documents with their clients and CA easily. They can also send payment links and QR codes to clients for easy payment collections.
7. Made invoices and estimates of professional standards
Invoicing software creates invoices and estimates of professional standards without errors and quickly. It enhances the freelancers’ brand image since the clients positively respond to professionalism.
8. Availability of business insights as reports
Billing software helps the user to generate various reports. It contains a dashboard for accounting or taxes with useful metrics. Users can track business operations more efficiently.
How can ClearOne invoicing and payment collection software help?
The ClearOne app supports all the features mentioned in the previous section. It creates professional-looking invoices in attractive templates and ensures you collect payments for every invoice raised. Some of its exclusive features are given below.
- ClearOne creates GST-compliant invoices ensuring that the software remains up-to-date.
- It allows users to create various business documents and business cards.
- Users can add payment links and QR codes on the invoice for easy collections.
- Users can send reminders to clients for paying dues.
- It also helps inventory management so that users don’t run out of stock or avoid overstocking.
- Users can obtain the payment status on the app within seconds.
__
Author Bio – Ombir is a SEO Executive at eRank Solutions. He is a SEO and writer has 2 years of experience in these respective fields. He loves spending his time in doing research on different topics.
