Pay Me the Money: Invoicing Clients for Freelance Work
Discover the importance of invoicing and make it easy for you to get paid
Invoicing clients is one of the main ways that freelancers get paid, but you'd be surprised how often we overlook it. If you want to keep your creative business healthy, it's vital to stay on top of your invoicing. Part of that is finding the right balance between getting paid quickly and making it easy for clients to settle up. Let's explore how you can make invoicing much easier.
The basics of good freelance invoicing
Strong invoicing is built around a few key approaches:
Create and send out invoices for the freelance work you do directly with clients.
Get agreements in place, define how you want to be paid, track your work, and send invoices.
Make it as fast, simple, and as easy as possible for clients to pay you.
Offer several options for providing payment, and make each one friction-free.
Understand the likely fees you will pay to receive payments.
We'll dig into these below.
The main channels you'll get paid through as a freelancer
There are plenty of options for making money through freelancing:
Fees that you’ve invoiced to clients for your freelance work.
Payments that you’ve received from freelancing platforms like Fiverr, Upwork, and similar.
Charges to clients for areas like project management, public speaking, or consulting.
Money you’ve made from selling your own physical or digital products.
Money you’ve made from selling other people’s physical or digital products through affiliate marketing.
Money you’ve made from monetizing your videos or website through advertising or other means.
Any other payments for freelance work and related activities.
For most creative freelancers though, the majority of our income will come:
Through invoicing clients directly for work you have completed.
Through a freelance platform or third party.
We'll focus on the first option in the rest of this guide.
The most important rule about invoicing and receiving payments as a freelancer
If there's one thing to learn about getting payments as a freelancer, it's this:
You should make it as easy as possible for a client to pay you.
The simpler you can make the invoicing and payments process, the more likely you are to get paid quickly and with a minimum of hassle.
You get money in your bank account sooner.
You don't have to send reminders and chase payments as often.
Your clients are happier because it's convenient for them to pay you.
You might not find the perfect mix of payments immediately. I recommend testing and tweaking how people can pay you to find the right balance of cost, speed, and ease of use.
Types of freelance clients that you can raise invoices for
You can generally raise invoices and receive payments from clients where the following three points are true:
You have a direct relationship with the client.
The client has requested that you provide them with freelance work in exchange for payment.
The client is expecting to be invoiced when you complete work or on a regular basis.
Steps to follow to raise invoices and get payment
From a payment perspective, the main stages you will follow are:
Get a contract or agreement in place with the client.
Track the freelance work that you complete and return it to the client.
Create and send out an invoice for the work you've completed.
Get paid.
Understand the costs and speed of the payment methods you use.
Why a freelance contract is critical to raising invoices and getting payments
A freelance contract protects you in many ways, but when it comes to invoicing and payments, the most important parts of a contract:
Explain that you are completing freelance work in exchange for money.
Define the terms of how and when you will raise an invoice.
Define the terms of when you will get paid and how long the client has to make payment.
Let the client know what your rates are.
Explain how you charge for work, for example through an hourly rate, a project rate, a per-word rate, or something else.
Lay out a schedule of payments, defining when you will be sending out invoices. This might be based around invoicing on a regular basis (weekly, monthly), before the work starts, once the work is delivered, or as you achieve certain milestones in the project.
You can work with an attorney to draw up a contract, or customize one from those available online. Once you have a contract, you will need to personalize it to the client and get the client to sign it, normally through an electronic document signing service.
How to track the freelance work that you complete
As you complete freelance work, you'll track the charges that you will be invoicing to the client, based on your payment structure. Freelancers can track completed work in various ways:
In a task manager or to-do list.
In a spreadsheet or document.
Directly into an invoice.
Using specialized software like a time tracking or project management tool.
Via other means.
The most important parts of tracking your work for payment are:
Describe what the piece of work is called, or what it is for, so the client can recognize it.
Note down whether the work is not yet started, in progress, or complete.
Depending on how you charge for the work, you might want to record the amount of time you spent, how big the project was, or other factors that determine your fees.
Record the total fee for the work.
Return the work to the client and go through any necessary revisions or follow-up processes.
Raise and send out an invoice for completed work.
How to invoice a freelance client
Invoicing is the main way you'll charge direct freelance clients for your work. Before you create an invoice, you will need to:
Choose the right invoicing system for you—there are hundreds of invoicing apps out there, from standalone software to invoices that are part of your bookkeeping and accounting systems—Popular options include FreshBooks, QuickBooks, PayPal, Xero, Wave, and others.
Set up your invoicing or bookkeeping system by adding your business details, integrating with your bank account and payment system, making other configuration changes, and learning how the system works.
Add your client to your invoicing system. You'll need to include their name and email address at a minimum, and can add further details as required.
Once you've set up your system and added your client as a customer, you can create invoices for them.
How to raise an invoice for a client
Your invoicing software will take care of some of the following areas for you. You will need to complete the others manually:
Create an invoice for the client you want to charge.
Add the details of your freelance business to the invoice.
Add the client's name and contact details to the invoice.
Add an invoice number or unique reference.
Date the invoice and how long the client has to pay.
List each item of work that you've completed on a separate line, together with the fee.
Include a purchase order number or other reference if the client has provided one. If not, don't worry.
Provide options for paying the invoice.
Send the invoice to your client.
How your freelance client pays your invoice
Most invoicing software will allow you to define how you want to be paid. The most common ways to be paid are:
Through an integration with your invoicing software—you send the invoice to the client, they click on the link, and they get to a screen where they can pay the invoice, normally by credit card or bank transfer.
Through a credit or debit card outside your invoicing system—you can receive card payments via various services like Stripe or PayPal.
Through a bank transfer or check—the client might make the payment directly into your freelance bank account or send you a check for the amount that you can pay in yourself.
Through other applications like Venmo, Zelle, Payoneer, mobile wallets, etc.
When you're deciding on the best payment method, think about the client and what would be convenient for them. In most cases, an integration with your invoicing software is going to be the most straightforward.
Fees associated with taking freelance payments
Even receiving money costs money! Here are the typical fees you'll need to pay for receiving your freelance payments:
Credit and debit cards: 2.9% of the transaction amount + $0.30. On a payment of $500, you would pay $14.80 in processing fees--2.9% of the transaction amount ($14.50)+($0.30).
Domestic bank transfers / ACH: Typically, there are no fees.
International bank transfers / wire transfers: Between a $20 and $40 charge from your bank, plus possible costs from interim banks, normally at about $20 - $30 each. On a payment of $500, you might pay $40 - $70 in processing fees.
Domestic checks: Typically, there are no fees.
International checks: Fees vary, so confirm with your bank.
Other methods: Fees vary between platforms, so confirm charges by reviewing the platform website.
A breakdown of the fees and speed of various payment methods
Here's how each payment method breaks down.
Freelance payments via credit and debit cards
The client makes a payment using their credit or debit card.
The card processing company takes the payment and deducts their processing fees.
The processing company deposits the amount in your bank account.
Credit card speed and fees for payment: Money is normally available to you within two to three working days, and there's typically a processing fee of around 2.9% of the entire transaction amount plus $0.30.
Freelance payments via bank transfers / ACH
The client gets your bank account details—the name of the account, the routing/sorting number, and the account number.
They arrange for payment from their own bank account or payment software.
The money gets transferred directly to your bank account.
Money is normally available the next working day after payment.
Bank transfer speed and fees for payment: Money is normally available to you within one to two working days, and there's not normally a fee for domestic payments. International payments / wire transfers will typically attract a fee of $20 to $40, plus charges from interim banks (which could be another $20 - $30).
Freelance payments via checks
The client gets your payee details.
They arrange for a check to be raised for the freelance work you have completed.
They print out and send you a check.
You deposit the check directly with your bank or via a mobile banking app.
Check speed and fees for payment: Money is normally available to you within three working days of depositing a check, and there's not normally a fee for checks in the same currency as your bank account. Checks in a different currency will attract additional fees that vary by bank.
Freelance payments via other methods
There are plenty of other payment platforms that a client could use to pay you. These include Payoneer, Zelle, Venmo, PayPal, mobile wallets, and similar technologies. The fees for receiving payments and the speed for receiving money do vary between applications. You will want to check how these platforms can be used for business and ensure you understand the costs of doing so.
Receiving freelance payments in a foreign currency
Many freelancers work with international clients, and might be taking payments in foreign currencies. There are often additional fees for taking payments in currencies different from your bank account currency, so check with your bank what those fees are and their exchange rates. In almost every case, it is always better to charge in your native, domestic currency, as the client's debit or credit card payment will take account of that. If you do need to invoice in a different currency, then a service like Wise provides a low-cost way to receive payment and convert between currencies.
Showing your invoices and payments in your bookkeeping system
You will need to show all of the payments you receive in your bookkeeping and accounting system. This applies:
Whether you received the payment through an invoice, a freelance platform, or via other means.
Regardless of how the client chose to pay.
You will use this income, together with your expenses and profits, to complete your accounting, file tax returns, and make estimated tax payments.