Whether you’re a freelancer, creator or contract worker the art of the invoice is a critical business tool to master – and I’m here to help.
For those unfamiliar, an invoice is essentially a document that clearly itemizes the pertinent details of a transaction.
My fiancé, bless his heart, calls it a ‘reverse-receipt’. In the same way a receipt captures who the merchant is, what you bought and how – an invoice itemizes similar details BEFORE the transaction takes place.
Invoices come in so many shapes and sizes but the components are typically:
Self-explanatory but I cannot count the horror stories I’ve heard. Terms should be negotiated well before an invoice is generated but occasionally there is some sticker shock.
And this honestly is where the real-world application of an invoice really shines. It documents these details clearly and protects both parties. It also clarifies the payment method and schedule – there are tons of ways to slice this:
“NET” agreements: Are arguably the most common. While the industry standard is usually 30 days, I’ve seen all kinds of variations from 1-120.
Pre-Pay: Wherein either part or the total compensation is transacted prior to services rendered.
Retainer or “Pay As You Go”: Wherein a service rate and time period is agreed upon, but the frequency of work/assignments/projects is adjustable.
And this list goes on and on. Importantly, an invoice may also include special arrangements or notes unique to the project.
This is critical because while your brand partner may have promised XYZ, the accounting team may not be privy to those details and it may result in delays in payments. Plugging in “memory joggers” where absolutely necessary can save both parties a lot of headache and double work.
Bank Details & PDF Format: One of the biggest causes of rejected payments is missing bank information. It’s sort of sad that I must mention this but it’s true – yours truly has fallen victim to this in a past life.
Ditch the PayPal invoices and don’t send them a Word template or doc. PDF format is the way to go as many invoice processing systems that your clients use will automatically reject an invoice if it is not in that format. Another great thing about PDF’s is that they are not easily edited.
If you are working with an international brand – congrats! – you will also need to provide your IBAN and Swift code.
IBAN is short for International Bank Account Number and is used worldwide to identify individual accounts. IBANs make it easier to process international payments. You can find your IBAN on your account statements.
A SWIFT code is an international bank code that identifies particular banks worldwide. It's also known as a Bank Identifier Code (BIC). This can also be found on your account statements.
Other things to include:
A unique invoice number
A description of the service
The quantity and/or frequency
State or local taxes (Taxes only apply for physical goods sold – so you don’t need to charge any taxes!)
Your business address and the brand’s address along with contact info
I enjoy using the app InvoiceASAP because it can CC multiple parties like the brand partner, accounting rep, legal team, etc. The Invoice Maker app is also a great alternative. This is also a great option if you want to make one on your laptop.
Was this helpful? Let me know down below what you learned.