Freelancers often face problems such as not receiving the correct payment amount or not receiving it on time. Hence, they must know how to write an accurate invoice while freelancing.
An invoice is an item-wise list of goods or services provided by a person, along with the amounts due for each of these goods and services. It also provides other information relating to the transaction undertaken, such as the taxes levied, the date of the transaction, the address of the supplier and recipient, the tax identification numbers, etc.
Who is a freelancer?
A freelancer is an individual who does not work for a particular company as an employee but picks up multiple assignments for various different companies or individuals. For a freelancer, raising invoices is an important business process as it not just determines the amount to be paid but also ensures that the payments are received on time. It also helps eliminate any confusion or misunderstanding between the freelancer and the client.
What are the contents of an invoice raised by a freelancer?
The following details should definitely be included in a freelancer’s invoice:
Title Every invoice should be appropriately titled with the words ‘Invoice’ or ‘Tax Invoice’ or any such similar title, as applicable.
Name and logo The name of the freelancer or his company, and the logo, if available, should appear on the top of the invoice. This way, anyone reading the invoice will know who raised it at first glance.
Contact details The contact details, such as the telephone number, email address, postal address, etc., should appear below the freelancer’s name/company name so that the recipient can contact the freelancer in case of any discrepancies. If the freelancer has a tax identification number like a GSTIN, the same should be mentioned here.
Client’s name and client’s information Similar to the freelancer’s name and contact details, the client’s name and relevant information such as his address, contact number and email address, GSTIN, etc., needs to be mentioned too.
Invoice date The invoice date is the date the invoice is raised on. This is important to mention as sometimes the payment terms in the freelancer contract, if available, is based on the invoice date. For example, ‘Payment to be made within 30 days post invoice date’.
Invoice number The invoice number is the serial number of that invoice and plays an important role in referencing that invoice, either by the freelancer or the recipient of his services. A helpful tip here is to include the year and month in which the invoice is raised while numbering invoices. For example, an invoice raised in May 2021 can have an invoice number like 12345/05/2021.
List of services with the rate charged (before tax) Next comes the list of services rendered by the freelancer. If the freelancer is a writer, it can be the list of topics written along with the word count and rate per word. If the freelancer is a graphic designer, it can be the list of creative projects undertaken along with the exact work done or the number of hours put in and the rate per project or per hour worked. The idea is to be specific here so that clients know exactly what they’re paying for.
Tax rate and amount, if applicable If the freelancer has a GST registration and is liable to pay tax on the services provided, then the tax rate and amount of tax due against each service should be separately mentioned. If all the services fall under the same tax bracket and service code, then just the applicable rate can be mentioned at the end and calculated on the gross value of services rendered, along with the amount of tax. A bifurcation should be given between taxes as IGST, CGST and SGST due to the Central and state governments. Please note that if the freelancer is registered under the Composition scheme, he will not be eligible to issue a tax invoice as there is no tax component. In such a case, he needs to print the words ‘Composition taxable person’ at the top of the bill of supply that he issues.
Total amount due This will be the sum total of the hours/assignments billed multiplied by the rate per unit, along with the GST charged, if applicable.
Payment details It is necessary to mention the bank account details or other such details determining where the payment is to be transferred to. If the mode of payment is cash, then the same needs to be mentioned. It would be wise to discuss the mode of payment beforehand with the client rather than directly print it on the invoice.
Signature Every invoice should be signed by the person issuing it. Hence, an invoice should have a designated space at the bottom for the freelancer to put his signature and the company seal, if any.
How should the invoice be raised?
It is always advisable to have a freelancer invoice printed in black and white and not have the amounts orally communicated to the client so that no dispute arises at a later date with regard to work done or the payment due. Once raised, the invoice should be mailed to the postal address of the client. If that is not feasible, then sending the invoice via email is an alternate option.
Though, in present-day transactions, emailing invoices seems to be the more popular method. Sending invoices via mail also helps in cases where the client claims to have lost the paper invoice. Note that the invoice raised and signed can always be used as proof in case of payment delays.
When should the invoice be sent?
Since a freelancer usually works on particular assignments and does not have long-standing employment with the company, it is best that the invoice is raised and sent to the client as soon as the work is completed. This is when the assignment is fresh on the client’s mind, and it is easier to follow up for payments as well. In the case of long-term projects, then billings on a weekly, monthly or quarterly basis can be done, and the invoices raised and sent accordingly.
How to invoice as a freelance designer?
The process of raising an invoice as a freelance designer is very similar to that of any freelancer. The scope of work and payment conditions are to be decided on beforehand. The invoice should contain all the details mentioned above.
The only difference when it comes to freelancer designers is the cost of raw materials that goes into a particular project. Hence, it is always better for a freelance designer to take an advance payment for the project before the work begins, especially when it is a new project or contract. A typical advance is about 25%-50% of the total project value. This will safeguard the designer from any cancellations that might occur from the client’s end at a later date.
A freelancer designer or graphic motion designer may have to interact with clients back and forth before the finalisation of the project takes place. Only after that, the invoice is raised. Further, the payment terms usually range between 45 days to two months. Sometimes, there are also agreements between the freelance designer and the client-company. One of the terms may include extra or additional charges for more than three revisions of the design copy or video produced.
Most of the designers use photoshop and similar software for creating invoices using the templates available.
Format of an Invoice raised by a freelance writer
Format of Invoice raised by freelance videographer or designer
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