Is keeping track of your finances driving you nuts? Invoices, due payments, reminders... set up a killer invoicing system and make your life easier! Andi Smiles tells you in detail how to set up a financial system for your business so you can keep track of your cashflow movements. Check it out!

Have you ever found a $5 bill in the back pocket of your pants? How about a $20 in that tiny little pocket in the front? I have. What ensued afterward can only be described as a happy dance so happy, it’s better left in private.

Setting up a rockstar invoicing system is one of the most important things designers can do to ensure that they get paid regularly and on time. When you have a really good invoicing system, it’s like having your pockets turned out all the time. There is nowhere for money to hide.

But don’t take my word for it. I want to tell you about two of my clients and how leveling up their invoicing game changed their business.

First, let’s talk about Linda, whose invoicing system was okay but she couldn’t get her clients to pay. Seriously, these people would take MONTHS to pay an invoice due in 7 days. Cash flow was always not flowing and she never had enough to cover her expenses or pay herself. #badnewsbears

Then there’s Aaron, whose clients paid. So he thought- until we redid his invoicing system and discovered outstanding invoices that he thought had been paid. Some of them were too old to re-invoice, which is like finding a shredded $20 in your shoe.

Both Linda and Aaron had one thing in common with their invoicing system: it was incomplete. You see, both of them had bits and pieces of a stellar invoicing system but the pieces weren’t talking to each other.

When it comes to money, bad communication almost always means dollars lost.

So let’s talk about the four main components of a kick ass invoicing system and how to get them to work together so you’re rolling in on time payments.

Tracking Time

When I first started my business, I didn’t realize tracking time was an actual thing. I would just look at the clock when I started doing my work and then look at the clock at some point after I stopped doing the work. Then I would FORGET to write down the time.

Eventually, I realized that having a proper time tracking system meant I made more money. Go figure.

One important decision to make about time tracking is what fraction of the time you bill up to.

For example, do you bill for actual time worked (like 1 hour 37 minutes). Or, do you bill up the quarter hour (so if you work 1 hour 37 minutes, you charge for 1 hour 45 minutes)? Make sure you decide on a billing increment and stick to it with all your clients. This makes time tracking waaaaaaaaay easier.

If you bill on a project basis, it’s still important to keep track of your time. You want to be sure that you are accurately estimating the project costs and getting paid a reasonable hourly rate for the project.

Tracking your time doesn’t need to be complicated. Here are some options:

  • Apps (TSheets and Toggl are two good options)
  • Inputting your time directly into your digital accounting/invoicing system
  • Using a spreadsheet
  • Keeping a time tracking sheet at your desk and logging your time the good ‘ol fashion way

Whatever you decide, be consistent and pick one time tracking method. Pick the system you will actually use and that fits your working style.

Creating Invoices

Now that you know how much you worked for someone, it’s time to tell them so you can get paid.

First and foremost, don’t just write an invoice in a body of the email. That’s seriously going to be a giant pain in the ass when your business takes off and you are invoicing your heart out.

Take the time to make invoices that are their own stand alone documents. This makes it easier for you and your client to reference.

You want your invoice to be as clear and detailed as possible so your client isn’t emailing you asking about the line that says “Work done”.

Be sure to include payment instructions on the invoice. Don’t make your client look for the email that you sent 6 months ago detailing how to pay you. They aren’t going to do it and you aren’t going to get paid.

Your goal with your invoice is to minimize the number of questions a client may have so they can pay you as soon as possible.

The main parts of an invoice are:

  • Your name and contact information
  • Your client’s name and contact information
  • Invoice Date
  • Service dates and a description of the work you did (this can be line by line or an overall project description)
  • The number of hours you worked (line by line or overall)
  • Your rate
  • The total for each line
  • Subtotal

And so important, but everyone seems to forget about this:

  • Your invoice terms (how long they have to pay you? 7 days? 30 days? 60 days?)
  • The invoice due date (make sure this is consistent with your terms)
  • Your late payment policy (what happens if they don’t pay you on time? Do you charge a late fee? Is it a flat fee? A percentage of the invoice?)
  • Payment instructions (make it as easy as possible for them to pay you- where can they send a check? What online payment processors do you accept?)

You can make an invoice in Word and Google Docs and send it as a PDF. This is important- be sure to send your invoice as a PDF and not a file format that is editable.

You can also use a digital accounting program like QuickBooks, Freshbooks, or Wave to make and send your invoices. These programs integrate with online payment processors, which make it even easier for your clients to pay you.

How ever you decide to make and send your invoices, take the time to make a template that you will use every time. Using a template means that you won’t leave out any important information on your invoice.

Psssssssst- all this info in on this free Killer Invoicing System checklist I made just for you! 

Keeping Track of Who’s Paid

For many people, sending an invoice is the last step of their invoicing workflow. Then they expect the money to come flowing in.

I have sad news for you- when you send your invoice, your job is only half done. Now, you need to keep up with payments.

There are a few simple ways to do this. The simplest is to use one of the digital accounting or invoicing program mentioned earlier to send your invoices. These programs keep track of the due dates you set and show you a list of your open and outstanding invoices. At a glance, you can see exactly what you’re waiting on.

If you’re not ready to move into one of these programs, then you can set up a basic spreadsheet that tracks your invoices.

Make a column for:

  • Customer name
  • Amount due
  • Invoice Date
  • Payment Date
  • Payment Amount

Using a spreadsheet like this will help you see, at a glance, who has an outstanding payment.

Be sure you update your spreadsheet and accounting program as soon as payments come in! I like to do this right before I deposit the money into my account so I won’t forget to close out the invoice.

Sending Reminders

What happens if someone doesn’t pay you? Then it’s time to start bugging them for your money!

The first step is to make a template email that you send every time someone’s invoice is overdue. Don’t try to write a new email for every overdue invoice- that’s way too time consuming and you won’t get around to it.

Create a template that is friendly, firm, and short. Let the client know their invoice is overdue and remind them of the invoice date. If you have a late payment fee, let them know you’ve updated their invoice with the fee and the new invoice is attached.

Here’s an example:

Greetings ____________,

This is a friendly reminder that I have not received payment for your invoice dated ________. Per my late payment policy, I have added a $_________ late payment fee to your invoice and attached an updated invoice.

Please send payment as soon as you have a chance.

Many thanks!

Warmly,

_____________________

After you make your template, the next step is to decide when you are going to send out invoice reminders. If you invoice a lot of different clients, I recommend checking on your invoices and sending out reminders every 1-2 weeks. Pick a regular day for this (like every Friday or every other Friday) and block the time out on your calendar to check on payments and contact non-payers.

If you send very few invoices, you can add the invoice due dates to your calendar or reminder app and send non-payment emails on a rolling basis.  

How you feeling there, hot stuff? Ready to become an invoicing master? Before you go forth and invoice your heart out, here’s a checklist of everything I laid out here in one handy dandy page so you can set up your invoicing system with ease!  

Andi Smiles

Andi Smiles

Andi Smiles is a professional bookkeeper and small business consultant. She has a passion for helping small business owners develop a transparent and loving relationship with their finances and blogs about solopreneur finance at the BFF course. You can also get other juicy tidbits by following her on Instagram, Twitter, Facebook, and Pinterest or by joining her FREE Facebook Group Boss Babes Business Finance.

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