Becoming an established freelancer is as satisfying as it is rewarding. Indeed, taking a deliberate step away from the safety net of the Rat Race to generate an income as a self-employed professional can deliver a sense of achievement - and pride – which few salaried jobs can match. However, while drumming-up work and getting it accepted by clients is rightly regarded as the bread and butter of any freelance enterprise, it is undoubtedly the payment – your individual profit - which is the honey.
Truly, being remunerated for work you yourself have chased, created and completed feels fantastic.
But what is the best way to taste this honey? How do you actually go about liberating your hard earned cash away from your clients’ coffers and affording it asylum in your own account?
Read on to find out.
STEP 1: invoice your client(s)
An invoice is essentially a bill; it tells your clients what services you have provided for them and details the amount of money you expect to be paid in return. Although some freelancers make out invoices in advance of taking on a project, it is most often the case that invoices are issued after a task has been completed.
Invoices are relatively simple documents so it is very easy to create one within a word processing/spreadsheet package like Word or Excel, or in Google Docs if you prefer. When creating your invoice document, you must include the following:
- Relevant information about both your business and your client (e.g. contact info)
- An invoice reference number (e.g. Invoice #0001)
- An itemised list of the tasks you have completed, along with the billable cost
- Any taxes that need to be levied (e.g. VAT)
- The total payable amount due
- Terms of payment terms (e.g. ‘Please ensure payment within seven days of receiving this invoice’)
- Payment options (e.g. BACS transfer, PayPal, etc).
If you don’t fancy creating your own invoice (or are keen to generate documents that look a little more professional) then you can always make use of one of the many online and cloud-based accounting software packages that are available these days. As well as generating very smart looking invoices, packages like OnTheJob, BillingsPro, FreshBooks and FreeAgent typically provide several handy optional extras too, such as logo uploads, time tracking, expenses overviews and account reports.
STEP 2: receive payment
In the dark days before the Internet, payments to freelancers - even those issued via banks - often took days to go through (weeks if cheques were involved). Fortunately, the World Wide Web has changed all that and now it is frequently the case that most payments conveyed online can be made/accepted almost instantaneously.
Although there are a number of ways to receive payments online, it is fair to say that a great many clients and freelancers nowadays prefer to use PayPal. In addition to being free to sign up to and incredibly easy to use, PayPal offers some handy options that can make life easier for freelancers, such as the option to refuse as well as accept payments. The only downside to PayPal is that it can levy processing fees on some transactions, although some of your more generous clients may include a ‘grace’ payment of around 5 per cent to cover any unavoidable fees.
Receiving payments into your bank account via a BACS transfer is another good option. The great think about BACS transfers is that fees are normally not an issue (although this is not always the case). However, it is important to note that sometimes - and it is only sometimes - payments made in this way can, for unknown reasons, seem a little slower to come through than those made via PayPal.
It is worth mentioning that some of the more user-friendly accounting software packages (such as FreshBooks) enable clients to pay directly into an account of your choice directly from their invoice. Naturally, this makes receiving payments far more straightforward (and secure) for both freelancer and client.
Credit card payments and cheques can also be used to receive payments but both of these options offer significantly fewer benefits (mainly in terms of fees and swiftness) than those mentioned above.
If you’re a freelancer then please feel free to share your thoughts on this topic by letting us know about your own invoicing and payment strategies in the comments box below.