Money Rehab with Nicole Lapin - How to Set-Up an Invoice

Episode Date: November 2, 2021

Nicole got an email from a listener who is setting up an invoice for the very first time. This episode is all about what you need to outline on your invoice, so you get paid! Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. When you're starting your own business, you're going to figure out that there's a lot you don't know.

And what's more, you're going to figure out that you don't know what you don't know. When I started my own company, one of the things that I didn't know that I didn't know was how to put together an invoice. I remember landing my first client. It was a ton of really hard work. And when it paid off, I was really excited to, well, get paid. But then I realized I had no idea how to get paid. This memory came rushing back when I got this question from money rehabber Jason. Here he is. Hey, Nicole. My name is Jason and I live in Boston. I've been

trying to get into the freelance game and I'm starting to get my first couple of clients. They asked me for an invoice and I'm realizing that I have no idea how to put one together. I want them to think I'm professional, so I don't want to make any mistakes. What should I put on the invoice? Thanks. Well, congrats, Jason, on landing your first freelance gig. That's awesome. Thankfully, putting together an invoice is really easy, and I'll make it easier for you by giving you a straightforward checklist of the things you need on your invoice. Before we dig in, I will say that there are services you can pay for, like QuickBooks, for example, which will automate this process for you.

But if you want to go the DIY route, here are five items that you should include in the order I recommend they appear on your invoice from the top of the page to the very bottom. Number one, the first thing on your invoice should be your information, specifically your full name, your company's name, your company's address, your email, and your work phone number, probably your cell phone. If you haven't set up an actual business entity yet, I'd highly recommend you do so before the invoices start rolling in or hopefully rolling out.

before the invoices start rolling in or hopefully rolling out. But in the meantime, you can use your personal address and skip over including the name of your business for now. Number two. The second thing on your invoice should be your client's information. You'll need all that info you included for yourself in point one, but now for your client. So their name, their company's name, their company's address, and so on. Number three. Next should be the invoice details. This includes the invoice number, the date the invoice was generated, and the payment terms. Including the invoice number will keep your finances organized, which is always very helpful, but it will become extra helpful come tax season. When it comes to the payment terms, there are a few options.

Before sending an invoice to your client, you should mull over which option works best for you and then confirm the terms work for your client as well. One of the most common payment options is due upon receipt, which is the most expedited payment option. It's basically like saying, I need you to send me this money as soon as you see this. Okay, thanks, bye. With due upon receipt terms, payment is typically expected in one business day. It's a pretty common payment method, but not every client will agree to it because depending on your industry, some clients will need time to evaluate the work you've done for them. If your client does not want to go with a due upon receipt payment method, a really common alternative is N30, also known as Net30.

With a Net30 invoice, your client has 30 days to make a payment after the invoice is issued and sent to them. If you wanted to do a net 30 invoice, I'd recommend including the payment due date so that the client doesn't have to do the math for themselves. For example, I'd recommend that you write payment terms net 30, invoice date November 1st, 2021, due, November 1st, 2021. Due date, November 30th, 2021. Number four. Next, outline the goods and services. This is what we're all here for, right? It's standard practice to put this information in a table because there are a few key pieces of information that you should convey, and the goal is to provide your client with a clear breakdown of what they're being charged for. If you do go the table route, here's how you should set it up. The first column should be dedicated to the

descriptions of the products or services you provided. This could be a physical product like a piece of writing or something more abstract like an hour of consulting work. Next, create a column to denote the quantity of the product that your client received, then a column for the rate you charged for that product, and the last column on your table should be dedicated to the subtotal, which will be the quantity of your product your client received times the price you charged for that product. At the bottom of the table, you should put in bold the grand total of what you are owed, which should be the sum of all the numbers in the subtotal column. That might sound like a lot of columns and tables and numbers and math, but you're actually more familiar with this format than you think.

It's the exact same format as a bill at a restaurant. So don't worry, we don't need to reinvent the wheel here. Number five. The last thing on your invoice should be a note to the customer outlining which payment methods you accept. Some people I work with include their banking information on their invoice so that I have all the information I need to send a wire to them immediately. Now that works for me, but not all vendors will handle your bank information with secure protocol. Instead of putting your bank information in the invoice

itself, you could carve out some space at the bottom of the invoice to write a note thanking your customer, outlining the payment methods you accept, and the instructions for completing payment. For example, you might want to say, thank you so much for choosing to work with me. I accept payment through ACH Transfer. Please call my phone number to confirm bank details. For today's tip, you can take straight to the bank. Nothing in your invoice should surprise your clients. The moment your client opens your invoice should not be the first time your client is seeing your rates or your payment terms. That leads to tough conversations, tumultuous partnerships, and the chance that your client can't actually afford you.

Instead, you should confirm those details right after you and your client settle on the scope of the work. In business relationships, just like romantic relationships, communication is key. Money Rehab is a production of iHeartRadio i'm your host nicole lappen our producers are morgan lavoie and mike coscarelli executive producers are nikki etor and will pearson our mascots are penny and mimsy huge thanks to og money rehab team michelle lands for her development work katherine law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.