For tech-savvy individuals, web and software development is a rewarding and lucrative way to make a living. Not only is the industry on the rise and in increasing demand, but the pay doesn’t hurt too. As a software engineer, writing code and testing for bugs isn’t all that you do. Developer invoicing is a big part of it, too. Without it, you risk screwing up cash flow and the risk of bringing your software development business down under.
We need to avoid that at all cost!
In this guide, we’ll be covering:
- Why getting developer invoicing right is critical to your business
- How to approach developer invoicing
- Developer invoicing tips
- Roundup: let’s get paid!
Why getting developer invoicing right is critical to your business
Coding is important, but so is acquiring clients and knowing how to invoice and ultimately get paid. As a freelance software developer, you’re on your own: no HR, payroll, or admin staff can help support you to receive payment from your clients. The trade-off is clear though. Freelance development comes with a TON of flexibility, but the majority of the challenges lies in mastering the art of invoicing. The side of running a business that you didn’t learn when you self-taught yourself code or studied your computer science degree.
To do it right requires plenty of planning and the right tools in order to succeed (and see the positive cash flow). Come tax time, it also doesn’t hurt that getting invoicing right from the get-go will help you reduce taxes too!
How to approach developer invoicing
Ready to tackle invoicing for your coding work? Here are the general steps you can take to effectively plan for, create, manage and send invoices to clients for the work you performed.
Step 1: Do research on all new clients
New clients are full of unknowns. Whether you acquired a new client through word-of-mouth or through an outbound lead—there is plenty of ambiguity. A new, shiny prospect is exhilarating, especially if it’s one of your first few clients. Though that feeling never gets old, you need to do your research and lay down the groundwork before you can build an empire of loyal, paying customers.
So, how can you do that?
Find out if they’re reliable payers, how they like to communicate, and what their invoicing/payment expectations are. Once you get a feel of your new client, it’ll also help dictate what your invoice might look like. Some questions that can help you find out are:
- Have you worked with freelance developers before? Or am I the first? (This will tell you if they have sought the services you provide before, and whether they have paid for it)
- How do you prefer to communicate? (Whether they have worked with developers before or not, this question is a must. They might say through text, email, or phone. Their response will tell you how to best reach out to them for payment or simply to chat)
- What are your invoicing expectations? (Ask this question, but not before you set the tone for what your invoicing terms are first. For example, you might want to let them know that you typically invoice on X day of each month, and you expect payment within 15 days for the work performed that month on their website)
Remember, long-term clients, are always a good thing, especially if you can work your way to recurring payments, such as a retainer.
Step 2: Nail down their payment protocols (and align on them)
Nailing down your payment terms and method is one of the first things freelance developers should communicate with their clients. Establish policies for methods and timelines when it comes to money. Down the road, you’ll thank yourself later, especially if they turn out to be a long-term client.
Method. Which payment method does your client prefer? Is there a method that you prefer, such as through a bank transfer?
Timeline. When should payments be made? The initial kickoff is a good time to initiate conversations about payment timelines and expectations. Get on the same page early, such as payments within 15 days (net-15), so that expectations are established right away.
If you have more than one client, things might get a little trickier since one client’s payment method may differ from the next. Be sure to stay flexible and adaptable throughout this process! Trust us, your clients will appreciate it.
Step 3: Create your invoice!
There is no exact format to set up your developer invoice, but there is a standard skeleton that you should follow when you approach developer invoicing.
As developers, you know firsthand the importance of flexibility and automation. If those are some of the core values that surround your work (and perhaps, in life), why not approach it the same way with invoicing?
Whether you choose to start fresh or create one from a pre-built developer invoice template, here’s what to include on your invoices every time:
1. Business name and info
Your business name is a foundational element of a professional invoice. It identifies your business and establishes your brand.
A unique invoice numbering system helps you stay organized, especially come tax season.
3. Date of invoice
Date of when the invoice was generated and not when the goods were supplied.
4. Payment terms
Any terms or other contractual descriptions you would like to include.
5. Qty/hrs worked
The number of hours worked or quantity of services provided.
6. Bill to (client information)
Your client’s information including their full billing address.
7. Flat fee or hourly rate
The amount you’re charging per hour or for a specific service.
Any other fees or taxes that you may charge on your invoice.
9. Total, including sales tax
The total amount of your invoice after any sales tax, discounts, etc.
Step 4: Save invoices in the right place
Creating the systems and processes that work for you is important for freelance developers (and freelancers in general). The very last thing you want is to lose track of your invoices—both digital and physical.
Let’s say you and your client are discussing a line item on an invoice you sent 8 months ago. If you can’t find that invoice, and they can’t either, it can look extremely unprofessional on your end. In the same vein, you don’t want to wait until tax season to begin frantically searching for past invoices that were sent out and paid. In fact, you want to store it somewhere where you frequent so that you can confirm that they are being paid within the payment schedule agreed upon.
There is an abundance of both free and paid storage tools you can use to keep your invoices safe and organized. Tools like Dropbox, Google Drive, and cloud-based accounting software, and invoicing apps are great places to start.
For truly small business owners specifically (yes, you!), you may just need a tool that only provides invoicing. In that case, TrulySmall Invoices is a free, easy-to-use invoicing tool that you can start using today. Not only does it enable you to send invoices quickly to clients, but it also houses all your past and present invoices for you on the cloud—accessible from anywhere.
Developer invoicing tips
Developer invoicing tip #1: Reach out as soon as invoice payments are late
As a freelance developer, you’ll need to get in the habit of removing your ego in certain situations. If following up and doing the chasing isn’t your thing, well, that’s got to change! The sooner you follow up on late invoices, the sooner you’ll get paid. For example, if your payment terms are net-30 days and your client ignored the terms for one month, you should reach out as soon as the 31st day comes. Every day matters because your cash flow is on the line.
Developer invoicing tip #2: Automate, where possible
Unlike employees, you don’t have a set income (unless you’re on a retainer) and the support of legal counsel. Essentially, you’re on your own running all aspects of your developer freelance business yourself. From prospecting to writing code for a new app, every day is busy.
Automation, like many aspects of your job, can apply to invoicing too. And since invoicing is, quite literally, the heart of your operations, you should lean on tools to streamline your workflow.
Cloud-based accounting software or invoicing tools are a life-saver. Rather than creating invoices from scratch using Word or Google Docs, why not use free apps that generate, and pre-fill invoice details for you?
TrulySmall Invoices, for example, lets you easily fill out your invoice including contact details, line items, and fees. You can also add your freelance business logo to stay on brand and add extra notes that you want your client to see.
The best part? (There isn’t one—there’s a few!)
- The invoice number and date created is auto-generated for you, which saves you time
- Prompts to remind you to finalize the payment schedule (i.e. pay on receipt, next day, 15 days, or more), so that you actually get paid on time
- As soon as you use TrulySmall Invoices once, it will learn your details and pre-fill them for your next recurring invoice, which makes invoicing less of a hassle the more you use it
- TrulySmall Invoices auto-sends a reminder to your client that the invoice is outstanding after two days from the invoice date so that you don’t have to do it yourself
By trusting invoicing tools to get the job done, you can rest easy and re-focus your attention on other parts of your business, like testing a new feature or creating a new website.
Developer invoicing tip #3: Keep it organized
Expanding your client base is a great thing, but it also means having to keep track of more invoices. And boy, do they add up over time. Creating a system that can properly track and manage them is key. Create folders and subfolders for each client and be sure to label each invoice with the current invoice number and date.
Each invoice should have an invoice number to refer to for easy tracking purposes. Something like this should work fine:
Invoice 001 Truly Small 31-03-21
By creating a filing system with consistent naming conventions, it will become a whole lot easier to file your tax return come tax season.
Invoicing apps like TrulySmall Invoices pre-fills the Invoice Number and Invoice Date for you as soon as you create a new invoice. Instead of manually typing your naming/filing convention, let automation do it for you.
Roundup: Let’s get paid!
Invoicing can be done effectively. In fact, it can even be an enjoyable process—so long as you set up the right systems, lean on tools where it makes sense, and solidify good invoicing habits from the outset.
Interested in a simpler invoicing solution? Join other freelance developers and truly small businesses today by sending your first invoice in TrulySmall Invoices. It’s free and available on iOS, Android, and web-app.