Invoicing is critical, invoicing is important, invoicing is everything. Yes, irrespective whether you have a small or large business organization or startup, invoicing is crucial for every segment of the business. Especially, if you are a freelancer, this becomes the primary source to get paid for your work.

When you put together a proper and good invoice, it assures you of the quick payment and in full. This, in turn, improves your cash flow and makes your services look more reliable. With the right invoicing system, not only you can be sure of the payment but also you can avoid key invoicing errors that might let your next project go away.

We have listed a few key invoicing elements which are very much prone for any freelancer to make mistake upon and hence, these errors need to be avoided. Some of these invoicing error can slow down your payment process, while some might consume your valuable time and creates confusion for your clients. Let’s review them one by one:

1) Missing Pricing Schedule

The prime mistake or error on a freelancer’s part is to not have a pricing schedule ready for your clients. Without this, your clients and at times, you will be confused as to on what basis to set the charge in invoices? What is the method of price setting in your invoices? Is it by the hour or project, etc? If you agree on pricing terms well in advance and put it in your invoice then your clients will be clearly able to understand and will make payment faster.

2) Missing Professional-Look

Non-professional looking invoice takes a longer time to get paid, a report said. Having a professional and uniform look in your invoices can be the biggest advantage for you. Such an invoice should have work type and category, price, number of items or units completed, logo, etc. You can opt for an online free invoice maker, that can take care of all these small things and let you avoid having a non-professional look of your invoices.

3) Missing Payment Terms

Missing out on payment terms and policies in your invoices can prove to be beneficial for your clients to skip the payment. This will create an imbalance in the cash flow and ultimately is going to reflect in your work or business. Simply adding a due date and policy related to late payment can change the payment perspective for your clients. Putting this information in your invoice will encourage your clients to pay fast and in full due to a charge or fee implied for the late payment as well.

4) Missing Clarity

It is very imperative for you to mention clearly in invoices so that your clients understand what they are paying for? Or what are the services they opted for and their respective fee or charge for the same? Having unclear line items or units mentioned in an improper way will confuse your clients and also delay the payment. It is better to keep less back and forth over the invoices to maintain seamless relation with your clients.

5) Missing Consistency

Another critical issue that freelancers face is by not sending the invoices consistently. If you do not maintain consistency and are always late then your clients will also pay late. This will prompt them to be making untimely payment because of your invoicing error or mistake. Your clients will be making a payment on time when they’ll know that an invoice is coming soon. If certain of your clients are regular, then setting up recurring invoices is a great way to move ahead.

Concluding Note:

To have all this feature which will help you to avoid errors might sound expensive, but in reality, it is not. The online invoicing application from Moon Invoice comes with a 7 days free trial period to give you first-hand operational experience and functionality feel of the app. So, we do not see any reasons for you to hold back from giving this much-awaited momentum to your business.

Recurring Payments Vs Recurring Invoices

Recurring Payments	Recurring Invoices
Recurring payments charge the customer’s credit card account or debit card account on a predetermined schedule for the same amount as preapproved.	Send an invoice to your customer on a regular basis. The client receives the invoice but, money is not paid unless the customer approves.
A business that takes prepayment of money and sells a monthly subscription service and product. Subscription services are excellent examples of this.	A company that provides fixed services with billable hours is an excellent choice for recurring billing. For example law firms and consulting agencies.

Pros and Cons of Recurring Invoices

Pros	Cons
You eliminate the possibility of human error by automating the billing process. If you use a recurring invoice, you will not be concerned about forgetting to charge your customers for the things they ordered.	You must exercise caution while recurring billing to prevent issuing inaccurate pricing. This also holds for price changes that could take place right once an invoice is created.
If you provide your customers with the option for recurring billing, they are more likely to buy products regularly.	It could be difficult to cope with recurring invoices if a transaction fails for any reason.

Net 45	Invoice is due in full within 45 days with no early payment discount offered
2/10 net 45 terms	2% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days
1/15 net 45 terms	1% discount if you pay within 15 days; otherwise full payment of the invoice is due in 45 days
1/10 net 45 terms	1% discount if you pay within 10 days; otherwise full payment of the invoice is due in 45 days
1/7 net 45 terms	1% discount if you pay within 7 days; otherwise full payment of the invoice is due in 45 days

Category	Net Method vs. Gross Method	Explanation
Calculation Approach	- Applies tax credits first; reduces taxable income before computing tax liability.	- Doesn't apply tax credits; computes taxable income without considering tax credits.
Tax Credit Eligibility	- Allows for greater likelihood of tax credit eligibility due to reduced taxable income.	- Limits tax credit eligibility because taxable income hasn't been reduced yet.
Itemized Deduction Requirement	- Lowers threshold requirement for itemizing deductions due to decreased taxable income.	- Raises threshold requirement for itemizing deductions due to higher taxable income.
Advantages	- Leads to lower taxable income and increases chances of meeting qualifications for other tax benefits.	- Results in higher taxable income compared to net method.
Disadvantages	- May miss opportunity to reduce tax burden if taxpayer doesn't itemize deductions or take advantage of tax credits.	- Increases taxable income and may result in higher overall tax bill.