Much as we hate to admit it, being a freelancer means being more than mere writers. If we want to be paid, we need to be staff our internal accounts receivable and billing departments, too. Yeah, it’s a pain, but it doesn’t need to be. Once you get your processes set up, keeping track of your cash flow becomes pretty brainless. Here’s my approach.
Though there are some off-the-shelf solutions you can try, as I noted in a previous post, I prefer Microsoft Office. For billing, I recommend creating an MS Word template (eg, MyInvoice.dot) that contains the following information:
- Your name
- Your address
- Client contact name
- Client billing address
- Invoice number
- Invoice date
- Payment terms (eg, Net 30)
- Your tax ID number (if appropriate — not your SSN)
- Your client’s PO number (if appropriate)
- An itemized description of the work, including submission date, fee rate (per-word or per-hour), word or hour count, and total
- A box at the bottom “For office use only”, including room for an approval signature and date.
- Put a nice logo on it too, if you can, to make the thing look professional
My invoices look like this:
I save each one by numbered filename, eg “Invoice 001.doc,” and keep them in a directory called Invoices. As checks come in, I print the invoices, attach the pay stub, and file them. At the same time, I move the electronic invoice into a subdirectory called Paid, so I know at a glance which invoices are outstanding.
For invoice tracking, I use Excel. My goal in setting this up was to track (a) how much money I’m billing per month, (b) how much money I’m owed, (c) how I’m doing overall (ie, is my work steady, increasing, or decreasing), and (d) my taxes. With that in mind, I created a spreadsheet that contains two tabs.
- Invoice number
- Customer ID
- Billed amount
- Date paid
- Amount paid
- Days past due (This is calculated automatically using the formula: “=IF((F4),””,DATEDIF(B4,TODAY(),”d”))”; this formula says, if there is an amount in the “amount paid” cell (in this case, F4), do nothing, otherwise, enter the number of days elapsed since the billing date (cell B4). For extra panache, I use conditional formatting to color the text red if the invoice is more than one month past-due and I need to reach out to my editor.)
- Taxes paid (ie, in which financial quarter, such as Q3/2010)
The second tab, called “Overview,” data-mines the Invoices tab to calculate, by client, how many invoices I have submitted, their total, and how much I’m owed. In addition, I added a simple table that tabulates total billing per month (as well as average billing per month), and a graph of that data that includes a “moving average” trendline.
To make these calculations, I let Excel do the work, using formulas like this:
SUMIF and COUNTIF are Excel formulas. In this case, COUNTIF counts the number of times the Customer ID (specified in Overview tab cell A4) appears in the Invoices tab Customer ID column. SUMIF scans Invoices tab cells C4-C11 for the Customer ID (again specified in Overview tab cell A4), and when it finds it, adds the amount billed (specified in Invoices tab cells D4-D11).
Well, there you have it: my low-budget accounts receivable department. It took me a few days to work all the kinks out, but since then it’s been smooth sailing.
I’ve made the invoice spreadsheet available here. If you use it, I recommend double-checking the Overview tables as you add new clients; occasionally, in its zeal to simplify your life with autofill, Excel fudges up the formulas. Caveat emptor.
How do you track your clients and billing? Let us know in the comments!