How-to: Self-Employed & Freelancer Invoices

If you’re here, it’s fair to say that you’re possibly dealing with the nitty-gritty of your small business or freelance job. No worries, you’re in the right place! Osu is all about you!

After the Great Resignation crisis that surged with the Covid-19 pandemic, more and more people are considering career changes and/or stepping into self-employment for the first time. As always with any change, there’s lots to learn and take in!

One of the first things you find out is that self-employment is not entirely the romanticised story of simply doing what you love 24/7. In part, it is… but being self-employed also comes with a ton of admin. And if you’re not organized it can take away the joy out of what got you started in the first place.

Osu is changing this reality! We want to help you focus on growing your business without having to deal with the hassle of boring administrative tasks.

In this guide, we’re going to be talking about invoices. And while an invoice is almost a business standard, it doesn’t mean that everyone knows the exact ins and outs of when to use them and how. That’s why we’ve put this together - to help you navigate this important part of your business towards success.

Let’s start with the basics!

What is an invoice?

Invoices are documents that list exchanged goods or services in order to request a payment. They provide detailed information to your client regarding the exact goods or services that they purchased, the date when these were purchased and their corresponding prices. An invoice is not the same thing as a quote or a receipt.

A quote comes before the invoice and shows your clients the expected costs of the items that are going to be delivered/purchased. This quote can be open for discussion and changes before the client fully commits to the purchase.

On the other side of the spectrum, a receipt is what comes after the sale has been completed and paid. A receipt is similar to the invoice but it is less detailed and serves only as proof of payment, which can be useful to track expenses.

Both a quote and a receipt are optional documents to offer your clients and are not as key to your small business as the invoices.

Why do you need an invoice?

  • To get paid fully and faster

Everyone wants to get paid for their work, right?! Even if you’re doing what you love as your job, it doesn’t mean that you can do it for free. Invoices are official business documents requesting payment and, in the worst-case scenarios, they are vital documents to chase clients when your work goes unpaid.

  • To keep on top of your taxes

By keeping track of your business sales and your invoices it will be easier to report your small business income and make sure you pay the correct amount of taxes.

  • To track your sales and finances

Invoices allow you to keep on top of your cash flow and finances. By having a consistent procedure to issue these invoices with detailed information regarding your exchange of services or goods, you can look back and both understand how much revenue you had for your business in a given time period and also see which item or service was most popular within your clients.

  • To show you're a professional and trustworthy business

Although invoices are “just a piece of paper”, they’re often perceived as much more than that. Invoices are a key part of how you manage and present your business. They can be great tools to increase your brand awareness, show that you’re transparent about your services and showcasing you and your business as professional and trustworthy.

Are there different types of invoices?

Yes, there are several types of invoices. Though let’s focus on the most important ones for small businesses and the self-employed.

  • Standard Invoice

The most common type of invoices are the ones that Osu automates for you. This type of invoice is mostly used as a payment request for an exchange of goods or services between you and your clients.

  • Commercial Invoice

This type of business invoice is particularly useful if you are selling goods that have to cross international borders. It provides extra details around export and shipping tariffs. Commercial invoices confirm that the shipment is legal.

  • Timesheet Invoice

A timesheet invoice, as you might be guessing, is an invoice that states an hourly based service. This type of invoice can be particularly useful to self-employed and freelancers that work with projects or tasks that vary in complexity.

  • Retainer Invoice

Retainer invoices are issued by businesses that require an upfront payment or deposit that will then be deducted from the final full price once the job has been completed. This type of business invoice is a great way to secure funds before starting the job, giving small businesses and freelancers a way to protect themselves and avoid no-shows or no-pay clients.

  • Recurring Invoices

This type of invoice is used for services or goods that are purchased on a regular basis, such as subscriptions.

At this point, one other thing to note is that all invoices can be VAT invoices or not. In short, if a sole trader or small business is VAT registered, then the invoice needs to show the VAT calculation. VAT is a fee that is added on top of the items you are selling. According to UK law, If your VAT taxable turnover goes beyond £85,000, it means that you need to register your business.

What does a standard business invoice look like?

As mentioned above, there are many different types of invoices and therefore they will not look all the same! That being said, they all contain the same core sections:

  • Invoice Number
  • Date of Issue
  • Client details (name, address, email, phone number, etc)
  • A detailed list of the goods or services purchased by the client (description, quantity, price and amount)
  • Discount code (optional but always gives that extra touch of care that your clients may be looking for!)
  • Payment total
  • Your business details (name, address, phone number, email, etc)
  • Your bank account details (very important to make sure you get paid!)

Other information you may want to include:

  • Your business logo to make yourself stand out as a more professional and trustworthy business!
  • Your payment terms to make sure your client knows by when they will need to complete the payment and to warn them that you will chase it

Psst… Did you notice that Osu has a special “Pay here” button on the invoice? Continue reading to know more about it!

How to create an invoice?

Right, creating business invoices online can seem the easiest thing to do. After all, there are several free invoice template generators online that provide you with different design options that you can use and customize as much as you fancy.

And while it’s easy to get started, what you might be forgetting is that recreating the design every time is incredibly time-consuming! And not just that. It’s harder to track your records and keep up with your finances. You can, for example, lose sight of your invoice numbers which can then create a whole new mess when it comes to organising your invoices to claim taxes.

Invoicing is a task that is intimately tied to your bookkeeping and accounting; it's not just a way to get paid.

Let’s be real: for your business to thrive you need to be able to automate as much of the admin as possible so that you can focus on providing better services and acquiring more customers. Therefore, manually creating invoices every time, checking that all the details are accurate, is simply inefficient.  Plus, it’s a rather tedious task!

“What is the solution?” you may ask.

Easy! Osu is the answer.

Osu is built to help sole traders, self-employed professionals, freelancers and small business owners get paid and easily manage their time, clients and finances. By using Osu, you no longer have to worry about creating invoices because we automate this for you!

With our app, you simply add your standard business details to your Osu account along with your logo in a couple of minutes, and we’ll take care of the rest!

Whenever you request payment from a client, the Osu system will automatically generate and issue an invoice for you in the background. Both you and your client will receive a copy!

The best things about our automated invoice software are:

  1. There’s an actual “Pay here” button embedded within the invoice! It makes it incredibly easy for your clients - they simply click the button and are immediately able to pay you!
  1. When your clients pay the money is sent instantly from their bank account to yours - it means there’s absolutely no delays. Even better, there’s no fees! Instead of waiting 2 or 3 days for the money and paying 2% or 3% in fees which happens with card payments, when your clients pay via the Osu invoice, it’s instant and the fees are 0%
  1. You can get the Osu app absolutely for free - check it out yourself! Once you sign up you’ll be on our Free plan which will allow you to issue 10 invoices per month and collect up to £1,000 worth of payments - truly at no cost.

If you do need more, then we have premium plans available. But before then you have the Free plan!

Ready to give us a try? Click here to get started!

Interested in learning more?

Why not download our handy guide to cutting the time, hassle and headaches out of running your self-employed business.

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