Invoicing is the process of requesting payment for the services performed. An invoice is a time-stamped document containing an itemized list of jobs done in the project and the overall cost. The reason invoicing is important is that an invoice is a legal document that shows that an independent contractor is owed money. A freelancer can’t receive any payment unless an invoice is issued. Another aspect of invoicing is that it helps freelancers keep track of cash flow — that is, how much money is available at the moment and how much is expected to come in the future. 

What is invoicing for contractors?

When you request an invoice from a contractor, chances are they already know what is supposed to be included in the document. If not, you could always direct them to free templates and tips online. Either way, it is okay to name exactly what you need to see in the document in a short message prior to receiving the invoice.

Basic Info
The document's purpose is stated right on the face of the document. Invoices also have unique identifiers for reference and the seller’s or service provider’s contact details in case of errors related to billing.

Itemized list of what was done
Contractor invoicing requires naming services. An itemized list is best; it simplifies billable job compilation and total cost calculation. Any free template out there is ideal as long as it presents itemized in a concise manner. Itemized lists aid tracking, reducing the likelihood of omitted items.

Applicable Taxes
Tax handling is crucial for contractor invoicing. Incorporate tax either into the total cost or as a separate line item; both are acceptable, provided taxes are accurately calculated and paid on time.

Payment Terms
Payment details, including discounts, early payment incentives, and late payment penalties, are often specified on invoices. Billing practices vary. Some issue a monthly statement summarizing all outstanding transactions, explicitly stating that no further invoices will be sent, and others charge per service. Traditionally, paper invoices were common, creating multiple copies for both parties.

Payment Methods
The way a payment request is made matters a lot. The easier and more seamless the option is, the happier the business and the freelancer will be. As a client, you can offer convenient payment methods which ultimately turn you into a desirable customer that freelancers would love to work for. Whatever method you choose, make sure your payment details are provided in the invoice.

Customization
Invoices can actually be customized to include a freelancer’s logo or brand name or even a short brand message. invoices can be customized to meet business needs of customers, too. While the key components should stay, how detailed they are depends on the client’s wishes and requirements. As a client, you can suggest the freelancer uses your template for invoicing in your case.

What does an invoice include?

Stage 0. Use the independent contractor / freelancer service agreement
A contract is crucial in any project you work on with freelancers, especially if you and the contractor work without any intermediaries like freelance platforms. It is the contract that sets the payment terms, the amount to be paid, and the due dates. To invoice as a contractor, your freelancer needs to refer to the previous agreement.

Stage 1. Make contractors keep track of resources invested
Behind every invoice, there should be an accurate calculation of how much time and money, if any, has been invested into a project. You can refer to free time-tracking software to keep track of your freelancer’s time. Providing a specific amount of items you are charged for, be it hours, words, or project milestones, increases your contractor’s trustworthiness and reduces your stress.

Stage 2. Get the invoice
Help your contractor customize their invoices, but these key elements are must-haves for professionalism and error prevention:

• Document Title. In bold, provide the name of the document in the top part.
• Logo. A logo can be added here for branding. It is OK to customize an invoice.
• Invoice ID. This piece of information is necessary for easy retrieval later on. It is recommended to use sequential numbers or a date/client code system.
• Invoice Date. The date should be specified and within a rational period to prevent payment delays.
• Your Details. Your name, their name, and contact information are essential. To avoid any potential issues in banks, double check that the details you provide are written correctly.
• Client Details. Client name, billing contact/department, and contact info. Again, avoid any errors in this field so banks process the invoice faster and you receive payment quicker.
• Itemized Services. List each service, description, hours/word count, rate, and subtotal.
• Total Due. Total cost, including tax and any additional fees is listed here. Make it the most visible item on the invoice and ensure it is calculated correctly.
• Payment Methods. Specify accepted methods (PayPal, bank transfer, etc.) and conditions that may apply.
• Due Date. State a clear payment deadline that is possible to meet for the client.
• Late Payment Policy. Outline any late fees that may occur if the payment is delayed.

Stage 3. Receive payment
Your preferred payment method should be specified in your contractor agreement. For freelancers in the same country, direct deposit, checks, domestic wire transfers, or payment apps (like PayPal) are efficient options. In turn, International payments may introduce complexities. Exchange rates, conversion fees, and bank charges (for either party or both) must be considered. Local currency payment requirements vary by jurisdiction. If your contractor management and payment are compliant with local and overseas labor laws, growing internationally is less challenging and risk-free.

Invoicing for Contractors: Simple Guide

Unprofessional invoices. An invoice is a document, and it needs to look like one. You want to make sure that the invoice you receive is accurate and properly organized, and follows the conventions. There is a set standard for an invoice, and most of the free templates you can find on the internet are okay to use. To invoice as a contractor, your freelancer is free to follow the standard to meet everyone’s expectations.

Inaccurate invoices. It’s important that the documents your contractors send look polished, and information they contain is accurate and concrete. Again, consider using a template to avoid making mistakes.

Delayed invoices. Your professionalism is in meeting deadlines and letting others get to their deadlines unrushed. Contractors need to send in their invoice before it is too late and in advance enough for clients to make their payment. After all, an invoice that is sent later than necessary may look like a gesture to rush the client, which is far from being considerate.

Lack of Follow-Up on Late Payments. While some shy away from follow-ups because they think they are rude, others genuinely forget about following up on payments. It may seem sweet that the contractor doesn’t push for payment, yet it does nothing but show that they are not consistent and you might have to chase them around to complete the transaction.

Avoiding personal touch. Adding a sprinkle of their personality into every invoice is charming. Entwining their personal branding into an invoice makes invoices payment stand out which contributes to how memorable the freelancer is.

Not providing closing documents. It may seem that once the payment is received, you are good to go. Some freelancers simply stop replying or reading messages from their clients. However, you need to receive closing documents. A closing document is the ground for tax reduction. It shows that you, as a customer, don’t need to pay tax for an employee, since the counterparty acted like a contractor. Finishing a business relationship on a good note with all documents sent your way helps you build international teams worry-free.

These Invoicing Habits Are Dangerous

Wherever your contractors are and whatever amount you pay them, your work relationship needs to be compliant and secure worldwide. Clients and freelancers alike are prone to making errors, and facilitating your operations with freelancers with an intermediary contractor management service like EasyStaff helps considerably reduce risks of worker misclassification, document mismanagement and tax noncompliance.

EasyStaff is the contractor management system that helps you work securely and compliantly with your contractors regardless of their or your location. EasyStaff positions itself as an intermediary between you and your remote teams, thus bringing your multiple individual contractors under a single B2B contract. EasyStaff is your answer to the question of how your freelancer should invoice as a contractor.

EasyStaff is a European company that pays your remote team in multiple ways taking into consideration their preferred withdrawal methods. As a business, you can pay with a business card, a bank transfer or cryptocurrency. The great news is, regardless of what method you choose, you will receive closing documents to back up the spend. For your freelancers, fully compliant closing documents are also available so they are able to report income and pay tax.

EasyStaff takes serious risks off of your shoulders. Convenient payment methods to suit your needs, fully compliant invoices and closing documents, Customer Support and a personal manager regardless of your turnover are at your disposal to build any teams. The icing on the cake is dynamic commission that can be changed depending on pay and withdrawal methods and monthly turnover.

Success Recipe. EasyStaff Backs You Up With Any Contractors

Conclusion