Some people send invoices beforehand so that they can get paid earlier. Others send it after because they feel that any other option makes them look unprofessional. It isn’t as easy as saying whether or not one side is right or wrong. Because of this, we’re going to explore when you should invoice and why.
When you should invoice early
Invoicing early has its perks and its drawbacks when it comes to both you and the customer. But, what exactly are they?
You might be able to get a portion of your payment beforehand to promote a healthy and active working relationship between you and the customer.
Even if this isn’t the case, you can avoid the trap of invoicing after and falling into a later billing cycle. This essentially means that as long as the work is done, you would be paid as soon as possible, without having to wait as long as 30 days for the next billing cycle.
An additional perk of invoicing early is that you can weed out customers you don’t want to work for. Especially if they seem unwilling to pay. It might be harsh to do this but there are some kinds of work that this is essential for. An example is, carpentry, you can’t “withhold” a decking like you can a word document.
Nobody likes spending money. There are customers out there who would see early invoicing as rude, maybe even money-hungry. This could weaken potential working relationships.
You are also quite locked into the job if they decide to pay the deposit. Ensure that the customer knows every aspect of the job and that there aren’t any nasty surprises so you can avoid unexpected payments. Surprise payments will exhaust your customer relationships.
When you should partially invoice
Partial invoicing is when you invoice for small amounts of the total cost over different periods of a project. It’s rarely done for smaller jobs as there is no need for it. Where it mainly shines is long-term jobs with multiple large parts.
Partial invoicing has one obvious perk to it that should be addressed first. You get paid whilst working. This helps with several things that are necessary such as:
- Having the money needed for subcontracting
- Making a healthy cash flow
- Getting the full payment
- Involving clients in projects becomes far easier
Alongside this, it also helps create a healthy working relationship that’s beneficial for both parties. But with such a list of perks, what could the drawbacks be?
You are largely locked into that project and could potentially be treated similarly to a salaried employee and expected to keep to a reasonable timescale. This can be a deal-breaker as they could be doing self-employed work specifically to avoid this kind of employment.
This kind of payment includes long-term projects or deals. This means it’s essentially locked off from smaller projects or jobs, only certain professions can easily make use of this.
When you should Invoice after/on completion
Invoicing on completion is often seen as the right option for a job. Many who invoice regularly opt for it and some even call it the “professional” way to invoice, but why?
Firstly, there is the aforementioned fact that it’s commonly called the professional way to invoice, this is why.
When you finish a job, the customer expects the work done to be of a high enough quality to justify the payment. Now, what happens when you invoice someone early or through partial invoicing and they don’t think that what you have done for them is deserving of the price set? They disagree and tell you that you need to do some things before they can pay you. This strains customer relations, possibly even pushing them to look for the service elsewhere, in the very worst cases, they may not even pay you at all after this. Invoicing after cuts this out completely, giving them time to decide what they need before you ask them to pay.
There is also the obvious reason that invoicing on time is polite, and protects your cash flow.
Invoicing on time, whilst largely being accepted as the correct way to invoice, does have its drawbacks.
You may need parts or tools to do a job, meaning you need an upfront payment to be able to afford those.
Your safest bet when invoicing is to invoice on time, keep in mind all the points that have been made. It makes more sense that way for long-term business relations and has a higher chance of getting paid.
The only thing left is admin, regardless of where you are in a job when you invoice the client, admin takes up plenty of time. Why not switch to E-Invoicing and use the invoice24 app so that you can invoice on the go.