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How to Write an Invoice for Contract Work

Will Cannon

Last updated on October 1, 2024

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    Independent contractors and freelancers know just how important it is to properly invoice a client for their work. Without timely, accurate invoicing, payments may be delayed, incorrect, or both. To help you improve your invoicing processes, here’s how to write an invoice for contract work, mistakes to avoid, and top tips for contractors.

    How to Write an Invoice for Contract Work: 8 Elements to Include

    Here are the top eight elements to include in every invoice you create for your contract work.

    1. Label Your Invoice

    At the top of the invoice should be the label, which clearly identifies the document as an invoice, who it’s from, and potentially the subject of the invoice. You’ll often see templates with the word invoice at the top in all caps. This label makes it easy for the recipient to identify what the document is and (ideally) spurs them to action.

    2. Add an Invoice Number

    An invoice number is an extremely important element for all parties involved. As the contractor, you need to track and log your invoices. As the client, they need to track all of their business expenses. Invoice numbers give both sides a unique income and expense tracking identifier. Without an invoice number, clients may delay payment or it may cause issues with income and expense tracking.

    3. Include the Invoice Date

    Just as important as the invoice number is the invoice date. The invoice date plays a crucial role in the payment due date and terms that we will review later in this article. The invoice date should be the date that the invoice is submitted to the client. Some contractors incorrectly put the date that the work is completed (if submitted after a completed project) or the date the payment is due. While neither is technically incorrect, as a best practice it should be the date that the invoice is submitted to the client.

    5. Contractor Business Details

    The client needs to know who they’re paying. Some clients may have dozens of invoices to process at a time, and not including your business details can cause significant delays in payment processing. It shouldn’t be up to the client to investigate an invoice and determine who to pay. It would be best if you made it as easy as possible for the client to process an invoice quickly and accurately.

    4. Client Contact Information

    Similar to contractor business details, client contact information is crucial to include on every invoice. The client’s contact information identifies who is responsible for paying the invoice. 

    6. Services Completed (Line Itemed)

    The invoice should be itemized, with each payable item having its own line and ideally a description. Describe the services or deliverables in as much detail as possible to prevent any questions or confusion about the services rendered, the payment, and what is owed. It may feel monotonous detailing each payable item, this is one of the most important elements of the invoice. 

    Not only should the services completed section outline each item the client is to pay for, but also the amount owed for each line item. The client won’t have the necessary details to pay the invoice without an accurate services completed section.

    7. Total Due

    After you detail the services delivered and each item priced accordingly, enter the total due from the client at the bottom of the services delivered section. This makes it easy for the client to identify the total amount owed and lets them process the invoice quickly. They won’t need to add up each individual line item but they can see a clear breakdown of that total cost.

    8. Payment Due Date & Terms

    Finally, clearly identify the payment due date and any payment terms. There are several ways to state payment terms, but one of the most common payment terms are ‘net’ payment terms. Net terms are simply the number of days the client has to pay the invoice in full. Clients can pay sooner, but the net number identifies the very last day the client can pay without late fees. For example, net 30 means that the client has 30 days from receiving the invoice to pay it in full.

    Common Contractor Invoicing Mistakes

    Now that you understand the eight most important elements of invoices, here are some of the most common mistakes that contractors make (and what you should do instead).

    Invoicing Late 

    Invoicing late is the number one mistake that contractors make. Work with your client to identify a clear invoicing schedule. Whether that’s upon project completion, the last day of the month or quarter, or another pre-determined schedule, always stick to it and avoid invoicing late.

    As part of your invoicing process, give yourself a due date for completing and sending an invoice to your client just like you give a client a due date to complete their payment. 

    Missing Details 

    Many contractors, especially new contractors, rush through the invoicing process to receive payment as quickly as possible. Creating an invoice too quickly leads to mistakes such as missing details.

    As we mentioned previously, it’s vital to include a complete breakdown of the services or products delivered and what each of those line items will cost the client. Not including enough detail or missing a sufficient breakdown of costs is a common reason for payment delays.

    If you use the same invoice template for all of your invoicing, delete all templated information or information from an old invoice. Also, thoroughly review your invoices prior to sending them out.

    Time Tracking Errors

    If you work at an hourly rate, you need to have a solid system in place for tracking all of your billable hours. There are tons of free platforms out there that allow you to accurately track time worked. If you’re tracking your hours manually in an Excel spreadsheet, it’s time for an upgrade.

    If you haven’t started tracking hours and you work at an hourly rate, you’re likely missing out on getting paid what you deserve. Establish good habits early on in your contract to make sure you’re tracking your hours accurately every month. 

    Inconsistent Invoice Format

    Your invoice is part of your brand, and inconsistently invoicing may actually impact your brand negatively. If you haven’t established a consistent template to use, including your business branding, it’s worth spending the time to create one. Setting up a template also makes the invoicing process more efficient. Simply fill in the required elements and send to the client rather than starting from scratch every time.

    Invoicing Without Setting Payment Terms

    If you don’t set clear payment terms with your client, you may end up not getting paid. While most clients are understanding, there may be some that take advantage of a mistake like this. Establish clear, reasonable payment terms when you start working with the client and include those terms on every invoice you send them.

    Make the payment terms clear and easy to identify. Many contractors put payment terms at the top of the invoice, making them harder to miss.

    Not Filing Past Invoices

    As we mentioned with invoice numbers, tracking every invoice you send for processing is crucial. As a contractor, you need to track all of your income for tax purposes. If you don’t file away and securely store your past invoices, you have no way to accurately report your income.

    Establishing a simple digital filing system is a great place to start. Store invoices locally on your computer, on a cloud storage service, or even sign up for invoice filing software like QuickBooks.

    Forgetting to Follow Up

    If your client doesn’t meet the agreed-upon payment terms, it’s important to follow up with them to not only receive payment as soon as possible but also let the client know about additional late fees to pay.

    It can be uncomfortable to follow up with a client on a late payment, and even more uncomfortable to then charge them a late fee. However, consistently following up with clients helps the client establish better invoice payment practices. Both sides of the contract (the buyer and the seller) have standards they need to adhere to, and timely payment from the client is one of them.

    How to Bill a Client as a Contractor

    Once you have created the invoice, how do you actually bill the client so you can get paid? There are a number of ways to invoice a client, but one of the simplest is to attach an invoice to an email and send it to them directly.

    It’s a good idea to give a brief description in the body of the email as well as the total due and the payment terms so there are no questions about the invoice. If your business is growing, you may want to consider invoice processing software to help with automatically sending invoices, following up on them, and tracking payments.

    Independent Contractor Invoice Tips

    Now that you know what to include in an invoice and out top mistakes to avoid when invoicing, here are our best independent contractor invoice tips.

    Employ Late Fees

    As we mentioned, assessing a late fee to your client can be uncomfortable. Not establishing clear payment terms up front with the client makes it more difficult. When setting the contract, you should also include the payment terms and clearly outline any applicable late fees if an invoice is not paid on time.

    Late fees can be set amounts regardless of the total invoice amount or they can be a percentage of the total invoice amount. It’s common to see late fees in the range of 1-3% of the total invoice amount for every month the invoice is late.

    Accept Multiple Payment Methods

    You should make the invoice payment process as easy as possible so that the client can pay on time and pay in full. Aside from making a clear invoice that has all of the necessary elements and details, you should also accept multiple payment methods from your clients.

    You should accept credit card and debit card payments, wire transfers, checks (where appropriate), wire transfers, and even cash payments. Having more options for your client to choose from minimizes barriers to completing the payment.

    Make (and Use) a Template

    We’ve said this once and we’ll say it again, it’s crucial to make a template and stick to it. Not only does a template help with your brand image, but it creates a better experience for everyone involved. Creating and using a template makes the invoicing process more efficient on your end. You won’t need to create a completely new invoice every time, just update the required fields and send it for payment.

    Templates also improve the client’s experience. If you invoice your client consistently, they will start to learn the structure of your template and spend less time reviewing it, making the payment process faster.

    What You Need to Remember About Invoicing for Contract Work

    Whether you’re a seasoned contractor or you’re just getting started, it’s clear that invoicing is a crucial part of your processes. Without invoicing, you simply don’t get paid. It’s important to have clear payment terms that are established at the onset of the contract with the client. Use a template to help with your branding and avoid some of the most common mistakes we often see with contractors, such as invoicing late and not charging late fees.

    FAQs About Independent Contractor Invoices

    Here are some of the top questions we receive about independent contractor invoices.

    How do you write a contracting invoice?

    A contracting invoice should include a label, invoice number, contractor and client business details, a breakdown of the services and deliverables, their costs, the total invoice amount, and the payment terms. These are the key elements of an invoice, but it should also include your business branding. There are a number of templates that you can use online to get started.

    How do I invoice a company for contract work?

    Invoicing a company for contract work is simple. Once the invoice is created (and you’ve reviewed it for accuracy), simply send it to the client via email or through an invoice processing tool.

    What do contractors use for invoices?

    Contractors use a wide range of tools and platforms for invoices. If you’re just starting, you can use Microsoft Word or Google Docs to create a simple invoice, turn it into a PDF, and send it to your client. As you progress, you may want to look into tools that provide automated workflows or even dedicated invoicing software. 

    How do I make an invoice for the first time?

    We always recommend using a template whether you’re making your first invoice or you’ve been invoicing clients for years. Remember our top tips when creating an invoice and use this article as a guide for which components to include.

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