How To Invoice Clients The Right Way | How Do You Properly Invoice
The 5 Stages of The Sales Process, Contracts, and Invoicing Clients Professionally
Whether your a freelancer, solopreneur, or agency - understanding the basic stages of the sales process, contractor agreements, and how to invoice clients the right way is critical to the survival of your business.
Now, the process is not difficult, but it is important to get the step-by-step sequence right.
That way you understand what stage you are at in the process, protect yourself from being scammed, act professionally, and create a pleasant customer experience.
As a general rule, to breeze through the legal and sales process - you should have customizable templates for each of the following documents:
- Master Services Agreement / Work-For-Hire Agreement
- Independent Contractor Agreement
No need to reinvent the wheel here.
Before we dive into the important details of what should be included in the master services agreement, independent contractor agreements, and invoice - let's take a look at the overall sales process.
The 5 Stages of The Sales Process
- Stage 1: Prospecting & Making Contact - Finding and connecting with leads who have the need for your products and services via email, phone call, or video chat.
- Stage 2: Qualifying Client - This is a discovery call to assess the target goal(s) and project details to make sure the project is a good fit for both parties. Make sure you are asking the right questions and gain as much project information as possible.
- Stage 3: Pitching / Drafting Proposal - Should you move forward to this stage after qualifying the client / prospect, this is outlining your tailored offer or scope of work (SOW). Based on the goals and project info provided in the qualifying stage, you draft a "soft proposal." This is a rough scope of work outlined in the master sales agreement. The most important thing at this stage is to simply make sure that the scope of work (SOW) is accurate based on the project goals and details provided by the client. You want to make sure the client feels heard and you understand their precise needs.
- Stage 4: Negotiating - Discussing any questions, comments, or concerns with the "soft proposal." Then revising the proposal based on these objections. Once the proposal / scope of work (SOW) is accurate and agreed upon, you move to close the sale.
- Stage 5: Closing The Sale - Both parties execute the agreement which is the authorization and dating of the master services agreement (work-for-hire agreement). Deposit invoice and W9 are drafted and sent to the client's accounting team before starting the project.
Make The Master Services Agreement Easy-to-Edit and Iron-Clad
Using a master services agreement (work-for-hire agreement) protects both you and your client from many issues that could unfold during the course of the project.
Both you and your client have a crystal-clear picture of what success looks like from the jump.
By flushing out all (or the majority) of details on the front end, you remove unforeseen hurdles that could pop up down the road.
And if those roadblocks do pop up, you have the agreement in place to fall back on for protection.
This saves you time, money, and most importantly confusion and stress later in the process.
So what are the most important parts of an iron-clad and easy-to-edit master service agreement?
- Scope of Work (SOW): This is a very specific description of the project's goals and objectives. A list of the specific tasks, activities, and software that will be performed and used to produce the deliverables.
- Deliverables: The list of file(s) that will be sent to the client - ie; a video, graphic, illustration, etc.
- Due Dates / Deadlines: A timeline or schedule of specific date(s) for completing the SOW. This can be a single set date or multiple different dates referred to as "milestones."
- Fees: This is the price or budget to complete the scope of work. It shows the dollar amount hat you will be paid and when, including deposits or kill fees if a project is ended prematurely.
- Communication Expectations: Establishing a reasonable protocol for communication as it pertains to responses and client feedback. This ensures the project stays on course without major delays.
- Terms and Conditions: Preemptive language and clauses to resolve potential future problems, such as what happens if there is a significant “change of course” in the direction of the project, expenses, time of payment, client representation, client obligations and materials, approval of work, legal clearances, liability of agency, rights, ownership, usage, governing law, and notices.
Other documents you should be familiar with are:
- Non-Disclosure Agreement (NDA): Many companies may require you to authorize an NDA (non-disclosure agreement) which means that you will not showcase or discuss the project until it is launched into the public.
- W9 Tax Form: This is the easiest of all the documents to fill out. You can simply do a google search, download, and fill in your business entity information. As an independent contractor, you will send this along with your deposit invoice before the start of a project. Come tax time, you’ll receive a 1099 from the client which details your earnings for the year. Keep track of the clients you’ve contracted with so you can reach out in February if they’ve forgotten to send you a 1099.
Independent Contractor Agreement
The independent contractor agreement (IC agreement) is similar to the master service agreement but for sub-contractors.
You use it when you sub-contract out part of a job to other individual(s) or a team.
The IC agreement covers:
- Service Obligation between the company (your company) and the service provider (sub-contractor).
- Performance of Duties
- Ownership of Work
- Service Provider Relationship
- Limitation of Liability
- Governing Law and Jurisdiction
How To Invoice Clients and Customers Properly
You draft and send the invoice in stage 5 of the sales process.
Once the proposal / master service agreement is authorized by both parties, you create a deposit invoice for 50% (or other agreed amount) of the total amount and send this along with your W9 to the client before beginning the project.
As mentioned above, the W9 is a tax form that has your company / entity name and address, type of entity (ie; LLC, C-Corp, S-Corp, etc.), and employer identification number (IEN).
You can also include your banking info on the W9 to collect payment via direct deposit.
The Invoice Template should include the following details:
- Your Company / Entity Name + Address
- Your Company Logo
- Client's Company / Entity Name + Address
- Invoice Number
- Invoice Date
- Invoice Due Date
- Terms (ie; Due on Receipt or Net 30)
- Service / Product Rendered + Description
- Quantity Number
- Total Balance Due
- "Thank You" Message
I'm sure you can find some free invoice templates by doing a simple google search, however, we highly recommend using accounting software.
Quickbooks, Freshbooks, and Xero are great resources.
There are huge advantages to using accounting software to manage your business finances.
Not only can you create branded invoices templates like the one above, you can auto-track income, expenses, run reports, and always know exactly where you stand financially.
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