Whether you’re a freelancer or a production company owner, an invoice serves as a request for payment from your clients and is a critical component of any business.
But before we dive into the nitty-gritty of invoicing, let’s get one thing straight: an invoice is simply a document that confirms payment for work already completed. It’s different from the record that outlines the agreement between you and your client.
That would be either a deal memo or a Scope of Work agreement. So, make sure you have that in place before sending an invoice.
What is a ‘Scope of Work’?
SOW outlines the specific tasks to be performed, the timeline for completion, and the payment terms. Having this agreement in place will ensure that both you and your client are on the same page and can avoid any misunderstandings or disputes down the line.
With a clear and detailed Scope of Work agreement in place, you will be ready to move on to the next step: invoicing.
What are the essential elements of an invoice?
When you send an invoice, you want to include all the essential elements your client needs to process payment.
That means you’ll need to include
Your Contact information
Your full name, business name, address, phone number, and email address.
Remember, they may send your check to the address you put in your invoice, and the contact info you added is the way accounting will contact you.
The invoice number
A unique identifier for the invoice helps you and the sender keep track of payment. It is a must in any invoice I receive, so we don’t pay duplicates.
Ensure that the invoice includes the date it was created and sent to the client.
The full name and address of the client or company receiving the invoice. You can use the abbreviation ‘Attn’ for the person you work with before you put their company name and company address.
Description of the services or products provided
Make it clear.
The other side may receive dozens of invoices a day, and their world is not revolving around you.
Most often, the person sending the check is entirely different from the person who decided to hire you. A detailed breakdown of the services or products provided is critical. This allows the client to see what they’re paying for and helps ensure they’re getting value for their money. Write your services clearly, the date, the production you were in, etc. Make the payers’ job easy!
If you forgot anything I taught you, remember this: Always make it easy to get paid.
Total amount due
The total amount the client owes for the services or products provided. If you are a day player, break down the day instead of putting the total.
Include the agreed payment conditions, such as the due date and any fees for late payment.
If applicable additionally:
Payment Method and Instructions
For seamless payment processing, provide your preferred payment method and clear payment instructions, including your bank account information for direct deposit. This helps the client make payment efficiently and ensures you receive the full amount due.
I also personally always add a thank you note to the client.
Is there any other paperwork you might be missing?
Despite my memos, at least once or twice a month, a contractor will send me an invoice without W9. I can not pay without W9, so I always reply by asking for one. Consider what paperwork you may need to provide before you send an invoice.
Sending invoices as a Production Company
For a production company, it’s crucial to have a Scope of Work agreement in place. This agreement should outline the timeline, payment terms, and delivery before you send an invoice.
In some cases, production companies may receive payments in multiple installments.
Example: 50%-50% or 75%-25%
Assuming the person responsible for sending the balance is different from the person who signed the contract, I always include the total production cost and the percentage they are invoicing.
Note about Cash Flow
Always consider your cash flow before you agree on a payment term. It’s vital if production requires upfront costs.
Let’s say you have a 50-50 payment agreement with a client for continuous production, with half of the payment due upfront and the other half due upon delivery. While this may seem like a good deal, it can actually put your business in a precarious position as you realize the ongoing production cost is higher than the 50 percent you received.
If the client has the right of refusal on the delivery date, you may find yourself in a situation where you’ve already spent the money but have yet to receive the final payment. If the money isn’t there to cover those expenses, you’re in a tight spot.
I am very adamant about requesting at least 75 percent of the budget before we start filming and I do not put more than 25 percent of the budget for “after delivery.” When it comes to events, I prefer to ask as high percentage as possible and I get used to vendors doing the same.
To recap, when it comes to invoicing, it’s essential to include the following key elements:
- Your Contact information
- Invoice number
- Recipient’s information
- Description of services or products provided
- Total amount due
- Payment terms
By ensuring that your invoice includes all of this information, you’ll be able to streamline the payment process and avoid any confusion or misunderstandings. And if you’re looking for a helpful tool to get started, remember to download my invoice template!
This template includes all the important elements you need to create a professional and effective invoice, so you can focus on running your business.