You do a case for an attorney and she says, “Great work. Send me an invoice.” Here are top tips for invoicing to make the process go smoothly.
1. Use accounting software to create your invoice. Yes, you can get an invoice template from Word, but that does not create the kind of record you need for taxes and to manage your business.
2. To avoid looking like a newbie, don’t number your invoices starting with #1. And to avoid giving your clients a clue as to how many invoices you have sent out, use a 4 digit code like 1801 with 18 standing for year and 01 standing for your first invoice of the year. Next year change it to 1901.
3. Have a code for the type of service you provided. For example, you do both expert witness work and behind the scenes consulting. You’ll want to know at the end of the year how much income you generated from each type of service.
4. Include a minimum of detail about the work you completed. The attorneys who love to nitpick will tell you why it should not have taken you 2 hours to read the records; you could have done this in an hour. I grouped items on an invoice such as “organization and review of records 5 hours” instead of breaking down each time frame. This way I spent less time arguing with attorneys.
5. Include your payment terms on the invoice. Is it due upon receipt? 14 days? 30 days? I recommend using a payment time frame that is as short as possible. If you work with replenishing retainers, your invoices should be for small amounts. Which leads me to the next of the tips for invoicing.
6. Don’t do a lot of work for which you are waiting to be paid. It is easier to get paid if you are communicating well with the attorney, explaining the time you are putting into the case, and using a replenishing retainer to pay yourself in incremental amounts.
7. Two small invoices are easier for an attorney to approve than one large invoice. Don’t let large amounts of hours to accumulate without sending an invoice.
8. When you decide to raise your rates, start letting attorneys know 3 months ahead of time. Expect a last-minute rush of cases which the attorney wants completed at the older rate. Decide when the new rate is effective. Then invoice for all work at the new rate which is performed after the effective date. It is far too complicated and not a smart business practice to continue to invoice at the older rate for older cases.
9. Provide your tax ID (social security number or Employer Identification Number) on each invoice. This one of the tips for invoicing avoids a lot of phone calls at the beginning of the year when law firms are issuing 1099s.
10. State your interest policy on your invoice. Typically, companies use 1.5% a month on unpaid invoices. You won’t always collect this interest on older invoices, but it can act as an incentive to pay your bill.
11. Send your invoice as soon as you are finished with the work requested on the case. And stay on top of unpaid invoices. Be persistent and clear about the need to get this paid. Document your efforts (date and time, who you spoke to) about unpaid invoices.
12. Use leverage when needed to get paid. Explain to the attorney you need to withhold a report, or can’t appear at a deposition or trial until outstanding invoices are paid.
Use a simple, clear system to avoid problems with invoicing. Following these top tips for invoicing will avoid a lot of collection issues.
PatIyer MSN RN LNCC shares her hard-won knowledge in this post.