When Do You Send an Invoice to a Client?

Invoicing is a fundamental business operation, serving as the formal request for payment for goods or services. Timely invoice issuance is important for maintaining healthy cash flow and fostering professional client relationships. Determining the precise moment to send an invoice is not always straightforward, as it depends on various factors specific to the engagement.

Timing Based on Project Milestones and Completion

For project-based services or products, invoicing often aligns with the completion of specific tasks or item delivery. Service-based businesses, like consultants or graphic designers, typically send an invoice once a project is fully completed and accepted by the client. This ensures the client has received the agreed-upon service before a payment request is made.

For physical products, invoicing often occurs upon shipment or direct delivery. This links the payment request to the product’s transfer. Clearly defining “completion” or “delivery” in the initial agreement helps prevent misunderstandings and facilitates a smooth invoicing process.

Larger projects often use a milestone-based invoicing structure. The project is broken into distinct phases, with an invoice issued as each pre-defined milestone is reached and approved. For instance, a web development project might involve invoicing after the design phase, then again after the development phase. This progressive billing allows businesses to secure payments throughout an extended project, aligning revenue with work performed.

Timing for Ongoing Services and Retainers

Businesses providing continuous or recurring services follow a different invoicing schedule than one-off projects. For ongoing services like website hosting, maintenance contracts, or cleaning, invoices are typically sent on a regular, predetermined cycle. This could be monthly, quarterly, or annually, depending on the service agreement.

Retainer agreements involve a client paying an upfront fee to secure a block of time or services over a specific period. Invoices for retainers are commonly sent at the beginning of the retainer period, covering services for the upcoming cycle. Some arrangements might also involve periodic invoices to track retainer utilization against services rendered.

Subscription models, common in software-as-a-service (SaaS) or content platforms, automate invoicing. Invoices are automatically generated and sent to clients at the start of each subscription cycle. Establishing a clear billing cycle and outlining covered services in the initial agreement is important for these ongoing arrangements.

Understanding Payment Terms and Their Influence on Timing

Agreed-upon payment terms significantly dictate when an invoice should be sent to ensure timely payment and adherence to the contractual agreement. For terms like “Due Upon Receipt,” the invoice should be issued immediately upon service completion or product delivery. This implies payment is expected as soon as the client receives the invoice.

Terms like “Net X Days,” such as “Net 30” or “Net 60,” mean payment is due within a specified number of days from the invoice date. Send the invoice promptly after service or product rendering, as the payment clock begins ticking from the invoice date. For example, an invoice dated March 5 with “Net 30” terms would be due by April 4.

In some scenarios, an invoice is sent before work commences to secure an upfront payment or deposit. This is common for larger projects or when materials need to be purchased in advance. The invoice date is also crucial for calculating any potential late payment penalties, reinforcing the importance of timely issuance to align with agreed-upon terms.

Information Needed Before Sending an Invoice

Before an invoice can be accurately prepared and sent, specific information must be gathered. This includes comprehensive client details, such as their full legal name, business name if applicable, billing address, and a contact person with their contact information. Your own business details, including your legal business name, address, contact information, and relevant tax identification number, are also necessary.

Each invoice requires a unique, sequential invoice number. The invoice date and payment due date, determined by service completion and agreed-upon terms, must also be clearly stated. A clear, itemized description of goods or services provided is essential, detailing quantities, rates, and the total cost for each item.

The agreed-upon total price or rate for the entire engagement, including any applicable taxes or discounts, must be precise. Finally, a clear restatement of payment terms and detailed payment instructions, such as bank transfer details, a payment portal link, or a mailing address for checks, should be included.