Reliable invoicing is critical to your success as a freelancer or small business owner. You need a regular cash flow to cover expenses, like employee salaries and materials costs, and generally maintain operations. If your clients don’t pay you on time, you run the risk of not meeting these critical costs, and your business may stall. This is stressful for you and can impede business profitability and growth.
For small projects, a simple one-time invoice is sufficient. What happens when you have a large project spanning a lengthier time span, however? You don’t want to invest time, money, and energy without getting paid for weeks or even months. An interim invoice is the answer. Interim invoices break up project payment into smaller chunks, often aligned with key milestones or predefined timelines.
Discover how interim invoices add value to your business and learn how to create an interim invoice below.
Why an Interim Invoice Is Valuable for Business Owners
If you’re going to dedicate large amounts of time and effort to a project regularly over an extended period, opt for interim invoicing. You will consistently get paid, so your overhead costs are covered, and you don’t have to stress about cash while working. This alleviates stress for you, ensuring you can focus on your work instead of money troubles. It also ensures you can deliver your best-quality work, which further benefits the customer or client.
In most cases, interim invoices correspond to milestones (the completion of predefined parts of the project) or an agreed-on time-defined payment schedule (sometimes called a progress invoice). For example, if you’re a content writer delivering a 15-chapter book, you might get paid for every three chapters you deliver. If you’re a contractor working on a remodeling project expected to take a year, you might get paid on a quarterly basis.
Note that an interim invoice is not a recurring invoice. These are two different types of invoices. A recurring invoice is issued to the same customer at regular intervals for the same services. It’s commonly used if a customer has you on retainer or for subscription-based services.
For example, if you’re an SEO professional, and a client has you on a monthly $1,000 retainer to maintain their website, you will use a recurring invoice. However, an interim invoice is for a specific project. So, if you’ve been hired to do a website audit, technical revamp, and content rewrite, you might split this work into three deliverables and use interim invoices.
How to Set Up Interim Invoices
You might worry that interim invoicing will be an administrative burden because it requires you to create multiple invoices instead of just one. Don’t stress: Interim invoicing is fast and easy with Skynova templates. This step-by-step guide walks you through the invoicing process.
Follow these four steps when using interim invoices:
- Determine the project schedule
- Draft and submit invoices based on the project schedule
- Keep a record of invoices and payments throughout the project
- Submit the final invoice
Determine the Project Schedule
Before you start any project that will require an interim invoice, agree on a project schedule with your client. They should sign off on this schedule and interim invoicing before you start. This avoids confusion and frustration and ensures clarity on both sides. Most small businesses will send an interim invoice monthly if a project spans multiple months. How often you want to bill your client is up to you, but they should agree to the timeline you choose.
Creating a project schedule also allows you to determine what to charge for each invoice. Say you have a large project spanning eight months, for example. You plan to bill the client every month. You can determine how much to charge each month by dividing the total project cost by eight. So, if the full project will run $80,000, you will invoice the client $10,000 per month.
Projecting these details in advance is also convenient for your client. They can make sure they have the needed funds and won’t be caught off guard by unexpected costs. They also don’t have to worry about paying enormous chunks of money at once. Provide your client with a copy of the project and payment schedule in advance, giving them ample time to review it and agree to it. If they have questions or concerns, these should be clarified before the project’s start.
Draft and Submit Invoices Based on the Project Schedule
Once you and your client have agreed on the project and payment schedule, stick to it. Submit your interim invoices regularly, according to the agreed-on timeline. By submitting your invoices on time, you also ensure that you get paid on time. Don’t expect your client to make payments based on the project timeline and payment plan. A distinct invoice is needed for each deliverable you’ve agreed on.
You can use the Skynova business invoice template to create your invoice easily and quickly. Here’s what you have to do:
- In the "From" field, input your name, address, and contact information, such as a phone number and email address. This ensures that the client can easily reach you if they have questions about the invoice.
- In the "To" field, input your customer’s name, address, and contact details. Clarify with the customer whether you are billing them personally or billing a business entity and provide the correct contact information accordingly.
- Input the invoice date and the due date. Make sure to include payment terms on the interim invoice, such as Net 7, 15, or 30 (calendar days). This ensures that your client knows when to pay you.
- Input a unique invoice number. Skynova invoices automatically update each time, adding +1 to ensure progressive, logical invoicing that helps you stay organized.
- Under "Item" and "Description," define what you’re billing the client for. Input the relevant unit price and quantity in the given fields. The Skynova invoice will automatically calculate the total.
- For example, if you’re a content writer charging $250 per chapter and have delivered three chapters, the total will be $750.
- Alternatively, say you’re remodeling a house. In this case, you can input a description of the progress made in the last month (e.g., refinished flooring), the agreed-on monthly cost under "Unit Price," and "1" (as in one month) under "Quantity."
- Add any additional details relevant to your client in the "Notes" section. This is a good place to note that this is an interim invoice, for example, "Interim invoice 3 of 5, as agreed on in the project schedule and payment plan of (date)."
The Skynova invoicing system calculates the final balance due automatically. In the future, you can reuse the same invoice format without having to change details like the client’s information. You’ll just have to change small points, like the date.
Keep a Record of Invoices and Payments
Tracking receivables is even more critical when you’re submitting interim invoices. If you have to chase unpaid invoices, you can easily refer back to the invoice number. You can also get a complete overview of the project costs when you compile all the invoices in one place. This makes it easier to determine your final invoice (see the next step for more on that). With a Skynova account, it’s easy to keep track of your record of invoices and follow up on late payments.
Submit the Final Invoice
At the end of the project, you have to submit one final invoice. This is different from the interim invoices submitted throughout the project. It provides additional details and an updated total cost of the project, in case this varies from the original estimate. This is often the case in fields like remodeling, where unexpected tasks and costs can arise — for example, due to the discovery of faulty wiring inside a building’s walls.
A final invoice will include the total hours worked on the project, if you’ve agreed on time-based billing, and the total amount due for the project. If there is a discrepancy between the project estimate and the final cost, you should include a note explaining this to your client. Beyond this, the final invoice will contain the same basic details as the interim invoices (your and your client’s names and contact information, a unique invoice number, the date, and the payment due date).
Find Invoice Templates for Your Business
As a small business owner, timely client payments are critical. A steady cash flow allows you to pay essential expenses, such as employee salaries and the cost of supplies you need to do your work. For larger projects spanning a longer period, waiting to invoice until the project’s completion can leave you strapped for cash. Interim invoicing gives you the immediate money you need to maintain efficient operations and deliver your best-quality work.
If you’re worried that interim invoicing will eat up too much of your time, Skynova offers the solution. Our free invoice template makes it fast and easy. Simply input your business information and the customer’s details and save the template for future use. You can even send invoices directly to your clients via email, ensuring speedy delivery and processing, and follow up on late payments. Discover how Skynova invoicing software can support your business success today.