A Few Elements to Consider

One of the first things you will need to learn as an entrepreneur is how to invoice. To aid in the process, I have broken down a few different elements you will need to consider. Before getting into the nuts and bolts of invoicing, I want to first look at quoting.

Quotes

Quoting is your first opportunity to impress your client. At this stage, you will want to communicate with the client about the structure of your quotes. Let them know why you are doing what you are doing and why you took the approach you did. There is a lot of debate about how detailed you should go with this document as many people find clients that will try to reduce the budget themselves by removing line items without knowing the implication of this action. Make it clear in the document, through your website, or (most preferably) a face-to-face conversation of the importance of each line item. If you are working with high-end clients, you will most likely not run into this problem.

Quoting vs Invoicing

Quoting and Invoicing are both important parts of the process. The main purpose of quoting is to break down your line items for your client. It is used to give them a clear picture where their money is going. Each line item will fall into a pre-production, production or post-production main category based on a given day rate. You will then estimate how many days of work the given job requires. Invoicing is where you document how many days the work actually took to complete. This final document will simply address the cost of each area of production (day rate times the amount of days). Your client should be aware at all times about the amount of days you spent in each area so they are not surprised if your invoice comes in higher than your quote.

*Please Note: It is your responsibility to estimate as accurately as possible the amount of days required so you are able to finish on budget. This is always a balancing act and the only way to improve is by practice. The accuracy of this is always based on your ability to read your client and their needs accurately.

Payment Schedule

Payment schedules typically vary depending on your client and the job requirements. On average, I usually request 50% upfront and 50% within 30 days of delivery. If it is an ongoing project, I would recommend renegotiating your contract every 3-6 months.

Line Items

I recommend being as specific as the job entails. Develop a cohesive list to reference and remove line items that do not apply to the given job. When developing your list, make sure to think about both the above the line expenses and the below the line expenses.

  1. Above-the-line is a term that refers to the list of individuals who guide, influence and hopefully add to the creative direction, process and voice of a film and their related expenditures. These roles include but are not limited to the screenwriter, producer, director, casting director and actors. Above-the-line expenditures reflect the expected line item compensation for an official above-the-line member’s role in a given film project. These expenditures are usually set, negotiated, spent and/or promised before principal photography begins.
  2. Below-the-line is a term that refers to the list of individuals who perform the physical production of a given film, the post-production work and all of the related expenditures.

Breaking down each department’s function and the costs involved is a great starting point. These items are important no matter the style of production that you are performing. Have everything broken down in advance for your reference to ensure your business is scaleable. Many studios determine a day rate for each section of pre-production, production & post-production as a starting point.

Another advantage of having everything broken down, even if your business will not use a specific line item, is knowing what it would cost. One of the most important traits you need when invoicing is confidence – confidence in your work and your worth. If you believe you are worth a specific amount, your client will to.

On Budget and On Time

One of the most important aspects of your quote is to be clear on the delivery date and estimated budget. As a contractor, it is in your best interest to finish the work on time and on budget. These two items are obviously dependent on how many changes are requested by the client. In your quote, make sure to build in the amount of days delegated to each area of production so your client is aware what the current budget and schedule is based off of. If they deviate from this schedule, it is clear if the initial schedule is achievable.

Importance of Contracts

Contracts are an extremely important part of the process. They not only protect both you and the client, they also help establish an open line of communication. These contracts lay out the terms of the work and ensure the process is transparent.

What should be included in an invoice?

There are a few things you will want to include in your invoice including the payment due date, late payment fees, the delivery address, and payment options.

What software to use

There are many great software solutions that exist for invoicing. Freshbooks is a great option for freelancers. I personally have used Freshbooks but have moved over to Quickbooks as you are also able to use Quickbooks for budgeting and expense tracking as well.

For larger productions, EP Movie Magic Budgeting 7 is a great solution, however, it is pricey.

Although just a starting block, my hope is that the information above may be help you with your business. If you have any questions about my approach, I would love to hear from you! Feel free to use the comment section below.