Invoicing
Depending on the length of your contract and what you’ve agreed, invoice clients either:
- as soon as you’ve completed a job
- at regular intervals.
Consider using online accounting technology to send out invoices and track when they’ve been paid. If your customer is around when you provide a service (for example, you’re fixing washing machine while the customer is at home), think about using a mobile app to get paid straight away.
Make sure you also give them a tax invoice including your GST details. Keep a copy for your tax records.
Payment terms
If you’re contracting through an agency, it may ask you to send in an invoice at a set time. If you contract directly to a client, negotiate your payment terms up front. Put the terms on your invoice.
It’s common for businesses to ask to be paid for work they’ve done that month on the 20th of the next month. For example, if you do a job on 12 March, you would ask to be paid on 20 April.
Keep track of who's paid
To have a healthy cash flow you need to know who’s paid your invoices and who hasn’t.
If you have more than one client, set up a system so you can easily see who’s paid their invoices. You can:
- use a spreadsheet
- write ‘paid’ and the date on the invoice and file it away
- use an online accounting software.
Recording your hours
If you’re contracting though an agency, you’ll be expected to fill in timesheets that break down the hours you work. These will be used to bill the client.
Check when your agency does its pay run and make sure you get the client to sign off your timesheets in good time.
Even if you don’t have to do timesheets, it can be a useful discipline. Write down your hours as you go instead of trying to remember at the end of the day or week. You can also use a smartphone app.
You’ll need to decide how you’ll charge for your time and put it in your contract for service.
Setting money aside for tax and ACC
Put away enough money regularly to pay your income tax, ACC and GST (if you’re registered).
Keep the money in a separate account so you don’t spend it by mistake. Think about opening a high interest account and put the interest towards other contracting costs.
There are many ways you can reduce your tax bill, including claiming expenses and getting a discount for paying tax early. Think about hiring a tax agent, to help you save time and money.
Getting a loan
You can still get a loan as a contractor, but it may be tricky. Ask your bank what records you’ll need to provide. Think about setting up an overdraft for quiet times, and make sure you do it before you need it.
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