Outstanding invoices are a core part of freelance business. They represent completed work that is awaiting payment from your client.
What is Outstanding invoices?
An outstanding invoice is a bill you've issued for your services that remains unpaid. It's not 'late' until it passes its due date. It simply represents money owed to you for work already delivered. Think of it as an active financial claim on your client.
Why is this important?
For freelancers, outstanding invoices directly equal your available cash. Too many can cripple your business, making it hard to cover your own expenses. Tracking them is essential for predicting your income and financial stability. It's the core of your accounts receivable.
How does it work?
You complete work and send an invoice with clear payment terms, like 'Net 30'. From that moment until payment is received, the invoice is outstanding. You should track it in your records. Once the due date passes, it becomes a late or overdue invoice requiring follow-up.
Pros and cons
The main pro is that an outstanding invoice signifies earned revenue. The significant con is the risk of non-payment, which hurts cash flow. Other cons include the administrative burden of tracking and chasing payments, which takes time away from billable work.
Conclusion
Managing outstanding invoices is a fundamental business skill. By understanding what they are and tracking them diligently, you protect your income. A clear process for issuing and following up on invoices is key to freelance success.
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