If you play the role of studio owner, manager, or otherwise financial advisor to your clients, you might feel like invoices are beneath you. After all, how hard can it be? Just put the services and products provided for a specific project on one page and bill the client for it.
Right? The tricky thing about invoicing as a recording studio is that a lot of people don’t know how to handle invoices in the recording studio. Recording studios exist almost exclusively to provide services that primarily have an intangible value rather than an easily-quantifiable monetary one.
The result is that most people don’t know how to invoice a recording studio. Traditionally, services rendered are billed hourly or by the project (scope of services). In either case, few clients understand what they’re getting charged for beyond the final billable period (e.g., per hour or per project). That means that if you’re working as part of a team in a recording studio, your job will involve handling invoices on behalf of both your own company and any other companies with which you do business.
The Invoice: Why is it so Important?
The billing process is the only way that a recording studio can actually make money. Assuming your client has the cash to pay the invoice when it comes due, the invoice is the financial transaction that transfers money from the client to the studio. It’s the only way the studio gets paid for its services. Without an invoice, there’s no way to bill your clients for the work you’ve done. And without an invoice, there’s no way for the client to know how much they’re paying for your services.
Know Your Clients
The needs of every client will vary, but most of them will have some specific needs that you need to be aware of. Your existing clients are the best people to ask how they prefer to be billed. They’re also the best people to ask what invoicing process would be most helpful. Whether they prefer to be billed hourly or by project, or to be billed at all, is up to them. For new clients, you’ll have to use your best judgment. You need to be aware of how your invoicing process works and how it might affect your new clients.
Defining the Scope of Services for a Project
While it’s important to define the scope of services for a project, it’s also important to understand how to define the scope of services for an invoice. An invoice doesn’t need to contain every single detail of how a project was done. It needs only to contain the basic information needed to bill a client for a specific project.
This information might include: What project you’re billing for. Who is being billed for the project. What the job is called. The date or start/completion date for the job. The total amount the client is being billed for the job.
Estimate Time and Materials, Then Add Mark-up
The first thing you need to do when you create an invoice is to estimate time and materials needed for the project. The second thing you need to do is to estimate the price for those materials. Then you need to estimate the time it will take your team to complete the project. The last thing you need to do is add a Mark-Up to the materials and time estimates. Mark-up is usually expressed as a percentage of the materials or time needed to complete the project.
Handle Quick Pay Invoices Right Away
Quick Pay Invoices are invoices that are due to be paid quickly. They’re usually due on the same day or within a week of the date the invoice is created. A common example of a Quick Pay Invoice is lab and/or mastering charges for a record. These charges are usually due on the day they’re run, so you should either require a payment plan or expect immediate payment. In general, there’s no reason to wait more than a week for a client to pay an invoice. Even if you provide them a discount for paying quickly, there’s no reason to let an invoice go unpaid for more than a week.
Handle Non-Quick Pay Invoices with Caution
Non-Quick Pay Invoices are invoices that are due to be paid a week or more after the date the invoice is created. You don’t necessarily have to wait a full week to send a non-quick pay invoice, but you should wait at least a few days. One of the most important things to remember about non-quick pay invoices is that they should be sent with a payment plan.
Invoice Management is one of the most important parts of running a business. Whether you want to focus on growing your client base and increasing your revenue, or you want to focus on reducing your costs, you need to understand how to invoice a recording studio. With the right approach to invoicing, you can get paid on time and be paid what you deserve!