The Best (and Cheapest) Way to Track Freelance Income

Once you get money coming in from several clients, things can get a little chaotic—to say the least. With multiple clients, multiple projects, and multiple invoices in various states of payment, how do you keep track your freelance income and keep it all straight?

If you’re seeing ads for invoice tracking software for freelancers, you may feel like this type of software is essential. I’ve seen some of these ads, myself. They do a great job of making you feel like, if you were a real freelance professional, you’d use this software.

That’s not the case, though. You don’t need this software to keep your invoices straight.

However, you do need a system.

Here’s what your system needs to track:

• What projects you’re currently working on
• What projects you’ve concluded and have invoiced for (bonus tip: the same day you get client approval, send them your invoice. Make this a habit, and you’ll save yourself a lot of headaches)
• How much the invoice is for
• The invoice number
• When you sent it
• When you received it
• Whether or not you’ve set aside money for taxes

Wow, kind of a lot, right? What kind of crazy, high-tech system is going to let you track all of this?

Open yourself up an Excel document.

Really: an excel document is all you need to track your invoices effectively. (Well, with one caveat—more on that in a sec.

Across the top of your doc, create these column titles:

• Client
• Project (write a two- or three-word description)
• The date you sent the invoice
• The invoice number
• The amount it was for
• The date you receive the invoice
• Whether or not you’ve set aside tax funds (y/n)

Using it is just a simple. As soon as you get a client, enter the client name and short project description in the sheet.

If you’ve agreed on a project price, you can put that in there, too—it will help keep the info handy.

This shows you your current, unbilled projects.

When you finish a project and bill for it, put in your invoice number and the date you sent it. This gives you an easy way to see your unpaid invoices.

When you receive a payment (and automatically deposit any checks you receive via your phone—you need to), record the date you receive it. This gives you a handy reference for how much income you’ve made.

And, of course, when you transfer funds to your for-taxes-only account, record that you’ve done so. This will help you remember to do it, as well as help you remember which payments you’ve planned for in your taxes.

And that’s it! Really, that’s all you need.

But time for that caveat: You have to actually use it. No tracking system, not this one and not some five-figure swanky tracking software, will work unless you actually use it.

Make it a habit to record your projects, bill as soon as you get approval, deposit your payment as soon as you get it, and transfer your tax savings as soon as the payment is deposited. And, of course, make it a habit to record all of this in your Excel invoice tracking sheet.

Your turn! Do you have any additional tips for tracking invoices? Or questions about this system? Let us know in the questions below!

Last Updated on October 16, 2021 by Kate Sitarz