Keeping track of billable hours and billing clients for your time is an important aspect of running a consulting firm.
To get paid for their work, consultants should keep meticulous records of the time they spend on each project and invoice their clients on a regular basis.
Consultants must create professional invoices that clearly outline their services, the number of hours they worked, and the amount owed.
Here’s a step-by-step guide to invoicing clients as a consultant:
- Track Your Hours:
In the consulting industry, billing clients by the hour is fairly common. If that’s the case with some or all of your clients, it’s critical that you develop a system for keeping track of your hours. Make sure the system works for you and that you’ll be able to stick with it in the long run.
It’s critical to keep track of every billable hour so you don’t miss out on any potential revenue. The first step in invoicing as a consultant is to keep track of your hours so you can bill clients hourly.
If you need assistance calculating your hourly rate, the Small Business Administration has a helpful blog post for consultants.
- Include a Header
When creating your first consultant invoice, make a basic header that will appear on all subsequent bills.
Include the following in the invoice template’s header:
- The logo of your company
- Contact information of your company, including your name, address, phone number, and email address
- Include the word “invoice” in your header so that clients can see what the document is about at a glance.
- Add Your Client’s Contact Details
You’ll need a space on your invoices below the header to fill in the client’s contact information. On every bill you create, double-check that the correct point of contact is listed.
If your clients are larger corporations, your invoicing contact will most likely be someone from the billing department rather than your regular business contact. Taking the time to double-check the billing contact can help you get paid for your services more quickly.
- Include The Invoice Date
Below the client’s contact information, write the date you’re preparing the invoice for. This will make it easier for both you and the client to file the invoice for bookkeeping.
- Number Your Invoices
Every invoice you create should have its own unique number. If you number your invoices, you and your clients will be able to quickly refer to a specific invoice if questions arise.
A consistent numbering system also aids in the filing of invoices and the organisation of your records. The most straightforward method of numbering invoices is sequential. So, for example, your first invoice could be Invoice #001, and your second could be Invoice #002, and so on. If you prefer, you can create a numbering system that includes the invoicing date. In the top portion of the invoice, write the invoice number.
- Clearly List Your Services
Make a detailed list of all the services you’ve provided, including the following:
- Each service is given a brief description.
- The amount of time spent working
- The hourly wage rate
- A subtotal of each service’s charges
It may be beneficial to organise this information into a table, with each piece of information having its own column.
- State Your Payment Terms
On every invoice you send, include your payment terms. It’s also a great thing to go over your payment terms with each client before signing a contract, so there are no confusions when the time comes to send your first bill.
The payment methods you accept should be listed in your payment terms, and they can include any of the following:
- Credit card
- Bank transfer
- Online payments
- Mobile payments
- Recurring payments
Your late payment policy should be stated in the payment terms section of your invoice. List the details of your late fees here if you plan to charge them for late payments.
- List the Payment Due Date
Make a note of the payment deadline on your invoice. Make this section of your invoice stand out so that clients don’t miss it. Use bold fonts or different font colours to make it stand out. Instead of vague deadlines like “Payment Due in 30 Days,” includes a specific payment due date. Giving the exact due date can help you avoid misunderstandings and get paid faster.
- Add the Total Amount Due
Include the total amount due on the invoice, with any applicable taxes. Much like with the payment due date, make the total due section stick out on the page, with larger, bolder or more colourful fonts.
Invoicing tips for consulting services
Getting paid faster is all that matters after the completion of any work. Besides learning how to invoice as a consultant, check out the below-mentioned invoicing tips to avoid delays in your payment process.
Monitor the working hour
Tracking working hours is vital for speeding up the payment procedures. Consultants need to keep a track of the productive hours so that they can invoice properly. As we have already discussed, most consulting services bill their clients on hourly rates. Therefore, it is essential to keep a track of the productive hours.
Do not delay in creating invoices
There is no harm in sending out the invoices to your clients as soon as you’re done with your projects. Sending the invoices immediately speeds up the payment process as it reduces the chance of getting overlooked by the clients.
Make payment methods flexible
Flexible payment methods like accepting checks, cards, bank transfers, online payments, etc., make it more convenient for clients to pay. Keeping diverse payment methods eases up the client’s job and eventually, the payments get settled quickly.
Request for deposits
In some cases, where you can understand that it would take months to complete, it is safe to ask for a certain deposit amount. This would help you to carry out your business expenses with a steady cash flow. It also avoids the risk of an economic downturn due to sudden project cancellation.
Be polite and friendly while you follow up for delayed payments
Follow up for delayed payments. Be polite while you send out friendly emails or make phone calls. As per various studies, a thank-you note at the end of a follow-up email maintains cordial business relationships and gets your invoices paid faster.