Keeping a record of your billable hours and issuing invoices to your clients is a fundamental part of operating a consultancy business. Ensuring that you know exactly how much each client owes, and billing them regularly, will ensure you get paid the correct amount in a timely manner.
A clear and professional invoice will detail the services you have provided, hours worked and the amount that the customer needs to pay you. Follow these simple steps to create the perfect invoice for your consultancy business:
STEP 1 – RECORD HOURS
Billing by the hour is a common practice among consultancy firms. If you plan to operate in the same way, you’ll need a reliable way to monitor the hours that you dedicate to each client. The system doesn’t have to be complicated (in fact, the simpler the better) but it must be something you can work with long term to avoid errors creeping in. Capturing every billable hour is the first step in getting paid what you are owed.
STEP 2 – ADD A HEADER TO YOUR INVOICE
When you prepare your first invoice, include a header that can appear on every subsequent invoice. This will save you time later, and ensures that your invoices always have a consistent look and feel.
Your invoice header should include:
- Your business name and contact details
- Your logo
- The word “Invoice” should be clearly displayed
STEP 3 – INCLUDE YOUR CLIENT’S DETAILS
Leave a space under the header where you can insert your client’s business details, including relevant points of contact for each invoice. To avoid delays, always check who will be the most appropriate contact for invoicing, whether it is your regular working contact or perhaps someone in the finance department.
STEP 4 – ADD THE DATE
Typically the date of the invoice will mark the beginning of any payment terms stated, so it is important that the invoice date is clearly displayed.
STEP 5 – CREATE AN INVOICE NUMBER
For tracking purposes and to avoid the risk of either duplication or invoices not being created, every invoice must have a unique identifying number. As we discussed in a previous article there are several ways to generate invoice numbers, either by numbering them sequentially or including the date or even a client reference plus a unique identifier. Whichever system you choose, your invoice numbers should be simple for you to manage and implement.
STEP 6 – LIST YOUR PRODUCTS OR SERVICES
Each product or service on the invoice should be itemized clearly, along with a description if it is helpful. This may be organized in the form of a table, with columns for quantity, product or service, unit price and a subtotal for each item.
STEP 7 – PAYMENT TERMS
Payment terms should not be taken for granted, and should be clearly stated on each invoice. As well as the final date by which payment is due (usually indicated as “Net X” days from the date of invoice) you should also detail which payment methods you accept.
You may also wish to include a late payment policy within your terms, detailing any fees or penalties if payments are received after the final due date.
STEP 8 – INCLUDE THE TOTAL DUE AMOUNT
Add together the subtotals for each line item on the invoice and state the total due clearly. The total will also include any applicable taxes, which should be detailed separately for clarity.
Here are five great tips that will help you streamline your invoicing practice, and get paid faster!
TIP 1 – AUTOMATE YOUR HOURS TRACKING
Admin can be time-consuming, and anywhere you can save time is a win when you’re running a consultancy business. Of course you can manually record each hour spent working for a client, but it isn’t necessarily the most efficient way to get the job done. If you work online, consider installing a time-tracking browser extension, or log your hours automatically on a cloud-based accounting platform line EZBILLING360 so that they can be imported directly into your invoices.
TIP 2 – INVOICE PROMPTLY
There is no need to delay invoicing. As soon as a given project is complete, or an agreed milestone is reached, you should issue your invoice. Invoicing promptly reduces the chances of you neglecting to issue an invoice for a particular piece of work, and increases your chances of being paid quickly.
TIP 3 – ASK FOR A DEPOSIT
Asking for a deposit in advance of a larger sale or longer term project is perfectly normal. By requesting between 25 and 50 percent in advance, you allow yourself an influx of cash which might be needed to complete the project, and you protect yourself by guaranteeing at least a partial payment for your services.
TIP 4 – BE FLEXIBLE WITH YOUR PAYMENT METHODS
The more options your clients have when it comes time to make payment, the easier it is for them, and the faster it will happen. Cash, checks, credit cards and even online payment platforms are all commonly used methods of receiving payments for the services you have provided. You may even choose to discuss setting up recurring payments from your clients where that is appropriate.
TIP 5 – BE POLITE!
Yes, an invoice is a standard business form. But when you’re asking for payment, it’s another human being who needs to make it happen! Simple measures such as including a “thank you” note on your invoice and a friendly message in your covering email or letter can smooth the way and help you get paid faster.
Remember, if you don’t already have an invoice formatted and ready to go, BILLWAZE has a selection of downloadable templates in a range of formats that you can use to get started.
Billwaze
Jeff Liebov is the CEO & Founder of BILLWAZE. Jeff envisioned a simpler way out of the complicated world of accounting apps and created BILLWAZE. As a tool, BILLWAZE makes things easy for those who want to get things done fast, without all the hassle. Jeff and the team are continuously improving the platform and are passionate about making the entire billing process simpler than ever.
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