Invoicing consulting work

The invoice is an artefact of the engagement

Somewhere there is a statement of work, an engagement letter or a signed proposal, and everything on your invoice is supposed to follow from it. The person approving payment usually does not have it, which is why the invoice has to bring enough of it along: the document reference and its date, the phase being billed, the agreed rate, and where this payment sits against the total.

An ordinary invoice asks to be paid for work done. A consulting invoice asserts that a particular clause of a particular agreement has been satisfied, and it is checked against a copy of that agreement you will never see anyone open.

Three fee structures, and what each has to show

Days at a rate

Time and materials, invoiced monthly in arrears. The line shows the number of days and the rate; the notes show the period. Half days are worth stating explicitly as 0.5, because “6.5 days” with no explanation reads to a reviewer like a rounding you made in your favour.

A fixed fee by phase

Each phase is a line, named the way the agreement names it, invoiced when the deliverable it refers to has gone across. “Phase 2 — operating model design, delivered 28 May” is checkable. “50% of project fee” is not, and it is the version that sits in somebody’s queue while they work out what it means.

An advisory retainer

A monthly fee for availability rather than for a deliverable, which is the hardest of the three to invoice convincingly because there is often nothing visible to point at. Say what the retainer buys on the invoice itself — a standing call, a capacity of days, first call on your time — and say what happens to a quiet month before it happens rather than after.

Put the cap on the invoice

Most time-and-materials engagements carry a not-to-exceed number, and most of the uncomfortable conversations about them happen because the client discovered where they were only when the ceiling arrived.

Two extra lines in the notes fix it: fees invoiced to date, and the cap. A client who watches $19,400 of a $32,000 ceiling go by on every invoice generally raises the extension themselves, weeks before you would have had to ask.

Reimbursable expenses are not fees

Reimbursable expenses belong in their own group, below the fees, at what they cost you. Three things make them uncontroversial.

• Bill them at cost. A margin on a train ticket is worth very little and costs a great deal of goodwill when it is noticed. If your engagement letter allows an administrative percentage, name it as its own line.
• Follow their policy, not yours. Most companies have an expense policy with caps on hotels and rules about class of travel, and it usually applies to you by reference in the agreement. Ask for it before the first trip.
• Keep travel time separate from travel cost. Whether you bill for time spent travelling is a commercial question settled in the agreement; the ticket is a cost either way. Separate lines, so a query about one does not hold up payment of the other.

The discovery phase, and why it is invoiced

A short paid discovery phase — two or three days of interviews and a written recommendation — is how a large amount of consulting work starts, and it is worth invoicing properly rather than treating as a sales cost. Give it its own scope document and its own invoice, name the deliverable, and price it as work.

It also sets the billing pattern for everything after it. A client who has already paid an invoice of yours, on time, through their own systems, has answered every question about how the next one will be handled — including which entity pays and which reference it needs.

Who signs is not who pays

The person who bought your work is a sponsor with a budget. The person who pays it is in a finance team, working from a purchase order and a supplier record, and returning anything that does not match. Get the legal entity, the accounts address and the reference at the point the engagement is agreed, not when the first invoice comes back. Invoicing for freelancers covers that second reader in more detail, and the freelance invoice template lays the fields out in the order they get checked.

What Invoice Tiger does for an engagement

• Saved clients holding the legal entity and the accounts email, typed correctly once.
• Quantity-and-rate lines, which cover days, half days and fixed phase fees on the same document.
• A notes field long enough for the statement of work reference, the billing period, the cap and the running total.
• Invoice numbering that only moves forward, which matters once a client’s ledger holds your numbers — how to number your invoices covers why.
• Every past invoice searchable by client, so reconstructing what you have billed against a cap takes a moment.

What it does not do

No time tracking, no proposals, no contracts or e-signature, no expense capture, no project management, and nothing that follows an invoice up for you. Practice-management software does all of that, and for a firm of ten it earns its price. For one person billing a handful of engagements, the document is the part that has to be right.

On terms: large clients tell you their payment cycle rather than accepting yours, so the useful leverage is the billing schedule — more frequent invoices, or a payment at the start of a phase. Payment terms explained covers what each standard term actually commits anyone to.