Billing and payments for consultants and contractors is purely dependent on the nature of the contract that one has with the client. The contract agreement can be milestone based or periodical. One has to send out invoices on the basis of the details mentioned in the contract.
Additional expenses are either included in the pricing of the service provided or as an additional charge as per actual. This too, is dependent on the kind of agreement one has signed. Here are some tips and best practices for billing for consultants and independent contractors.
Ask For Advance Payments
As a consultant you always want to get timely payments for the services delivered. Besides that, chasing for payments after the services have been delivered, can be very painful. Having a policy of advance payments is useful and one feels financially more secure and are able to deliver better services in such a scenario.
Keep The Billing Cycles Shorter
It is important to keep the billing cycles shorter for receiving payments on-time. For example, weekly or monthly billing cycles, should be preferred over quarterly ones. This helps in faster completion of payment cycles and keeps the payments flowing. Similarly, even while billing for milestones, one has to insist on shorter milestones, to get faster payments for the services delivered.
Sending Invoices on Time
Whether you are billing for milestones or monthly, you must ensure that the invoice is sent on the very date, that it is supposed to be sent. This ensures that the client does not pay up late, while giving an excuse, that the invoice was not sent on time. Using an online invoicing solution helps in sending invoices quickly and cost effectively. This also helps you focus more on your consulting business.
Early Payment Discounts
Many consultants and independent contractors,, provide early payment discounts for getting paid quicker. This helps in incentivizing the clients for faster payments. Some consultants also penalize clients for paying late. Online invoicing solutions provide features like late fee and interest payments for getting clients to pay extra for paying late.
Sending invoices online, is the norm for consultants and independent contractors in today’s time. Online invoicing helps in sending out timely invoices in a cost effective manner. An appropriate solution helps in easily managing and tracking a large number of invoices. Sending out professional invoices is easier while creating and sending them online. The process is far more efficient and reduces invoicing errors, many times over.
Use an Integrated Time Tracking and Billing Solution
Using an integrated time tracking and billing solution is helpful is getting paid for the hours worked, more accurately. An integrated solution helps in easily converting timesheets into invoices. A single solution where hours can be logged and invoices sent, helps in improving efficiency of the invoicing process.
As a consultant or a contractor, it is important to focus on the core services offering on a continuous basis. But, at the same time, one must also take invoicing clients and receiving on time payments equally seriously. Payments are the lifeline of your business and must be given top priority. Know more about how to send professional invoices and get paid on time. You can also read about time vs project billing from this post and some key essentials of time tracking.