Invoice Tips & Template

Invoice Tips & Template

One of the most common operations that independent consultants manage in their business is invoicing their clients.

This resource provides information and helpful tips for getting set up with clients as a vendor, creating invoices, payment processing, and handling payment issues. We also provide an invoice template you can customize for your own firm or use as a guide when created invoices in bookkeeping software.

Contents

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Invoice template you can customize for your firm

The majority of independent consultants use software, such as Quickbooks, to manage their bookkeeping and generate invoices. 

The invoice templates provided by such systems, however, don’t always include all the fields required for consulting services or that you should consider including.

This resource includes useful information for creating or customizing invoices through bookkeeping software. In addition, if you create invoices manually — such as in Microsoft Excel or Google Sheets — you can use these tips in your invoicing process.

We’ve also provided an Invoice Template, below, that can be customized and used with spreadsheet programs, or to reference when customizing invoices in your bookkeeping software.

Address fees and invoicing process in the contract

The invoice process begins when you enter into an agreement with the client. Make sure you include the following in your contract to facilitate invoicing.

First, your contract with a client should include parameters around your fees and invoicing procedure. The contract should specify: 

1. The amount of the fee and payment terms.

2. Up-front payment upon contract execution if that was agreed to by the parties.

3. If invoicing by milestones, be clear what the milestones are.

4. If invoicing by time and materials, be clear at what periodicity you are going to invoice (for example, monthly at the first of each month).

5. Late fees or early discounts.

You may try to negotiate terms that include some kind of penalty or interest if the invoice is not paid on time (such as an additional fee of 2% per month). Many clients will not agree to these terms, and another alternative would be to offer a discount for early payment.

For example, you might invoice with net 60 payment terms and offer a 1% discount if the invoice is paid in net 30.

Getting set up as a vendor

Now you have a consulting contract in place — congratulations!

As you move forward with the project, there are several steps you can take at the outset to get connected with accounts payable or procurement, and make sure your payment processing goes smoothly.

First, it’s recommended that you ask these questions of the client as you begin work with them:

  • Do I need to fill out a vendor setup form?
  • Do you offer electronic payments? If so, request the form to set this up. 
  • Will you be setting up a purchase order (PO) for this project, and do I need to include that PO number on my invoice? If so, what is the PO number?
  • How do I submit my invoice — via email, or by uploading it into a client-provided system such as Transcepta or SAP-Ariba?
  • If I submit the invoice by email, to whom should I send it? Is there anyone else I should copy ?
  • What are your requirements for items the invoice needs to include? 
  • What tax forms do you require (for example, U.S. consultants need to submit a W9 form). Who should receive any such forms?

You also want to ask what happens internally once you have submitted your invoice:

  • Who approves the invoice, and how?
  • Will I be notified once it has been approved?
  • Will there be visibility in some system as to what the expected payment date is?
  • Who can tell me that expected payment date?

In some cases, some of these answers will already be spelled out in your Master Services Agreement, so check your contract carefully.

Creating your invoice

Whether you are creating your invoices with bookkeeping software or through a spreadsheet, there are some basic items you may want to include. 

The following items should always be included on every invoice.

Name and address of your firm

Your company name and the physical mailing address.

Invoice number

Make this a unique number for each individual invoice.

Umbrex Managing Partner Will Bachman relates a learning experience. “Once I sent a client two invoices with the same number and they didn’t pay one of them because their system rejected it. I had to resubmit the second invoice with a different number which caused a delay in payment.”

Invoice date

This may not necessarily be the date you create the invoice, and/or the date you send it to the client.

Let’s say you are invoicing on a monthly basis and sending your invoice for the month of February, and you get around to doing this on March 5. Go ahead and put February 28 on the invoice, or maybe March 1.

In some cases, a client will start your payment days clock from the date on the invoice, not the date it was emailed.

Name of the client company

Name and mailing address of the company being invoiced.

Name and email addresses of client contact(s)

The name of the key individual client that is your point of connection, and any other recipient(s) serving as internal points of contact.

If you are emailing the invoice, list all the email addresses that you are sending it to. That might include your key client, that person’s executive assistant, and some Accounts Payable email address (for example, AP@client.com).

Having this right there on the invoice will help remind you each month of who you need to send it to without looking up the last email you sent.

Your name, email address, and phone number

In addition to your company name and address in the header of your invoice, include your personal name (if it differs from your firm name) and how to contact you directly.

Bachman says, “This did not occur to me for many years, because after all I’m emailing the invoice, so I would think that the company has my email address. But one time a payment got delayed and after I was able to finally talk to the right person in Accounts Payable, they said that they didn’t have any contact info for me so couldn’t ask me a question that they needed answered.

“My email had been forwarded a few times to get to Accounts Payable and by that point my email address was not available.That taught me to include my contact info right there on the invoice.”

Fee

Itemize your fee(s) as one or more line items as required.

If you are doing a fixed fee project, then you should explain what milestone the invoice is for. If you are invoicing for time and materials, then you want to include the following in a table format:

  • Consulting services you’re billing for.
  • The name of the person doing the work (probably you, or might be a team member).
  • The rate — hourly, daily, weekly, or monthly — whatever frequency you’ve agreed to in the contract.
  • Units — the number of hours, days, or weeks you are billing for.
  • Quantity — the number of units. If you are invoicing on a daily rate basis, some clients will ask you to just put the total number of days. Some will ask you to list out the specific days you worked.
  • The subtotal of these sums.

Note on this: Double check that you did actually work all the days you are saying that you worked — particularly if you are working every weekday.

“I’ve seen dozens of cases in which quite smart people have sent me an invoice that indicates they worked on some holiday such as Martin Luther King, Jr Day or Presidents Day or Labor Day,” Bachman says. “When I ask, ‘wait, didn’t the client have that day as a holiday?’, the answer is always, ‘oh, yeah, I totally forgot’. It reduces your credibility with a client if you make this kind of mistake, so be on the alert for it.”

Expenses

If you are also invoicing for expenses, our recommendation is to include one line for expenses on the main front page of the invoice — just one line with the amount.

Details of expenses can be handled in different ways depending on the situation:

  • If you are invoicing for just one expense (such as some piece of software they asked you to buy), then just include that expense directly on the invoice.
  • If you’re invoicing for multiple expenses, include one line with the total of the expenses on the invoice. Then separately include expense details, with a cover page itemizing the expenses and the receipts on subsequent pages.
  • If you are invoicing for time and materials, different clients have different requirements for invoicing. This should be covered in your contract.

Currency

To avoid any possible doubt, include the currency of your invoice as a general practice. That way, it will be automatic and you won’t forget if you are, for example, a U.S. consultant invoicing a Canadian client in dollars. 

Banking information

If you are concerned about the security of your banking info, you might find a more secure means of providing your this. If so, indicate on your invoice how it was provided and to whom.

If you are less concerned, you may want to include your banking info right there on your invoice, including everything someone might need:

  • Name on your account
  • Address of the account holder
  • Whether it is a business or personal account
  • Whether it is a checking or savings account
  • Name of your bank, address and phone number
  • Account number
  • Routing number
  • Any other information required by your banking system (e.g. IBAN, SWIFT code, branch number, etc.)

For some banks, you have one routing number for an ACH and one routing number for a wire transfer, so indicate if your routing number is good for one or the other or both. 

You may also wish to state that you prefer electronic payment. If you’re requesting payment by physical check (or that’s how the client needs to pay), then include a line that states, “Please make check payable to [NAME ON YOUR ACCOUNT]” and provide a mailing address.

Payment terms

Be sure to include the payment terms, whether the invoice is payable on receipt, or Net 30 days, or whatever you’ve agreed to.

In addition, there are a few other fields that might be included on an invoice, depending on client requirements:

Name of the project

Include a unique identifier for the specific project you are invoicing the work for. 

Reference the Statement of Work (SOW)

Reference the SOW number or date of the SOW as per your contract.

Purchase order

In the vendor set-up section above, we advised asking the client if they require a purchase order number on the invoice. If the answer is yes, ask the client to provide you with that PO number at the time of contract.

Budget vs actual

If your contract includes a not-to-exceed cap on fees, you might include a table of budget-to-actual billing costs.

This would include a column that provides the contract cap, alongside a column that lists the actual time and expenses being invoiced — for whatever time period and method you’re invoicing (hourly expenses monthly, for example).

Esther Kim does this for her nonprofit and foundation clients, and provides an example Budget vs Actual Invoice here

Additional Resource: How to Set Consulting Fees

Sending the invoice

These tips can help increase the chance you will get paid on time. In the majority of cases when consultants are paid late, it’s usually due to a breakdown in the process rather than intentional.

As discussed above there are two main ways to submit the invoice. By email, or by uploading it to the client’s system.

Request confirmation of receipt

If you are emailing the invoice, as above you will already have the information on who should be copied on the email.

For the subject line of your message, instead of putting “Invoice 1234” — consider using a call-to-action subject line.

For example, “Please confirm receipt: Invoice 1234, August 2022.”

If you haven’t received confirmation within a week, resend it to everyone and ask for an email confirming your invoice has been received.

If you still don’t receive confirmation, start calling — work your way to the right person in Accounts Payable and make sure that the invoice has been received.

Request payment date

If you haven’t worked with the client before and you don’t know how reliable their payment process is, after about two weeks you can ask for an expected payment date.

Once the client contacts have confirmed receipt, give it another week. Then ask that same set of recipients to confirm that the invoice has been approved, and ask for a specific payment date as well as the method of payment. (Will a check be mailed to me? Or will this get paid via ACH?)

“In my experience, if you can get a specific payment date, 95% of the time you can rely on it,” Bachman says. “Having a specific date means that your invoice has been approved and put into some system to automatically get paid on the date indicated, according to the payment terms.”

Troubleshooting

If you can’t get a specific payment date, that’s a good signal to keep working it with some additional questions:

  • Where is the invoice in the process?
  • Whose approval are we waiting on?
  • Do you need anything from me?
  • What has to happen for this to get loaded into your system?
  • Do you send out payments every day, or is there just one batch per week?
  • What do we need to do to make sure that this invoice gets into the batch going out on [X date]?

By asking these questions, you may discover that the client needed something additional, such as a Purchase Order number on your invoice, but it wasn’t available when you generated the invoice. They may need you to include something like that and resubmit the invoice for processing.

If you are having trouble getting answers, then at that point reach out to the key client you are serving and ask him or her to get involved.

Following these tips will usually increase the odds that you are paid on time.

Payment collection

If the troubleshooting steps above don’t work, there could be three possible reasons why the client isn’t submitting your payment:

1. The client has decided not to pay

This could be because they are not happy with your work, don’t believe the work satisfied the agreement, or are still waiting on final deliverables.

If you think this is a reason, you should have a conversation with the client so you can try to resolve the concerns.

2. The client has approved the invoice but is conserving cash

In this scenario, the client is fine with your work and does plan to pay you, but is tight on cash at the moment and intentionally delaying the payment.

In this case, open a conversation with the client to try and work out a payment plan that is mutually acceptable.

3. The client has approved the invoice but there was a process breakdown

Your client is happy with the work and planned to pay you on time, but somewhere in the whole accounts payable process, something broke down.

If this is the situation, continue the troubleshooting steps above until the issue is resolved.

If you aren’t getting results by email, try picking up the phone and work to get in touch with the person in Accounts Payable — one way to the bottom of the totem pole of who is actually responsible for issuing payment on your invoice. Treat that person as a partner — try to avoid expressing irritation and problem-solve together on the cause of the issue and how to solve it.

Once that person has helped you, consider sending a note of thanks to the individual, and perhaps a note to the person’s boss as to how helpful the person was.

In  Episode 373 of the Unleashed podcast, Will Bachman focuses mostly on this third scenario, which in his experience is the root cause of late payments 95% of the time (at least when you are dealing with a corporation).

Listen to Unleashed Episode 373 with Will Bachman on Collecting Fees