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A career in consulting is so much more than checking emails, running analysis, and delivering pitch decks. As a freelance consultant, you are an expert at your craft—and your clients look to you to solve their problems. Be it operational, branding, recruitment, or an organization going through a major change, you’re the one they rely on. Because you’re typically a one-person show, consulting can’t just be all that you do. Just like running any type of small business, you need to be your own accountant and an expert at consultant invoicing.
Not knowing the basics of accounting and the ins and outs of invoicing will only be a detriment to your small business. And without it, you also risk losing out on the benefits of a positive cash flow.
In this guide, we’ll be covering:
You can probably agree that as a consultant, not every day looks the same.
But you know what does? It’s finding time throughout each day to log your hours and invoice accurately in order to get paid for the work that you perform. This is generally in the form of billable hours that you put in. So, be sure to:
Invoicing the “right way” means knowing how to invoice when to invoice, and when to follow up in order to optimize your payment schedule. A place to track and store all your invoices is also critical. You’ll need a reference point to grab a specific invoice for client discussions or for tax reasons.
Ready to tackle invoicing for the first time? Follow these general steps to effectively plan for, create, manage and send invoices to clients for the work you performed.
New clients are full of unknowns. Whether you acquired a new client through word-of-mouth, a friend, through an inbound lead—there is still plenty of ambiguity.
The first thing you should do is set up a discovery call to find out:
Once you get a feel of your new client, you’ll quickly be able to tell if they’re reliable clients. You’ll also be able to take that information to help dictate what your invoice might look like for that client.
Remember, long-term clients, are always a good thing, especially if you can work your way to recurring payments, such as a retainer.
Plan ahead by getting aligned on your payment terms, method, and other ad hoc details. Once a discovery call is complete and he or she wants to hire you as their consultant, the next conversation should always be about payment details. After all, that’s how you get paid!
Establish policies for methods and timelines when it comes to money. These include:
Method. Which payment method does your client prefer? Is there a method that you prefer, such as through a bank transfer?
Timeline. When should payments be made? The initial kickoff or immediately post-kickoff is a good time to initiate conversations about payment timelines and expectations. Get on the same page early, such as payments within 15 days (net-15), so that expectations are established right away.
Hours. Do they expect you to track your hours and send them along with your invoice? As a consultant, you typically get paid for your time, so this may be the case. If they don’t ask for it, chances are if you send it, it’ll build trust, too.
If you have more than one client, things might get a little trickier since one client’s payment method may differ from the next. Be sure to stay flexible and adaptable throughout this process! Trust us, your clients will appreciate it.
While there is no exact format to set up your consultant invoice, there is a standard skeleton that you should follow when billing for your consulting business. Things like client contact details, line items, and invoice dates should always be present on an invoice. But there are some differential elements to consultant invoicing, too, which we’ll detail later on.
Instead of starting fresh from a blank Word document, a quick fix is to use a pre-built invoice template instead. As a consultant, your hours are billable, so you want to minimize your time doing non-billable hours during your working window.
Tip: Try TrulySmall’s free consultant invoice templates to get ahead start.
As a general rule of thumb, here’s what to include on your consultant invoice every time:
Your business name is a foundational element of a professional invoice. It identifies your business and establishes your brand.
A unique invoice numbering system helps you stay organized, especially come tax season.
Date of when the invoice was generated and not when the goods were supplied.
Any terms or other contractual descriptions you would like to include.
The number of hours worked or quantity of services provided.
Your client’s information including their full billing address.
The amount you’re charging per hour or for a specific service.
Any other fees or taxes that you may charge on your invoice.
The total amount of your invoice after any sales tax, discounts, etc.
Creating the systems and processes that work for you is key as a consultant, especially if you work alone. After all, the last thing you want is to lose track of your invoices—both digital and physical.
If payment was missed two months prior, how do you bring that up with your client? You should have an open and immediate conversation with your client. It’s just easier to bring up a missed payment that fell through the cracks if you have your invoice with you to show them. If you can’t find that invoice, and they can’t either, it can look extremely unprofessional on your end. In the same vein, you don’t want to wait until tax season to begin frantically searching for past invoices that were sent out and paid. In fact, you want to store it somewhere where you frequent so that you can confirm that they are being paid within the payment schedule agreed upon.
Free and paid storage tools like DropBox, Google Drive, and cloud-based accounting software and invoicing apps are great places to start. Leverage these tools to keep your invoices safe and organized. Most of them are extremely affordable, if not free! Because they’re stored in the cloud, you can access your invoices from anywhere—from your commute to a beach in Costa Rica.
As a consultant, you live and breathe billable hours. Like other line of fields that involve heavily on hour tracking (like lawyers), you want to avoid “the bench” if you were to work for a firm. In this case, you constantly have pressure from higher-ups to maximize your billable hours throughout the day.
But running a consulting business on your own is different. As a freelance consultant, there’s some pressure on how you arrange your work day too. Be sure to develop a system to track working hours. This system should be streamlined and tailored to you. For example, just because other consultants track their hours on an Excel spreadsheet on their computer doesn’t mean that you should. If you are always on the go, and your evenings are busy, you likely won’t have time to plug those hours into your spreadsheet late at night. In your scenario, you might want to track your hours on your phone, using a tool that’s more compatible with mobile.
Tip: Calculate your consulting fees with Consulting Success’s calculator, which considers costs like overhead and your annual total billable days.
Save time wherever you can by automating every day, repeatable tasks.
Time. One way you can tackle this is by tracking your hours automatically instead of glancing at the clock, logging them manually on a piece of paper or digital note, and keeping notes about your tasks. Time tracking tools automates this process for you. Simply download the app (like Toggl), install browser extensions, and the software track your time for you.
Filling Invoice Details. Another way to automate is by leveraging invoicing software. Software like TrulySmall™ Invoices uses machine learning to learn your typical invoice details—like contact details and recurring clients—and fills your invoice for you. Using invoicing apps, instead of a Word document or even a pre-filled invoice template, also means other aspects of the invoice are filled for you. If you use TrulySmall™ Invoices to house all your invoices, it’ll even fill in the invoice date, invoice number, and logo for you.
Sending Reminders. Once you hit send
Invoice as soon as your work or project completes. No invoice should be sent days or weeks after your job is done. In fact, sending invoices much later only means that you’ll get paid much later— drastically affecting cash flow. Invoicing immediately also keeps you and all the great work that you did for your client at the top of your mind. Psychologically speaking, that also means that they’re more inclined to make payment for that invoice!
Invoicing doesn’t have to be a difficult or tedious process. In fact, it can be a positive experience for both you (the supplier) and your client (the buyer). Test out these steps and tips and see for yourself how you can best stay on top of consultant invoicing.
And if you’re looking for a simpler invoicing solution than just templates, then we’ve got you! Start sending invoices completely free today with TrulySmall™ Invoices. Use it on your computer or download TrulySmall’s invoicing app today—it’s free and available on iOS and Android.
A career in consulting is so much more than checking emails, running analysis, and delivering pitch decks. As a freelance consultant, you ar...
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