How to bill a client accurately

To address this, businesses need to adopt effective billing practices. Employing strategies like accurate tracking of billable hours, incorporating all tracked time, and including any additional expenses can help.

Moreover, it is vital to account for any taxes and discounts that may apply. Using comprehensive time tracking and invoicing tools, such as Thriday, can streamline this process and minimise errors. These steps can significantly enhance billing accuracy, ensuring that clients are billed correctly for the services provided.

1. Track billable project hours

Tracking billable project hours is crucial for accurately calculating charges when using an hourly rate. These tools allow users to define their hourly rates, track time, and automatically calculate earnings based on those rates.

Time tracking can be done via a timesheet, a timer, or by manually entering time entries.

Timesheets are ideal for long-term projects. Users can log their hours for an entire week, specifying how much time was spent on each project. This method provides a comprehensive overview of time allocation.

Real-time tracking with a timer is straightforward. To use the timer, one simply starts it, enters the project name, and stops it when done. This method ensures precise tracking of active work hours. Once hours are tracked, they can be marked as billable or non-billable. Billable hours are included in the total project earnings, essential for understanding project profitability.

2. Import tracked time

After tracking billable hours, the next step is to add this data to your invoice. By importing tracked time directly, you can make this process much simpler and more accurate.

Thriday is a reliable tool for invoicing. This free invoicing software allows you to easily create and customise professional invoices, incorporating your billable hours and expenses seamlessly. This feature not only speeds up billing but also reduces the risk of errors from manual calculations.

Importing tracked time ensures that clients receive a precise bill, reflecting the exact hours worked. This method is efficient, saving you time and providing accurate billing information.

3. Include other expenses in your invoice

Apart from billable hours, you might incur other expenses that need to be billed to your clients. Forgetting to add these costs can result in a significant financial loss. Using software like Thriday helps manage these expenses efficiently by allowing users to:

Create expense categories: Organise your expenses by type, such as travel, supplies, or software subscriptions.

Enter expense data: Easily input details for each expense, including the date, amount, and description.

Import expenses into invoices: Seamlessly add your tracked expenses to your invoices, ensuring you're reimbursed for all project-related costs.

For instance, if you agreed that clients will cover transportation costs, you can set up a dedicated "Transportation" category within Thriday. This enables you to meticulously track mileage or other transportation-related expenditures. 

By attaching relevant receipts or documentation, you provide clients with transparency and substantiation for these costs. This practice not only ensures accurate billing but also fosters trust and clarity in your client relationships.

4. Add tax and discounts

To avoid errors, it is crucial to calculate taxes and discounts correctly. Start by entering the tax rate and discount percentage into your invoicing software. This ensures you don't undercharge or overcharge clients. 

Using tools like Thriday, you can simplify this task. The software calculates the total amount automatically, including taxes and discounts, and adds it to the invoice. This streamlined approach minimises the risk of mistakes and ensures accurate billing.

Thriday: An accounting, invoicing and tax receipt app for freelancers and small businesses

Freelancers and small business owners, we get it: finance matters can feel like a language you never learned. But with Thriday, you don't need to be fluent to thrive. We aren’t here to replace your accountant (they're great for the really complex stuff), but we're the friendly sidekick you need for everyday money management.

As your financial wingman:

• Invoices Made Easy: Create and send professional invoices in a snap. Track payments, send gentle reminders, and get paid on time, every time.
• Expense Tracking, Conquered: Say goodbye to lost receipts and manual tracking. Capture expenses on the go, categorise them effortlessly, and generate insightful reports.
• Tax Season? No Sweat: Thriday's got your back. We'll calculate your taxes, keep you organised, and help you face tax season without getting nervous on ATO audits.

Frequently asked questions

How should one invoice a client for the first time?

When invoicing a client for the first time, it is essential to follow a clear and professional process. Begin by gathering all necessary details such as the client's name, address, and contact information. Clearly list the services provided, the project details, and the rates agreed upon. Specify the due date for the payment and any penalties for late payments. Using a standard billing software can also streamline this process and ensure accuracy. 

Can a standard template for billing clients be provided?

A standard billing template usually includes sections for the client's information, invoice number, service descriptions, and the total amount due. It should also contain payment terms and methods. Customising this template to match the needs of each project can improve clarity and professionalism. 

How should invoicing and payment be discussed with a client?

When discussing invoicing and payment with a client, transparency is key. Clearly communicate the payment terms, methods available, and due dates. It is crucial to address any questions the client may have about the billing process upfront. Also, agree on a method for sending invoices and receiving payments, such as through email or an online invoicing system. Being open and clear can help avoid misunderstandings and ensure timely payments.

What payment collection methods are available for clients?

There are several methods available for collecting payments from clients. Offering multiple payment options can increase the likelihood of prompt payments. Common methods include bank transfers, credit card payments, PayPal, and cheques. Some businesses also accept cash for local transactions. It is advisable to use secure payment processing systems to protect both the business and the client. 

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