If you consult engage in any form of freelancing job that has bills per hour, you have to impress your clients with your deliverables as well as in your hourly rate invoice. Clients often love to pay for productive hours and not just random time spent on a job. After putting in hours and achieving the deliverables in your contract, the next thing is payment for your services.
Creating and sending an hourly rate invoice puts you on the track of getting paid on time. Even profitable organizations sometimes have issues with their cash flow in terms of payment for services, especially for business with long payment cycles. For freelancers, payment is much flexible since it has there is no much bureaucracy involved. It would be best if you thought of tips in creating an effective hourly rate invoice that would enhance faster response from clients and also fully represents your business professionally.
Invoices can take any form depending on the services performed by the issuer. Also, they can contain critical information, while others may just carry a handful of information about the deliverables. If you are a freelancer or individual consultant in the US with revenue over $600 in a calendar year, you are expected to include your business tax ID in your invoice.
Clients are meant to send you a 1099-MISC form once they see your tax ID on invoice receipt. The information on the form is needed for filing your tax and remittance to the IRS. Freelancers may add this number directly under their name and may request the tax form from clients at the note field.
Below are the relevant information in selecting an hourly invoice template:
Create a field to describe the services that you have rendered and make it simple for easy comprehension.
Record the time spent on the job in hours. Other units may be used depending on your agreement with the client.
Instead of quantity in some eCommerce invoices, your hourly rate invoice would be in units -say man-hours.
Since you bill per hour, the agreed rate on your contract should be stated on the document.
The net amount is the bill before tax. It is the product of the rate per hour and the total hours spent on the job. The total amount is the due payment after adding tax.
Create a field for value-added tax. Check the rate for your country before adding this amount to the net amount.
Before creating your hourly rate invoice at all, you must have decided on the amount to charge for your service on an hourly basis. While it is good to have a competitive price, it is fine you factor in the efforts you’d put in and the skills to complete a job.
Another important thing about the hourly job is in the recording of the useful working hours on a job. Time trackers are great tools in recording and tracking hourly work. Although manual methods such as recoding on journals an entering into excel sheets are in vogue. Freelancers may forget to keep the account, making them ineffective methods compared to automated tracking using software.
Below are the benefits of using an hourly rate invoice: