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How to bill for consulting services

minute read
Updated on:
December 12, 2022
December 12, 2022
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Now that you already know how to get into consulting, the next thing you need to know is how to bill your clients.

Tracking your hours and creating invoices that detail your services is crucial to running a successful freelance consulting business. Consultants must record their hours and invoice clients for their work regularly.

Have you recently established your own consulting business? Billing for consulting services for the first time can be challenging. Where do you start? How do you create an invoice that guarantees you'll get paid on time?

In this article, we'll explain everything you need to know about how to bill clients for consulting services. Let's get stuck in!

How to Invoice Clients for Consulting Services

Below we've outlined six simple steps consultants can follow to effectively bill clients for their services.

1. Track the number of hours you work

If you're a professional freelance consultant, you probably charge by the hour. Hourly billing is a common arrangement many consultants come to with their clients. Before you even begin to create an invoice, you'll need to have a robust time-tracking system in place.

Implementing an organized system for tracking the number of hours worked streamlines the invoice creation process. You can break down the fees into smaller totals alongside your hourly rate instead of just adding a grand total at the end. This makes it easier for invoice recipients to see what service they're paying you for and the hours you've worked to provide it.

Come up with a system that works for you. You can track your hours with a simple document in Excel or Google Sheets. Or you may want to use an all-in-one time-tracking software like Bonsai that allows you to manage your hours with timesheets and integrations with your billing system. Whatever solution you chose, ensure that it's one you can stick to. This way, you can make sure you're not missing out on potential earnings.

2. Add your business details

Along with the word "Invoice" somewhere on the page, every bill should include appropriate information about your business. This allows the client to immediately understand who they need to pay.

Make sure to include:

  • Your business name.
  • Your contact information including your phone number, email address, and physical address.
  • Your company logo.

Bonsai's unified invoicing software offers invoice templates that save your business details and contact information. This means you don't have to input the same information over and over again before you send each invoice. This is a huge time-saver and establishes consistency in your invoicing method.

3. Add your client's details

Next up, you'll need to add information about who you're providing consulting services to. If you work with the same client regularly, you'll benefit from saving this information using an invoice template. This way, you don't have to undergo the repetitive task of filling in the details about clients each time.

So what information about your client should you include on a consulting invoice?

Include the client's name and billing address. This is essential for record-keeping and accountability purposes. This way, you know who has or hasn't paid up and can follow up accordingly. It's also important to add the invoice date along with this information, so the client knows exactly when the invoice was received and can make the payment according to the consultant payment terms set out.

4. Make sure you include an invoice number

This is a crucial detail when it comes to creating professional consulting invoices—or any other type of invoice for that matter!

Each invoice you create must have a unique invoice number. Establish a method for numbering your invoices. Number them sequentially, or based on the project or client. Invoicing software automatically generates invoice numbers based on the last invoice created for a specific client, so you don't have to think about it!

Numbering each invoice makes it easier for you and your clients to track and manage invoices sent and received. The invoice number makes it much easier when you need to search for a specific invoice and helps you to remain organized. This way, you can track late payments and hold clients accountable for the bill you've sent.

Moreover, as a freelance consultant, you'll appreciate your own organization when it comes to filing self-employment taxes at the end of the year.

Check out our article on how to file 1099 consultant taxes.

5. Clearly list your services and hourly rate

The next step when it comes to billing for consulting services is to list your services. Make sure the way you do this is clear and organized, so the client can understand exactly what they're paying you for and —more importantly— pay you the correct amount.

To do this, create an itemized list of the services you've provided for the client. This list should include:

  • A short description of each consulting service you've provided
  • How many hours you worked to provide that service
  • Your hourly rate of pay
  • The total for each service
  • The total amount due along with any additional fees and taxes (make this stand out!)

If you're just starting as a freelance consultant, you might be asking yourself "How much should I charge for my consulting services?". Don't worry, you're not alone! The rate for consulting services varies depending on the industry, the nature of the consulting services, and the personal experience of the consultant.

If you've recently established your own consulting business, the best method to figure out your hourly rate is to divide your previous consultant salary by 52 work weeks, and then divide that by the number of work hours in a week (40). This will reveal how much you were making per hour before, so you can bill clients at the same rate or adjust it accordingly depending on the service you want to provide.

Remember that how much you charge is a reflection of value. Low consultant pricing rates don't translate to much value, and so don't necessarily lead to more work. Instead, ensure your pricing per hour or project reflects your experience and the value you can bring for clients.

6. Outline your payment terms

Finally, before you send your invoice you'll need to outline your payment terms on the bill.

This section of your bill establishes the payment methods you accept, the due date, and any late fees that will be applied in the case of late payments. List your late fee so clients are accountable for any applicable fees in case they miss a payment deadline.

When it comes to determining your payment due date, it's up to you. Some consultants choose to bill for payments to be made immediately (due upon receipt), whereas others might set different terms for the due date—within 30 days, for instance.

Invoicing Tips for Consultants

Now you know how to bill clients for consulting services, we thought we'd share some insider tips on how to streamline your business operations, track client payments, create better workflows, and get paid on time.

1. Bill clients often

Think about it—the more often your clients pay you, the better your cash flow. Those working in consulting often choose to get paid at the end of each month. This is standard, especially when it comes to consulting with hourly rates and charging for expenses. However, you may want to bill more often than that—say, every week or as soon as a project is completed.

2. Send your invoices immediately

This is going to make your life much easier. Create and send your invoices as soon as you complete the work. Not only does this ensure you get paid as soon as possible, but it also means you're less likely to make mistakes when billing for your services. When the project is fresh in your mind, you'll remember exactly what you did and how much time you spent on specific tasks.

3. Offer a small discount for prompt payments

Just like you can charge customers a fee for paying invoices late, you might want to give them a reason to pay you promptly. Offer a small discount (something in the range of 0.5%-1% will suffice) as an incentive. This benefits both parties! They get a discount, and you don't have to apply late fees or spend weeks waiting for your payment.

4. Don't just accept a single payment method

In today's digital world, why would you just accept a single payment method? It's more convenient for a client when consultants accept a variety of payment methods. Instead of just accepting bank transfers, why not set up an online payment service like PayPal? The more options you give your client, the more likely they are to make the payment on time without asking questions.

5. Request deposits for any long term project you take on

For long term projects that require a significant amount of your time, you may decide to ask for an up-front deposit. By doing this, you can secure your business and ensure you receive at least partial payment for the work you do. You could ask for 25%-50% of your payment rate upfront. By doing so, you'll reduce the risk associated with accepting long-term projects from clients you haven't yet grown to trust.

6. Stay professional

Sometimes you might work with disorganized clients. Unfortunately, there's no guarantee that your clients will pay on time. When this doesn't happen, you may need to get in contact to see what's going on. When this is the case, stay professional and don't lose your cool because they haven't paid you. Remember, if you've created and signed a legally binding contract for your services, you have the right to take the matter to court if it comes down to it. You'll want to phrase your questions politely, rather than take an accusatory tone. You can also contact clients personally with a payment reminder email or a phone call if they're not showing signs of paying you anytime soon.

When you send your invoice, be sure to include a short thank you note. It might be trivial, but using manners can make a difference when it comes to getting paid on time and help you retain your clientele base.

Use cloud invoicing software

We left the top tip for last. Ensure your consulting business operations run as smoothly as possible by using invoicing software. There are plenty of free invoicing software options on the market. One such cloud-based invoicing software is Bonsai.

Bonsai automates the invoicing process, allowing you to create, send, and track invoices sent from a unified platform. What's more, Bonsai offers free invoice templates to help freelancers create professional invoices. That's not all though. Bonsai is a unified tool for freelancers. With Bonsai, you can manage and automate all of your business processes. From writing proposals to tracking every hour you work to managing your business accounting needs—Bonsai does it all. Try the best consultant accounting software to organize your finances and taxes. Our software can help you keep detailed records of your bills. Try a 7-day free trial today.

This kind of software can help to take the stress out of freelancing or managing a small business by taking care of all the administrative tasks. This means you can spend more time doing what you do best, whether it's consulting, freelance writing, or something else.

Create a Consultant Invoice With Bonsai Today

Ready to bill your first client for consulting services? Sign up for Bonsai today and download our free consultant invoice template. All you need to do is:

1) Fill out the template with your contact details, project rates, and payment terms.

2) Send your invoice.

3) Keep track of whether or not the client has opened and paid the invoice.

All without leaving Bonsai's ultimate unified software platform. What are you waiting for? Start free with Bonsai today.

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