How to Invoice Clients for Long Term Projects
Typically invoices are paid in full after work is complete. When working on smaller projects this is usually acceptable. However when engaging with clients on long-term projects, waiting until the work is over can be both mentally and financially unsettling. Depending on how long the project is you may wait weeks even months to receive payment. Additionally, you are giving up a large chunk of your time with little to no cash flow coming in from the engagement. These are all very real concerns when it comes to billing clients for long-term projects. That said, there are definitely ways to implement invoicing strategies that protect you and engage the client for the long haul.
Here are a few tips on how to invoice clients for long term projects:
Request a Deposit or Partial Payment Upfront
When you give your client a quote for the project it’s always a good idea to discuss paying a portion upfront as a deposit. You can even tell the client that part of your policy requires that they must pay an upfront deposit for projects quoted in a certain dollar range. This is not an uncommon practice so don’t hesitate to implement it.
Requesting a deposit ensures that you get cash in the bank and a committed client before you even begin work. If your client is uneasy about paying a deposit then there’s a chance that they weren’t interested in the first place. This is a good practice to start early in your career so you can set the precedent for future clients.
Utilize a Recurring Invoice Schedule
Another common strategy is to utilize a recurring invoice schedule. If your estimates tend to be accurate you can ask your client if they’d be willing to opt in to an automated payment schedule. Once you come to an agreement on an hourly rate and commitment, you can bill your client bi-weekly as you work on the project. This is one of the best ways to ensure a consistent cash flow when working over an extended period of time.
If you do not set clear terms on the invoice or if your estimates are off you may run in to problems using this strategy. At the end of the day you want to get paid what you deserve. More importantly, you want to make sure your client can justify the price for what you produce. If you underperform you likely won’t get more work from that client. On the contrary, if you hit the mark the client will probably contract you again as well as refer you to others. That said, make sure you pick a fair and achievable rate and hourly commitment.
Use Proper Invoicing Software
Without proper invoicing software the two strategies listed above will be difficult to efficiently execute. Look for an online invoicing platform that allows you to customize invoices for various client engagements. Many freelancers and small business owners overlook the need for software and online tools in their early stages due to cost. Since the majority of online payments solutions offer tiered pricing however, it’s very feasible to find an invoicing product that will fit in with their budget.
Make sure you choose the right invoicing solution for your specific business or practice. With so many available options there is likely one that suits your business over others.
Don’t Be Hesitant to Stop Work
You hopefully wont have to come to this often but you’ll occasionally need to stop work if payment doesn’t come in. There is no calculated way to gauge this as it depends on what the client says and their history. At the end of the day you want to try and develop strong and trustworthy client relationships. If the client gives a legitimate reason as to why they can’t complete a payment you can give them a break. However, if they begin to make a habit out of skipping payments and making excuses you should stop work immediately.
If you need to stop work for the same client more than a few times, I recommend finding others to work for. Remember, your time is your most valuable asset so it’s always better to invest it on good clients rather than spend it poor ones.
Depending on the size of the project and client, you may need to use various invoicing strategies and techniques to make sure you get paid in full and on time. If you’re working on a long-term project with a client, I suggest utilizing the above tips to make sure your cash flow remains steady.