When do you invoice a client?

| February 19th, 2009 | , ,

There are many different ways to invoice a client when taking on a creative project. We’ve tried several different methods ourselves, all depending on individual client situations and how comfortable we felt with each client. Below are some examples of different methods illustrating how to invoice clients, and the pros and cons of each.

Invoicing before the project begins

When working on smaller projects, this approach makes a lot of sense. First, it goes beyond the contract in formalizing a commitment between you and your client. Their expectations are going to be higher and the pressure on you to deliver is going to be greater. However, having the money up front helps cash flow, and regulating cash flow is incredibly crucial when running a small design business.

Invoicing after the project ends

Asking for a client to hand over the money after the project has been delivered is both extremely risky and requires a high level of trust or past relationship between you and your client. Once you’ve delivered the project the client’s incentive to pay will have all but dissipated. You’ll find yourself getting explanations of net 30 invoicing or scheduled payments, while your client is sitting on top of a sweet new web site and your struggling to find cash to cover this months expenses. There really aren’t any good reasons to invoice after the project is over, and countless reasons not to. Unless you want to hear excuses while you’re not getting paid, don’t use this method of invoicing.

Invoicing before, during, and after the project

When working on mid to large size projects this is the method of invoicing we prefer most. When managing mid size projects we’ll usually invoice the first 50% upon contract approval and the second 50% when handing over the final deliverables. For larger projects we like to break that into thirds, creating a milestone middle payment based on a deliverable. This method of invoicing equally incentives both you and the client and helps you both regulate cash flow (which is also a factor for them as much as it is for you). Periodical invoicing keeps the project moving along at a good pace and maintains accountability on both sides. Though you may still have delays getting that final payment, it’s nice to have already received the majority of it by then end of the project. And if you’d like, you can even hold the final deliverables ransom for that final payment, a tactic which is far more idealistic than practical, especially if you are nice guys like us.

Whether you choose to invoice before or after the work is completed, be sure to have a solid contract in place. Otherwise, clients will take advantage of you. And even if you do have a contract, protect yourself with good invoicing methods and by holding out on deliverables until getting paid (if you can). Because even if you do have a signed contract, the cost in time and money chasing that money down can often be more than what you are owed. On a side note, check out Intervals’ invoicing support for general help and tips on how to invoice clients and creating a hassle-free invoicing process.

Anyone want to share their experiences — both horror and success stories are welcome — about invoicing clients and getting paid?

Lear

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John is a co-founder, web designer and developer at Pelago. His blog posts are inspired by everyday encounters with designers, developers, creatives and small businesses in general. John is an avid reader and road cyclist.
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