Retainer, project fee or hourly
- A retainer buys availability or a fixed slice of time each month, billed whether or not it is used
- A project fee buys a defined outcome, billed against milestones rather than time
- Hourly or daily billing buys time, with the timesheet as the evidence
- A hybrid is fine, as long as each invoice line says which of the three it belongs to
Invoice a retainer at the start of the period
A retainer pays for the month ahead, so it is invoiced on the first day of that month, not the last. Billing in arrears turns a retainer into a deferred hourly fee and leaves you a month of advice in credit with a client who may end the arrangement before paying for it.
Work beyond what the retainer covers goes on the same invoice the following month, as its own line at the agreed overage rate. Say whether unused hours roll over; if the agreement is silent, a client who used half the month will assume they did.
Bill a project against milestones
Split a project fee into named milestones the client can recognize as finished: a diagnostic, a recommendations report, an implementation plan. Each invoice names the milestone reached and the share of the fee it releases, so approving it means confirming a piece of work exists rather than estimating progress.
Expenses at cost, with receipts
Flights, hotels and per diems are reimbursed, not earned. List them in a section of their own, with the receipts attached or referenced by number, and keep them off the fee lines: a corporate client usually codes expenses to a different budget, and a combined figure has to be split by hand before it can be paid.
Put the PO number where the system expects it
Large clients pay against a purchase order, and their accounts payable team matches each invoice to one before anyone reads the description. Ask for the PO number at engagement, print it on every invoice, and check that the amount billed does not exceed what the PO has left: an invoice over the PO balance is returned unpaid, often without a reason.
Common questions
- Should a consulting invoice include hours if I charge a project fee?
- It does not need to, and adding them invites the client to divide the fee by the hours and argue the result. Name the milestone and the deliverable instead; the hours are your business on a fixed fee.
- What if the client has no purchase order system?
- Then use your own engagement reference on every invoice, taken from the signed proposal or letter of engagement. It does the same job: it ties each invoice to the agreement that justifies it.
- How do I bill a retainer that ends partway through a month?
- Prorate the final month by the days the arrangement ran, or by the notice period the agreement sets, and say on the invoice which you used. The final invoice is the one a departing client reads most carefully.