Freelancing is an incredible way to work for yourself online. But how do you create an invoice for hours worked where you actually get paid?
Charging clients at an hourly rate gives you freedom to offer many different services. It also means that clients can work as much or as little with you as they need! To make sure you get paid fairly when billing, we have put together a list of tips and tricks on how to invoice for hours worked in a way that benefits both you and your clients.
Importance of an Hourly Invoice for Small Businesses
Using hourly invoices give you and your clients accurate expectations for the work you are doing. If earning a living from your services is the goal, then hourly invoicing needs to be done right.
Count the Hours of Hard Work
You are doing the work, therefore you deserve to get paid! Your business will struggle to grow if you are undercharging yourself and not keeping track of hours accurately. Using hourly invoices keeps an exact record of what work you have done and deserve to be compensated for.
If you are using an hourly invoice model, it can sometimes be hard to predict how many hours you will need to complete a project. Time tracking software providers like MinuteDock allow you to set the quoted price and the hourly rate for each client. This then lets you see how much of the clients’ budget you have used so far and whether you need to make adjustments. Hourly invoicing needs to be done accurately to benefit your business!
Make Future Budget Decisions
Not only does an hourly invoice give your clients a clear overview of the price you quote, it also helps you understand where you time is going and how you could package your services into a fair fixed price based on how long it takes you. Tracking your hourly work for invoicing helps you make business savvy decisions where you won’t just be trading time for money forever.
How to Write an Invoice for Hours Worked?
An invoice date means you can track invoices easily and help you keep up to date with late payments.
If you are working with many clients, or the same client multiple times, including an invoice number is critical for bookkeeping. It will make it much easier for both parties to allocate the invoice in their accounting software or find payments in your bank account.
Vendor's Business Information
For tax purposes (and to keep things professional), it is important to include your own business details somewhere on the invoice.
Including your clients’ information makes it much harder to mix up invoices and much easier to find them retrospectively. It also makes it easier for your client when it comes time to write off your services as a business expense.
Tallying up line items is especially important when invoicing for hourly work. You can categorize the lines in several different ways.
- Create a new line for each type of task you completed at your hourly rate (e.g. planning, building, researching, client facing hours)
- Have a separate line for each service and then another separate line for your ad hoc hourly rate
- Include the full number of hours worked and then link to your billable hours chart for a more detailed overview
If you are using time tracking software, it will automatically calculate the total invoice price for your client. It is important to include any taxes, shipping, or client expenses to your invoice before you give them the final cost.
Payment Terms and Instructions
At the bottom of the invoice, let clients know exactly HOW to pay you. Include your bank account details or a link to pay directly by credit card or PayPal to make it as easy as possible for you to get paid. Don’t forget to thank them for their business!
Payment Policy and Due Date
As well as payment instructions, your invoice is a good place to include payment policies. This means outlining things like due dates, penalties for late payments, and consequences of not paying (e.g. no more work will be completed until it is paid). Most of these terms should be covered in your client contract, but it is still important to reiterate so that everybody is on the same page.
Sample Hourly Invoice for Freelancers
If you are looking for an hourly invoice example, it is best to start simple. Clients should be able to quickly skim through your invoice and know exactly what you are charging and why. It should also be clean and professional- no need for fancy frills here!
The hourly invoice sample from Freshbooks below shows all of the factors you should include when you are billing clients by the hour. For hourly rates, make sure you include:
- The name and short description of the service
- The unit price (e.g. price for one hour)
- The quantity of each service/unit
Invoicing Tips for Hourly Workers
If you want to invoice for hourly work rather than on a standalone project basis, there are a few key systems you should implement. These tips for sending out an hours worked invoice will ensure you get paid what you are owed every time.
Maintain Client Invoice Records
The first tip on how to create an invoice for hourly work is to keep records of everything you do. This is useful for keeping clients informed, backing yourself up in any payment disputes, and gives you a head start on tax time. Most importantly it gives you an accurate overview of how much work you are doing for a client to make sure you get paid.
Number the Invoices Date-Wise
Dating and numbering your hourly invoices is another easy way to keep your systems organized. This will help with any auditing, referring back to past client work, and makes it easy to line invoices up with payments in your bank account or accounting software. It also gives you a professional edge over people who use spreadsheets to time track!
Show Your Calculations
One of the best things you can do to build trust with clients is to be transparent. This is especially important if they are paying you by the hour. When creating invoices, show your hourly calculations in each line (and make sure they line up with the price you quoted the client).
Use Online Invoices
Make it easy for clients to pay you by using e-invoicing! A good invoice for hourly work is easy to open, read and pay all in one place. It will also help by automatically chasing outstanding invoice payments. Using an hourly tracking software like MinuteDock makes it easy for you to send billables to clients, link up with your accounting software, and watch money coming in for your well-earned hours.
Market Your Services
Did you know that your invoices for hourly work can be a good place for passive marketing? With comprehensive software, you could build an invoice template that includes each service in its own line at $0, and then only charge for the services you actually gave them. This (plus a bit of clever branding) can showcase other services your customer might need from you in future and do the marketing for you. Check out the simple example in the photo below:
Take Home Message
Invoicing at an hourly rate improves both your customer experience and profit margin- but only if you do it right!
MinuteDock is the ultimate time tracking software for freelancers that want to budget their time and clients’ money without all the paperwork. From tracking hours automatically to make sure you get paid to linking your billable hours to your online accounting service, MinuteDock is the only software you’ll need to create invoices for hourly work.