Article
How to Invoice Hours to Clients – A Practical Guide
The Short Version
- Hourly invoicing requires you to continuously record work hours, collect time data per client and project, and send invoices based on the agreed hourly rate.
Record Hours Continuously – Not Retroactively
The first step in hourly invoicing is to record work hours as they happen. When hours are written down retroactively, the risk increases that work is forgotten, estimates become inaccurate, or invoicing is based on memory instead of actual work. By using a time tracking app, employees and consultants can log hours directly from mobile or web, regardless of where the work is performed. This reduces administration and provides a better basis for invoices.
When time tracking occurs continuously, you also gain better insight into the actual costs and progress of the project. This makes it easier to catch if a project is going over budget, and you can adjust along the way instead of discovering the problem only when the invoice is to be sent. For craftspeople, this is especially important, as work often takes place at different addresses and projects throughout the day.
Collect Time Data Per Client and Project
After hours are recorded, they must be sorted by client and possibly by project. This allows for creating invoices with the correct basis and ensures that the client receives a clear presentation of what has been invoiced. Many time tracking systems do this automatically by having the user select the client and project when logging time. This way, you avoid having to filter or sort manually in Excel sheets when creating the invoice.
When you collect time data in this way, you also gain valuable insights into how much time different clients and projects actually require. This helps you price future assignments more accurately and provides a basis for assessing whether certain clients are more resource-intensive than initially assumed.
Choose the Right Invoicing Frequency
When invoicing hours to clients, you need to decide how often the invoice should be sent. Common models include:
- Monthly invoicing – clear and common for ongoing consulting assignments
- Bi-weekly – suitable for projects with high activity and need for steady cash flow
- Weekly – used for very short projects or time-and-material agreements with close follow-up
- By milestones – suitable for projects divided into phases or deliveries
- As agreed – can be adjusted based on the client's payment ability or project duration
The choice depends on the project's length, client preferences, and your own liquidity. Many choose monthly invoicing because it provides oversight without overwhelming the client with frequent invoices, but shorter intervals may be necessary in projects where you incur significant costs along the way.
What Should the Invoice Include?
An invoice based on hours should always include the date of the work, a description of what has been done, the number of hours, hourly rate, and total amount. If the project also includes expenses such as materials, travel, or tool rentals, these must be specified separately. The client should easily see what they are paying for without having to interpret unclear items or generic descriptions.
By having clear time sheets documenting the work, you avoid misunderstandings and questions about the invoicing basis. Many time tracking systems allow you to export hours directly to an invoice template, saving time and reducing the risk of errors. This is especially useful if you have multiple employees logging hours or if you are invoicing several clients simultaneously.
Frequently Asked Questions
How do I avoid losing hours before invoicing?
Record hours continuously in a digital system instead of writing them down retroactively. This way, you automatically get an overview per client and project, and you avoid searching through notes or trying to remember what was done.
How often should I invoice hours to clients?
Most choose monthly invoicing for ongoing projects, but shorter intervals like bi-weekly or weekly may be relevant for high activity or to ensure better cash flow. Choose frequency based on the project's duration and agreement with the client.
What should be on a time invoice?
The invoice should include the date of the work, a description of what has been done, the number of hours, hourly rate, and total amount. Any expenses should be specified separately so that the client can easily see what they are paying for.
Can I use Excel to invoice hours?
Yes, but Excel requires manual updates and increases the risk of errors. A dedicated time tracking system provides automatic summation, sorting by client, and easier export to invoices, saving time and reducing administration.
What do I do if the client disputes the number of hours?
Have good documentation from time tracking that shows the date, description, and duration of the work. When you log hours continuously and specify what has been done, it becomes easier to refer to actual work performed if the client raises questions.
How do I ensure all employees log hours correctly?
Use a shared system where employees log hours from mobile or web, and where you as a manager can monitor whether hours are being logged. Regular follow-up and clear routines reduce the risk of hours being forgotten or logged incorrectly.
How long should I keep time records?
Time records are accounting documents and should be kept for a minimum of five years after the end of the accounting year, in accordance with the bookkeeping law. This applies to both digital and paper records.
