So we chatted about how to build a clientele. You now have some money coming in. Yay!! How should you bill your services?

Let’s take a big sip of cup 2 ☕️

Set fees vs Hourly/progressive billing

Let’s sip on the topic of SET FEES.  If you choose to bill set fees, then carefully consider ALL your costs.  When it’s just you those fee’s don’t have to stretch too far.  When it’s a team there are so many more factors to consider.  What will your profit margin be.  Consider operational costs and subcontractor or employee costs (not just wages, you have required insurance and employer payroll tax costs).  What percentage do you want to keep for the company equity or your pay.  (You better be paying yourself if not let’s talk!) This isn’t going to be the same percentages for everyone.  Operational costs for virtual companies may be much less than the brick and mortar ones.

If you go with HOURLY BILLING.  The challenge is tracking those hours and making sure you invoice it all.  What software are you using?  Then what are the terms?  Extending people 30 day terms is a real bummer on your cash flow and I don’t recommend it.  ESPECIALLY if you have employees or subs.  Do the math, you are already up to 30 days into paying your subs/employees when you invoice the client.  Now you give them 30 days to pay?  Ugh! You have fronted possibly two months of subs/wages before you see payment.  That’s if they pay on time but let’s not head down that rabbit hole just yet (we have a part 3 coming). The moral of the story, if you bill at month-end the standard now is “due upon receipt”.  Stand strong you can do it!

Let’s talk about the opportunities to automate if you go with set fees.

With set fees you have the opportunity to make those AUTOMATIC and minimize your admin time and keeping you cash flow positive.  Determine if you bill on the first of the month before work is done or at the end of the month when it’s complete.  I have always pre-billed and have never gotten push back so if you want to pre-bill go for it!  Be sure to have signed authorization for this, but then it’s one and done!  Pro Tip – set up auto ACH (1% fees vs 3.5% for Credit Card).

If you go with hourly billing then focus on giving people the easiest way to pay you.  Offering the options to pay with credit card or bank ACH with just the click of a button is the only way to go.  You know what I’m talking about, if I have to cut a check it’s going to a week to 10 days later!  A button and I am a payment wizard!

So the round up….if you can choose set monthly fees DO IT.  Less admin and you can automate the process.  Just count the costs carefully bestie!

But not every business has that luxury, if you have to invoice based on hourly or progressive billing it means you may run into clients not paying timely.  Let’s head down that rabbit hole in sip 3 ☕️.

As always if this all sounds like a lot of work you DON’T want to do…we are here for you!

Let’s connect: [email protected]