BuzbyTimeRead the requirements guide

Time and money · 5.1

From a record to an invoice

From a record to an invoice. What decides it, what it costs, and what usually goes wrong. For another implementation reference, see Monitask's reference.

The gap between a record and a billThe step in the middle

A time record is a list of durations. An invoice is a commercial document somebody will read sceptically. Between them sits a review that most organisations perform badly or not at all.

What that review does: checks attribution, reads the descriptions as a client would, applies whatever the contract says about rounding and caps, and decides what to write off. Four judgements, and only the first is mechanical. For another perspective on the surrounding workflow, see ADP.

Descriptions are the part clients actually read

A line saying "development" against six hours invites a question. A line saying what was built does not.

The difficulty is that the description is written by somebody recording time and read by somebody paying an invoice, and those are different audiences with different knowledge. A description meaningful internally can be opaque or, worse, alarming externally.

Two practices help. Write descriptions as though the client will read them, because they will. And review them before sending rather than editing them into something nobody said.

Who may edit, and what that costs

Somebody has to be able to correct an attribution before an invoice goes out. That is legitimate and it creates the risk this whole site keeps returning to: an edited record is only evidence if the edit is visible.

Keep the original, record who changed it and why, and let the person who entered it see the change. An agency that edits a consultant's description without telling them will eventually have that consultant contradict the invoice in front of the client.

What the person sees

Anybody can see what was recorded against them and every subsequent change to it.

Including changes made during invoicing, which is where most corrections happen and where most systems are silent.

The approval chain

Three steps is usually enough: the person confirms their own week, a project lead confirms the attribution, and whoever owns the relationship reviews the invoice.

More steps than that and the invoice goes out late, which is a cash problem that outweighs the accuracy gained. Fewer and the first time anybody senior sees the detail is when a client questions it.

Timing

Invoice on a fixed day, from a period that closed on a fixed day, with a gap between them for the review. Variable invoicing dates produce variable cash and a client who cannot predict them.

The gap matters. Closing the period and invoicing the same afternoon means the review either does not happen or delays the invoice, and it is usually the former.

What to send with it

Enough detail to answer the obvious question and not so much that it invites a line-by-line audit. For most relationships that is a summary by workstream with the detail available on request.

Where a client contractually receives full detail, say so to the people entering time at the start. It changes what they write and it should not be a surprise.

Unbilled work

Hours recorded and never invoiced, for whatever reason, accumulate quietly. Report them monthly as a number: it is the single clearest signal of scope leaking, and the entry on write-offs is about reading it.

Fixed price and the record

Where the client pays a fixed sum, the hours do not appear on the invoice and they matter more rather than less: they are the only way to know whether the price was right.

Teams on fixed-price work frequently stop recording carefully on the reasoning that nobody bills from it. The consequence is a business that cannot tell which of its fixed prices were profitable, which is the one question fixed pricing raises.

Retainers

The same problem in a subscription. Hours are consumed against an agreed monthly amount and the overrun is discovered at the end unless somebody watches during.

Report burn weekly to whoever owns the relationship, and have the conversation in week three rather than at invoicing. It is the same conversation and it goes differently.

Expenses

They travel with the invoice and they are recorded in a different system by different people at a different time, which is why they are the commonest cause of an invoice going out late or twice.

Set the same cut-off for expenses as for time and hold it.

Credit notes

Track them against the original invoice and against a reason. A business that issues credit notes regularly has a problem upstream in one of the four judgements at the top of this entry, and the credit note log identifies which.

Cash rather than revenue

An invoice sent is not money received. The record contributes here too: the faster an invoice goes out and the fewer queries it attracts, the sooner it is paid, and both are functions of the review this entry describes.

Businesses focused on billing accuracy sometimes lose more to invoicing three weeks late than they ever recover through precision.

The checklist before sending

  • Every hour attributed to a client and a project.
  • Descriptions read as a client would read them.
  • Rounding and any cap applied per the agreement.
  • Write-offs decided and reasons recorded.
  • Expenses in, and cut off at the same date.
  • Someone who owns the relationship has looked at it.

One line to carry

The review between the record and the invoice is where the money is made or lost, and it is the step most often skipped for speed.

Also in time and money