Invoicing Options and Payment Schedules

A Cost + arrangement means that you want to bill a customer for the materials purchased and the hours spent on a job as the job progresses. You provide to the customer the supplier invoices for items purchased for a job, labour charges from your employees or contractors, plus an agreed up on percentage markup on the labour and materials for your project management services. Generally, clients are billed monthly for the duration of a project.

If you create a contract outlining the full project scope for a fixed price, this is called a set price arrangement which allows you to determine an invoicing schedule. This invoicing method allows business owners to invoice for jobs that are worked on and completed in phases.

If you are hired to do work which involves start up costs, you may want the customer to provide you with the funds required to get the work started. For example, if you have been asked to set up a new software program and train staff, you may be required to purchase the software on behalf of the client and pay for a facility booking for training. Both of these costs are directly related to the job, and instead of billing the customer after purchases/deposits have been made, you may want to set up an agreement with your customer to have these costs paid for before work begins.

On a set price contract, it is common practice to issue a progress bill which covers costs up to a specified date in the project timeline. When using progress billing, business owners start by creating an estimate for the job, then, as each phase is completed, items can be transferred from the original estimate to an invoice. Generally, a final percentage of the project is withheld (holdback/retainage) until the customer signs off on the project.