January 3, 2025
Invoicing for Consultants
Professional services leaders open up about their invoicing woes and discuss how they keep money flowing predictably into the business.
Professional services leaders open up about their invoicing woes and discuss how they keep money flowing predictably into the business.
A theme emerges in Netsuite’s guide to the biggest challenges for professional services companies. Three of the top challenges can be traced back to inadequate invoicing workflows. We’ve interviewed professional service providers from numerous companies to dive deeper into why invoicing is such a problem, as well as what you can do about it.
Boutique professional services companies are more likely than their large, enterprise counterparts to engage in small, irregular projects. As a result, they’re plagued by difficulties with invoicing that leave the company on uncertain financial terms.
Cash flow planning is especially tough for small consultancies and other project-based businesses. Every project might not follow the same timeline. Billing might also occur irregularly, such as when certain milestones or deadlines occur.
Project-based work also involves engagements with planned end dates, opposed to services that simply renew every month. As a result, revenue naturally ebbs and flows over the course of a year. Most SaaS platforms aren’t built for this kind of business, which can make it hard to tell when money will be coming into the business.
Any kind of business is likely to deal with inaccurate hour tracking at some point, but this is especially problematic for any business that bills hourly. “Inaccurate billable hours reporting costs professional services firms worldwide as much as 28% in lost revenue,” reports Netsuite.
Andy Golpys, founder of branding agency Shape, has put a lot of effort into this aspect of invoice administration. “While we've got our invoicing process down pat, I'd be lying if I said it was always easy. One of the biggest challenges we face is ensuring that all the necessary information is included on our invoices, particularly when it comes to tracking time spent on hourly projects.”
Until an invoice gets paid, it doesn’t do you much good. Unfortunately, many professional services companies struggle to get their invoices out on time – again, because of billing on irregular workflows. Then, depending on the payment preferences of each client, it can be a pain to track when the money comes in and which invoices are still outstanding.
Most of the business leaders we talked to are relying on numerous apps to ensure their invoices go out on time and with the correct information. Adam from Shape reported using Harvest for invoices, Xero for accounting, Float for forecasting, then Asana and Trello to keep track of projects.
Deepak Shukla, CEO of Pearl Lemon Web, uses Toggl to Track time spent on projects, then uses QuickBooks to create and send invoices. Just to be sure, there’s another layer of project management that goes into invoice administration. “To stay organised and keep track of all our invoices, we rely on Trello, where we manage deadlines and tasks related to invoicing, ensuring nothing slips through the cracks,” he says.
Even with multiple tools to juggle, invoicing often comes back to manual processes. James Hacking, Founder and Chief Playmaker at Socially Powerful, indicates that invoicing is important enough to get right even at the expense of some extra work:
“The real challenge comes when billing hourly for dynamic projects. Ensuring all tracked hours are accurate can get tricky, especially when juggling multiple campaigns. To manage this, we’ve developed an internal process of cross-checking hours before invoicing. We make it a point to review weekly reports and confirm the logged hours align with project milestones. It’s not fully automated, but this additional step ensures transparency with clients and avoids disputes.”
Most of the professional services leaders we interviewed said they spend 2-3 hours per week, sometimes more, on invoicing-related tasks. TimeFront’s automatic invoice generation, built-in time tracking features, and QuickBooks integration can help you put those hours back into your business. Try it for free today.
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