Billing
Invoicing clients for project work.
Workflow
- 01Billable Work Identification
- 02Invoice Generation
- 03Payment Tracking
- 04Revenue Recognition
If you change this
It implies 2 topics across 2 modules, including Financial Accounting which you might not expect.
See the path ahead →Why it matters
Work that is delivered but not billed is revenue lost, not deferred. Work billed incorrectly is a dispute that delays the cash and damages the relationship.
- It depends on capture: Unrecorded time cannot be billed.
- It depends on terms: Fixed price, time and materials, milestone and capped arrangements bill differently.
- It drives recognition: When revenue is recognised is an accounting policy question, not a billing convenience.
The workflow
- 01
Billable identification
Recorded time and expense assessed against the contract terms.
- 02
Review
A person reviews what will be billed before the client sees it.
- 03
Invoice generation
The invoice is produced with the detail the client's process requires.
- 04
Dispute handling
Queries worked without stalling the rest of the receivable.
- 05
Revenue recognition
Revenue recognised per policy — on delivery, on milestone, or over time.
- 06
Work in progress management
Unbilled work aged and actioned rather than accumulating.
Ageing work in progress is where professional services firms lose money without noticing. Unbilled time past ninety days is rarely recovered in full.
What you need in place
- Contract terms as data: Rates, caps, milestones and what is billable held in the system, not in the engagement letter alone.
- Timely time capture: Weekly at worst; monthly makes billing archaeological.
- Pre-bill review: By someone who knows the client relationship.
- Client-ready invoice format: Purchase order references and the detail their payables team requires.
- Recognition rules: Configured to the policy, including for fixed-price arrangements.
Questions to ask
01WIP ageing
How much unbilled work is over sixty days?
Past that, recovery drops sharply.
02Terms
Are contract rates and caps in the system?
If they live in a document, billing will diverge from the agreement.
03Review
Who checks a bill before it goes?
Unreviewed invoices generate disputes that cost more than the review.
04Recognition
Does recognition follow billing, or policy?
They are not the same, and conflating them misstates revenue.
05Write-offs
Who approves them, and is the reason recorded?
The reasons are the improvement backlog.
Metrics and KPIs to track
Work in progress
Value unbilled, by age.
Realisation rate
Billed value against recorded value.
Days to invoice
Work completed to invoice issued.
Write-off value
With reasons.
Dispute rate
Invoices queried, by cause.
Alongside this