Afraid of Undercharging? Here’s How to Bill Clients Accurately

You’ve calculated billable hours, included the early payment discount, and sent the invoice to your client.

And then… Panic ensues, as you realize you forgot to include tax.

This is a more common scenario than you might think. Research suggests that as many as 72% of all billing errors are related to undercharging.

Here’s what you can do to avoid making serious billing mistakes.

#1: Track billable hours

The first step to billing clients accurately is to keep track of billable time. You may already have a time tracking habit, but how you track time is what really matters.?

It goes without saying that failing to count the billable time you spend on client-related tasks leads to undercharging. That’s why it’s essential to use a foolproof method for tracking time.

Using specialized software has advantages over pen and paper or spreadsheets, as it’s more accurate, quicker, and offers a variety of useful features.

Clockify is an app that comes with powerful time tracking features.

For example, Clockify lets you track time in 3 ways:

?? Timer — tracking work hours in real-time,

??? Timesheets —? entering hours for the entire week, or

?? Manual mode — adding time you forgot to track or editing existing time entries.?

The most important thing is that with Clockify, you can mark tracked time as billable or non-billable.

#2: Add tracked time to your invoice

With tracked billable hours at hand, it’s time to include them in your invoice.?

If your goal is accurate invoicing that takes little time, writing down the time you spent on each task on a piece of paper won’t do the trick.

That’s because, in that case, your only option is to manually calculate and add that time to your invoice.

For precise invoicing, try Clockify.

Clockify isn’t just a time tracker. It also comes with easy-to-use invoicing features.

If you track time with Clockify, you can:

?? Have the total hours for each project be calculated for you, and

??? Import that time directly into your invoice.

#3: Include other expenses

Apart from the billable time you have tracked, you’ll probably have other expenses that must be charged. For instance, if you agreed with the client they would cover transportation, you need to make sure this expense is correctly calculated.

With Clockify, you can create custom expense categories. Simply name that category and add a custom unit of measure.

When you’re adding an expense category to your invoice, you also have the options to:

?? Attach a receipt, and

?? Mark the expense as billable.

#4: Calculate tax and discounts

Finally, remember to account for tax when calculating the total amount due for your client. Since tax rates vary across states, make sure you’ve included the correct percentage.

Things can get more complicated if you offer discounts.

For example, an early payment discount is an effective incentive to motivate clients to pay on time. However, it’s important to ensure that the discount is accurately calculated.

In Clockify, you can enter percentages for tax and discounts into designated fields, which will be reflected in the total amount

Final words

All in all, accurate client billing involves tracking every billable minute and expense and accurately calculating taxes and discounts.?

Using an appropriate method for time tracking and invoicing, such as reliable software, minimizes the risk of errors so you can confidently bill your clients.

To start doing all that today, sign up for Clockify.