When you do consulting work for a client, you are often left with a few extra expenses which either weren’t discussed ahead of time or need to be invoiced by you after the project is complete.
The few projects which I’ve been involved in so far, I have needed to separately invoice the client because not all expenses were accounted for; not all expenses were approved after invoicing – but it’s always worth the try.
Invoicing the Client
The easiest thing to do is to create a spreadsheet and enter the expenses you incurred, including the consultation fee you and the client agreed upon.
Usually, the consulting fee comes out of payroll. Your incurred expenses fall under the “expense” category and are processed separately. This is a budgeting issue because your 1099 will only include your consulting work.
I’ve mentioned before that it’s best to offload as much of your spending onto your employer or client. This will make simplify taxes and you’ll save money doing so.
Ask for Resources
Before you make a particular purchase, contact your client to see if they have a way of getting that resource for you for less. This will save your client money.
I needed to pay for a particular research article but my consulting client was able to get that article for me for free using one of their subscription services.
A simple spreadsheet is best. No need to get fancy. If you have an EIN for your business then you should include it. This will be used to draw up the 1099-MISC.
I had food and beverage expenses which I didn’t include, though I probably should have done that.
When in doubt, it’s better to include it. They can decide which items to reimburse you. It isn’t unprofessional for you to invoice the client when you aren’t sure.
I asked my friend H. for her feedback after I had already submitted this invoice. She commented that I should have separated the expenses and consulting fee. I should have also included how many direct hours I spent consulting and how many indirect research hours I spent.
If you’re performing ongoing work, then it’s best to invoice your client once a month or once every quarter. Even if they run payroll every 2 weeks, it’s a lot of work for both parties to submit your invoice that frequently.
Keep meticulous records, obviously. If you spent something in cash then get a receipt, take pictures of the receipt, and include a note as to why this invoice was necessary.
Especially when you submit an invoice infrequently, you and the client will forget the reason why an expense was incurred.
The smaller companies won’t reject your consulting invoice, they’ll just tell you what changes you need to make. But they will reject particular invoiced items.
If you’re quite particular, like my friend H. is, then it’s good to have a consistent strategy on how you will address rejected items.
Obviously you listed an item because it was an expense you incurred while doing the consultation. Is it worth it to fight for it? Should you let it go?
My friend H. tell me that she’s always regretted not fighting for a particular invoiced item. Apparently the consulting client takes this as a sign of weakness and uses it later to reject other items which creates a lot of back and forths.
Her strategy is that if she list an item then she will not settle for nothing less than a partial payment for that item. An example she gave me was a bill for a long distance call she made while researching something for her client. The client rejected this, saying that it wasn’t directly relevant to the consulting work. She eventually was able to recover half of the cost of this expense. The other half she will write off against the income.
It seems that 1-2 months is a safe turnaround time to use. If you submit your invoice on January 1st then you should have your money by beginning of March, at the latest.
You also shouldn’t have to hound your client for the money.
Now, my friend H. is a baller because on her invoices she includes a fine print which states that she charges a 6% interest if at least 50% of the money isn’t paid within 8 weeks. Damn.