In the old days, agencies billed clients only after the work was completed. Sometimes, on long projects, we sat on the money for months; once our agency waited a year without getting any money for a very large project. Of course, that was foolish; but that's what the times demanded. Business loans were easy to get, and agencies were not in the habit of billing their clients in advance. Much has changed over the past few years. Now no one can afford to be their client’s bank—not even the banks, who will only lend money to those who don’t need it.
Enter progressive billing. Progressive, or progress billing is the practice of billing the client for work completed on a monthly basis, whether the project is completed or not. Many agencies now use this technique to improve cash flow, and if it is sold and administered correctly, it is generally acceptable to clients. The key is information; clients need to have a clear understanding of how the project is progressing in order to pay for work that is not yet delivered.
When progress billing, we suggest that you construct your invoices to look something like this.
This invoice for work completed June 1, 20XX through June 30, 20XX
Initial Project estimate May 2 20XX: $13,500.00
Previously billed: $1,300.00
This Month’s Bill: $8,456.00
Please pay this amount by July 15, 20XX
Total Billed to Date: $9,756.00
Remainder to Be Billed: $3,744.00
Some clients (government contractors or non-profits, for instance) may demand additional details/itemization on work performed during the billing period; attach a statement page listing hours worked, outside charges incurred, etc., only if necessary. As with estimates, clients should be given a one-line invoice—they’re buying the whole job, not pieces.
This gives the client a sense of what they are paying for this month in relation to the total cost of the project. It only makes sense. If you were the client you would want the same kind of detail. It is amazing, however, what agencies put in front of clients and expect to be paid for.
Be professional in all your dealings with clients. That’s the only way to earn your way to better assignments. As one agency owner we know says, “If you can’t play with the big dogs, then stay on the porch.” Good advice.
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