Why does weekly billing make more sense for both clients and consultants? Do you really want to waste valuable client time collecting payments? Are you tired of arguing over hourly line items?
Weekly billing is good for you & your business. It might sound scary at first, but you and your clients will both be happier in the long run. You might want to check out this article from a client’s perspective, too.
Why you should bill weekly as a developer
Have you ever started a project with the best intentions, but things just went south? Maybe you just can’t seem to communicate with your client, or they’re constantly asking for scope changes, or falling behind on payments. If you agreed on the usual terms (50% up front and 50% upon completion), or some variation, then you’re both out of luck. Maybe you’re realizing that you’ll have to find a way to endure x number of weeks until you can finish the project and receive the other 50%.
50/50 billing is broken. Both parties are exposed to risk than they need to be. The client takes on a lot of risk up front, especially if they’ve never worked with this dev before. On the other end, the developer ends up with all the risk for the back half of the project. What if the client keeps asking for more and more changes, holding that paycheck over your head? Or worst case, what if they keep delaying payment? Is it worth your time to track them down and maybe even sue them? No.
Weekly billing is the answer. It limits risk for everyone involved. At Torspark, I charge up front for a week’s worth of work. Below are the reasons why.
What’s your motivation?
If you’re invoicing based on an hourly rate, are you really motivated to be productive? Think about the incentives. The slower you work, the more money you get… Does that make any sense?
Getting paid for a week at a time will motivate you to be as productive as possible. The faster you work, the higher your effective “hourly” rate becomes. This makes a lot more sense. Your clients will be happy with how quickly you knock out tasks, and your income won’t be capped by a strict $/hour rate.
Tracking time is a waste of time
How much time do you spend each week tracking your time? How accurate are you? Down to the minute? Round up 15 minutes? Approximately half an hour? It all turns into a guesstimate anyway.
How much time do you think you lose switching back and forth from productive work to time tracking? I bet it’s more than you think. You could probably claim it takes you less than a minute, but are you considering the context shift your brain has to go through in the process? You’ve heard multitasking is bad. Time tracking is just another form of multitasking. If you’re a coder, I’m sure you’ve experienced the loss of productivity after having your mental model of the problem disappear after an interruption.
Side note: never interrupt a programmer.
Are you supposed to bill for the time spent documenting your time on each task? That’s a gray area. It isn’t real work, but it’s work you wouldn’t have to do if you weren’t working on a client project… You don’t have to worry about it either way if you just stop charging hourly.
Don’t get me wrong, I think it’s smart to have a good idea of how you’re spending you time. But, the level of detail that hourly invoices require? Unnecessary. When you do want to get an idea of where you’re spending your time, I recommend using Toggl.
Scope creep will happen, and that’s ok
It can be very hard to maintain your margin when selling a project at a fixed price. There are always changes to be made, that you and your client can’t possibly know about until after the project is under way.
Could we just change that one “little” thing real quick? Your Friendly Client
With a fixed bid, you have to make a comprehensive document detailing exactly what is and is not in scope. Then you’ll either have to act like a lawyer, referring to it every time the client wants to make a change, or eat the cost of making “one more little tweak” over & over. This doesn’t hurt too much here or there, but it adds up fast.
With hourly billing, there’s often a disconnect between what might be perceived as a simple change, and what could take you a few hours more than the client expected. This leads to arguments over what exactly were you doing for those three and a half hours on task #122. Of course, they don’t usually notice the big feature that you were able to deliver in half the time expected thanks to your expertise. Any given task might take a little longer than expected, but there are just as many that you’ll finish faster than expected, They usually even out over the course of a week.
You are not a bank
You shouldn’t have to spend time tracking down overdue invoices when you could be delivering value to your clients. For any decent-sized project, weekly billing limits your exposure & your client’s.
If you’re billing hourly, all of the exposure risk is on you, the consultant. You do a bunch of work for x number of hours, then send off an invoice, hoping to get paid within the terms of your agreement, which could be anywhere from net 15 days to 90+. That’s like an interest free loan just sitting out there.
If you’re charging a fixed price for a project, you usually collect payments upon achieving milestones. The simplest being 50% down, with 50% upon completion. Sometimes it could be paid it quarters or thirds, or even 30/30/30/10. All of these options help spread the risk a little, but you’re still stuck trying to collect payments.
Weekly billing makes it so you never have to act like a collection agency. You get paid for a week’s worth of work up front. You don’t have the liability of receiving a full 50% up front. Your client only has the limited risk of one week’s worth of payments. If they aren’t happy, they’re free to stop the project at anytime, without worrying about the big down payment they may have already sunk into this project. This should help motivate you to consistently do good work and deliver value too…
Conclusion
It might take a little convincing, but you and your clients will both be happier in the long run if you switch over to billing weekly for your services. If your clients need a little convincing, encourage them to check out the benefits of weekly billing for clients.
