Invoicing can be a large time suck for public relations agencies and it probably is one of the least fun things to do for creative types. But it is critical to have an effective process in place so that you can ensure your agency is performing at its best. Without effective invoicing, then you could just end up doing your job for free – and what is the fun in that?
Types of invoicing
There are 3 main ways to invoice clients for public relations agencies:
- Hourly billing
- Fixed fees & retainers
- Retainer against actual hours
According to the PR Agency Industry 2016 Best Practices Benchmarking Report by Gould + Partners, over 50% of small to medium-sized PR firms are billing under fixed fee engagements. This is probably one of the easiest ways to set up your pricing for invoicing, so kudos to you if you are doing this already. (Now, you’ll have to internally manage your profitability on the jobs, but you don’t have to worry about tracking every detail for your clients.)
But, no matter how you’ve decided to charge your clients, we have some great tips on how to effectively invoice them to save you some time.
Invoicing for Hourly Billing
If you invoice your clients for hours performed, then the first thing you need to do is find a streamlined system to track your time and convert that into an invoice for your clients. One system we have seen in action is tracking your time in TSheets (affiliate link + you get a discount on your subscription!) and then that will sync over to QuickBooks Online. As long as you are marking your time as billable, then when you go to invoice your clients, all you have to do is move the pending billable time over to your invoice.
Fixed Fees & Retainer Billing
As I said before, if you are billing your clients this way, then I think you have set yourself up for success when it comes to invoicing. (I’m still going to hold you accountable on making sure you are making a profit on each client!) But, one really cool thing you can do is set up recurring invoices to your clients. You can do with QuickBooks Online, Chargeover, and many other systems out there.
Once you have determined your monthly fee, then set up a template in your system and let it do the magic for you. Of course, you’ll want to test this out on yourself or an understanding client first.
An added bonus is to check and see if any of these systems can setup recurring auto-payments with the invoices. QuickBooks Online recently released that they can support auto ACH payments. Alternatively, you can convert to accepting credit card payments from clients, but make sure to build in at least 3% margin for that credit card fee.
Retainers Against Hourly Billing
This type of invoicing is going to be the most difficult to manage. First, you need to ensure you have a retainer amount set up. You will bill the client this and record it is a liability account in your books. Then, you’ll track your hours like noted above. Definitely look into a system that will automate pulling that time activity into your invoicing.
When it is time to invoice, you’ll want to show your client the initial retainer, then the total number of hours deducted in the current billing cycle. It helps to add subtotals so that your customers can see the total they have used in a month. QuickBooks Online doesn’t have a lot of features to automate the retainer process. As you can see, this isn’t the prettiest layout of explaining the retainer, but we still have some tricks up our sleeves to make this even better.
Also, make sure you have communicated when a retainer will be replenished and when it won’t. If you have a retainer of 20 hours but just spent 1 hour in the first month, are you going to charge for that hour or just reduce the retainer? At what point do you use the retainer? Some agencies always keep that balance on hand and use it if there are payment issues with the client. Others, draw down on the retainer and have a point where they request it be replenished.
As you can see, there are many different ways to invoice your clients. I hope our invoicing tips have helped some. We strongly recommend using technology for good so that you can streamline as much of this as possible. You really don’t need to deal with this headache every month. And, of course, if you want to outsource any portion of your invoicing or bookkeeping, we are here to help!