Fixed price project are often billed using milestones. In other words, certain events mark the times when you and the client have agreed to send invoices. Here are some examples of milestone billing:
- Fixed amount, at agreed-upon times
- A percentage of the total, at agreed-upon times (often 1/3 at signing, 1/3 at the middle, and 1/3 and the end)
- All time and materials for an agreed-upon date range
Learn how to add invoicing milestones to your projects.
Mike with Standard Time® back with Ray White of Scoutwest and we are answering your questions on Standard Time. Welcome back Ray.
Ray: Hi Mike.
I have a questions about milestone billing. Can I within Standard Time bill 1/3 up front, 1/3 in the middle, 1/3 at completion. Is that possible in Standard Time?
That’s a very popular method of billing projects that consulting firms use. The client agrees I will pay you up front but you get started on this, pay you a third. Then I want to see you meet a milestone. Somewhere in the middle, usually a beta and then I’ll pay you a completion. That’s what you’re asking, right?
Let’s switch over to the screen I’ll show you how it works.
You’re looking at the timesheet now, I’m going to switch to a new screen. Go to the tools menu choose projects. Because this is on a project by project basis. I’m going to click on a project here and first of all draw your attention to the cost.
This is a $10,000 deal and you want to be paid in three installments. I’m going to go here to milestones and show you how that’s done. This milestone payment is how it’s done. You simply set up the percentage to 33 1/3 and you can bill a third of the project.
So the $10,000 project will be chopped up into thirds; first at signing, then somewhere in the middle and then at the end of completion. So that is how you would do that.
While we’re here I just want to point out a couple other ways you can bill your clients and bill jobs; these are usually for fixed fee projects.
So one of those is a fixed amount in this case when I meet a certain milestone the clients says yes, go ahead and bill me it’s going to be $11,000 and the client has agreed to pay.
Another way you can do it is with a date range. In this case I’m looking through all the time and expenses I’m going to bill that date range for the project. To answer your question; 1/3 here’s how you do it. We have this $10,000 project I’m going to go ahead and switch over to another screen. I’m going to the insert menu and choose new invoice. I have to have a client, so I’ve chosen the client, I then have to choose the project because these milestones are on a project by project basis. Then I’m going to choose the project here and you can see that $10,000 project is now billed on my first installment, $3,333.
That’s how it’s done, milestones.
Also in milestones, we all have that one client who has weird billing techniques. So with the milestones we can compensate how they want…
Yes, you customize exactly how that client wants it. You set it up on the project and away you go.
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