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Invoicing

Invoicing

Invoicing

(OP)
I am a sole proprietor. I often have clients who only need less than an hour of work for me to accomplish the task they need completed. Depending on the client, I like to have some sort of minimum invoice (say 2 hours of work minimum). For a repeat client who give me steady work I often bill them for the time it takes to complete a project at my hourly rate. However, I find creating invoices and tracking them takes far longer than the actual task. I don't see invoicing a client for 2 hours when the task was completed in under 1.

For example, just today I had a repeat client ask me to run a quick deflection calculation on a bent plate. I talked to the client, calculated the moment of inertia, calculated the deflection all in about 30 min (it took a little longer than anticipated as I wrote a quick spreadsheet to run the moment of inertia calculation just in case it failed and I needed to change something in the calculation). Tracking this invoice is going to be a pain as it is so small, but these are the types of projects I typically get from this client.

What do others do in this instance?

RE: Invoicing

There are software programs, presumably, Quickbooks?, that could help you with that. You'll need to create a basic template that you can fill in the task description and the billing particulars and pull down some sort of client list.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert! https://www.youtube.com/watch?v=BKorP55Aqvg
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RE: Invoicing

Don't know that we have a set standard at our firm. I personally don't usually bother billing if it's under about 4 hours' worth. We have enough big jobs that the 4 hours is essentially round off error and we don't have a ton of stuff that small.

That said if I did a lot of 'half hour here, hour there' type work with a given client I'd probably see if we can work out just an hourly rate with them. Then would bill it all at a regular basis (monthly, quarterly, whatever) and include comment backup with the invoice so they can track what items go with which job. If there's a ton and client is worried about getting a humongous bill, could maybe look at billing whenever I cross a certain dollar threshold instead.

Agree with you that spending time chasing people down for a small invoices is often more effort than it's worth. We see this sometimes in contract negotiations too. Usually it'll be contractors who send us the same standard form contract that they use with their subs for our engineering work. Tons of onerous and uninsureable language in those standard contracts that we usually have to go back and forth with their legal team for weeks explaining why we can't agree to some clauses and why some other ones don't even apply to us. It's not uncommon for us to blow more money on contract negotiations than the contract is worth in those situations.

RE: Invoicing

I am a sole proprietor as well. For good clients, I usually just keep a metal tally of these 15 minute jobs and bill them occasionally or just tack it on to a future bigger job. Generally, however, I have a 1 hour minimum ($175) for simple stuff. I do everything by the "hour," but in the end, if I actually charged for the time I have in the job, I would not make any money. So I charge what the job is worth and rarely get complaints. Most jobs I charge 3 hours for take me less than an hour to finish so it works out nicely.

RE: Invoicing

Similar situation here. We have a 2 hour minimum charge. Generally jobs that I do require travelling to a job site, and the travel time counts, too.

If someone calls me with a question that I can answer on the phone, that's not a real job and doesn't get billed. Frequently those lead to real jobs.

RE: Invoicing

In my business, I chalk up < 1 hr tasks to "goodwill" and never bill them. For a while it looked like I was going to have enough of these 45 min tasks to make a difference in the bottom line and I realized that EVERYONE has some sort of company credit card. Getting set up to take credit cards is relatively easy, and the fee is way less than you'll spend chasing $200 invoices.

It sounds like your business has enough of these short duration tasks, that it would be worth your time to take credit cards. When I worked for a big company we were encouraged to use our procurement card for anything under $5k and then relate it back to a cost center at the end of the month (we had a program to facilitate that). It was super easy for both client and consultant.

Your clients may appreciate that service, while you can keep your invoicing system for the multi-day, multi-asset kind of tasks.

David Simpson, PE
MuleShoe Engineering

In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist

RE: Invoicing

We are a small engineering firm and have had the same problems all of us have with invoicing. We use an online service that does all of what you want. It is a time-billing system that can handle a variety of conditions. Takes less than a minute to set up a client or project. It is inexpensive and we've been using it for two office locations for about 5 years.

Here's a link to their website...

Harvest

RE: Invoicing

FWIW, I prefer that clients pay me by check. Most clients prefer it anyway and I prefer to only have to keep track of one income stream. I have a few that pay using Paypal and Credit cards and it is just a time and fee suck for me to deal with each week and at tax time.

RE: Invoicing

In the past where I have done multiple tiny projects for the same client, I have opted to bill them monthly, one invoice encompassing however many projects you worked on. In my software I could list each project so that they could sort out which amount went to which project, or I have seen a cover letter added that provides a breakdown.

Project 1234 - Design beam in house 1.5hrs @ $175/hr $262.50

Project 2345 - Check footing 1.0hrs @ $175/hr $175.00

Project 3456 - Site visit to 123 North Street 3.5hrs @ $175/hr $612.50

TOTAL xxxxxx

RE: Invoicing

I learned from my attorney to charge for everything including 5 minute increments. That's how he charges me. If I have to consume 5 minutes of his time because of a cantankerous Client, the Client will pay for it. I do that to ensure I have the Client's attention.

I invoice by the month, after tracking all time, and I send it with a transmittal to clarify what they are receiving from me. It creates a paper trail for me, in case it is ever needed.

I learned some good lessons a few years ago.

Pamela K. Quillin, P.E.
Quillin Engineering, LLC
NSPE-CO, Central Chapter
Dinner program: http://nspe-co.org/events.php

RE: Invoicing

Quote (lacajun)

If I billed in 5 minute increments, I would be the laughing stock of the construction community. I typically bill in 15 minute increments.
Additionally, how on earth do you track 5 minute intervals? Seems like you would spend more time doing that than doing design work.

RE: Invoicing

XR250, to each his own. My attorney taught me a lot. Once I got organized, it's not too hard. I also charge for my timekeeping efforts. It gets their attention and reduces 5-minute phone calls as well as idle chit-chat. Some companies have a great deal of disorganization, i.e., chaos, which spills over to projects. Having a Client pay for their disorganization is an attention getter. I don't hesitate to tell them my method and reasons for my method.

I don't know your business so it may not work for you.

In the last few months, I've learned other engineers are only as granular as one hour and they charge a lot. It gets the Clients' attention and helps them get organized and not waste time. I'm thinking...

That is ultimately the goal, get their attention so they don't waste my time or theirs, really.

Pamela K. Quillin, P.E.
Quillin Engineering, LLC
NSPE-CO, Central Chapter
Dinner program: http://nspe-co.org/events.php

RE: Invoicing

At my current job, we track time to the nearest 0.1 hr (6 minutes), so we're pretty close to Pamela's 5 minutes. Other places I have worked charged only to the nearest 1/4 or 1/2 hour, but no finer.

==========
"Is it the only lesson of history that mankind is unteachable?"
--Winston S. Churchill

RE: Invoicing

Working for a precaster I often appear on the other side of the fence with the contractor. I've been in the situation where an engineer deemed my queries "cantankerous" enough that they started billing the contractor for my RFIs. I feel there are very few things higher on the list that show you're not there to help out a project than by nickle and dimeing someone. You're essentially saying that what I'm saying isn't worth your time to ensure the success of the project so I gotta pay up or shut up.

I feel that most members of a project "team" should be awarded 5-6 minutes with another party for a phone call, email, or a quick reply to a simple RFI. If not, the other members of the project team are now going to weigh whether a quick clarification on a dimension (for example) is worth the hassle of adding onto a growing fee. Yes, it's likely only a small amount in the end but it's still a cost that many other engineers wouldn't bill. Yes, this means it may add up on the engineers side as well but I would counter that if it's significant then that is the time you should charge for it, not before.

The smoothest projects I've worked on were ones where I could call up the EOR and say "Hey, the hooks you drew don't fit in the rebar cage. Would you be open to us submitting an RFI on changing these to headed bars? Yes? Great." And not worry about being treated as "cantankerous".

Obviously I'm not saying work for free nor am I saying that idle chit-chat isn't something that you may need to quash. If your jobs consist of 45 minute jobs then of course bill 45 minutes and any additional 0.1 hours or whatever. If a project member is truly being a pain then ensure your contact language specifies when you will start billing for extra things and remind them politely about it. But if your job is $10,000 worth of work then ensure that an aggregate extra hour worth of emails, phone calls, etc is factored into the hourly rate and scope.

Feel free to disagree with me; we all work in different industries, locations, and projects. I'd like to think I have a broad perspective but will happily hear other opinions.

Addressing the OPs original question. If it's a new client I would charge them a minimum fee, no matter the scope. If it's a repeat client then in the past we've arranged an hourly rate and billed them monthly or biweekly. Some months had only an hour billed; some months had 20 hours. It worked well for everyone; they could call us up for a half hour question and we would bill them. If they added on a 6 minute email RFI or whatnot we didn't bill that as it was already included in our hourly rate we quoted them.

Professional Engineer (ME, NH, MA) Structural Engineer (IL)
American Concrete Industries
https://www.facebook.com/AmericanConcrete/

RE: Invoicing

TehMightyEngineer, you're on a different side of engineering than I am. If I'd made a mistake on space for "hooks in a rebar cage," I would investigate the situation to determine how to handle it.

I want to ensure the success of every project I do. Since the success of each project means controls on scope, schedule, and budget, those are what drive my policies.

My first project as a solo practitioner taught me a lot, which is why I use "cantankerous" and that seems to have upset you. Trust me, that cantankerous Client cost me a lot of health points as well as a lot of cash. Tens of thousands in cash.

Sometimes people over estimate what they want to do. I'm not stupid and I realize they're over estimating what they want to do. I mentioned it yet they continued. That's where the trouble began...

However, I talked to other engineering firms about my experiences and they are sticklers on timesheets and charge more for "high maintenance" Clients. Why? Time is money. Sometimes Clients will nickel and dime engineering firms to death. I'm not making ignorant or stupid decisions about how I run my business. Nor am I unethical and I am required by the State of Louisiana to get ethics training to maintain my license. If you want to imply that I am unethical and/or not a team player, you need to think again. I've worked on way too many projects in my time, with a spectrum of people, to make sure the project is a success.

There are some bad companies out there and those are the ones I want to be prepared to deal with, if I don't catch red flags in time. I also learned from my attorney and others, if things are going well and you can afford to cut a project some financial slack, do it. Do it at the end of the year as a Christmas gift. So, you see, I'm not the total cad you may think I am. It's a shame I have to explain that to a fellow engineer.

If you have a bad Client, which I have, you start to understand how to protect yourself. People talk and they talk between companies. I've learned from them and my attorney.

As an engineer, I trust that you know how to conduct yourself. I would appreciate the same consideration.

Pamela K. Quillin, P.E.
Quillin Engineering, LLC
NSPE-CO, Central Chapter
Dinner program: http://nspe-co.org/events.php

RE: Invoicing

Teh, I'm surprised you don't see the other side of the coin... the guy who is bugged ad infinitum for the silliest of questions, "but the call will only take a couple of minutes". That "couple of minutes" adds up FAST, because it happens so often, not to mention making me lose track of what I was currently working on.

Make it a rule, and if the person at the other end doesn't abuse it, don't add the charge to the invoice. If they do abuse it, they've been notified of the charge ahead of time.

Dan - Owner
http://www.Hi-TecDesigns.com

RE: Invoicing

I believe I came off the wrong way; entirely my fault. Again, feel free to disagree with me.

I'm not saying that nickling and dimeing someone is wrong; rather that it's use shouldn't be applied to everyone as a default in my opinion. As MacGyver said (and I did as well):

Quote (Dan)

Make it a rule, and if the person at the other end doesn't abuse it, don't add the charge to the invoice. If they do abuse it, they've been notified of the charge ahead of time.

Forgive me if I address some other points in detail. Not trying to personally attack anyone here but it sounds like you got the impression I was; just trying to debate.

Quote (Pam)

If you want to imply that I am unethical and/or not a team player, you need to think again.

I didn't think I implied unethical behavior but if I did I apologize; that was not my intent.

Team player was the intent, though I was apparently more aggressive than I intended. Again, with the caveat that my original point was I don't feel it's in the spirit of "team player" to nickle and dime everyone as a default.

You reference lawyers a lot. Nobody wants to talk to a lawyer for many reasons, but nickle and dimeing is one. The result is people will try to cut corners when they think they can if it avoids another 15 minute bill at a lawyers rate. Thus, lawyers become a (un)necessary evil in any endeavor involving them. I don't personally feel that we should emulate that practice as engineers.

Quote (Pam)

Time is money. Sometimes Clients will nickel and dime engineering firms to death.

I'm not saying we should bend over backwards for someone who will happily walk all over us. Quite the opposite; I'm a firm believer in a fair price for our work as engineers. We can and should utilize contract language that lets us cover and prevent someone who seeks to take advantage of us. Simply my opinion is that this shouldn't be the default for those who are not trying to nickle and dime a firm to death (either intentionally or otherwise).

Quote (Dan)

not to mention making me lose track of what I was currently working on.

This is definitely why I qualified that my experience may differ. The consulting jobs for industry and especially the precast work requires me to be able to bounce from many different projects in a day. I fully agree it costs efficiency but as it's my day-to-day work I forget that this isn't typical.

However, this is why we have voicemail, email, etc. To put tasks on hold while we get to a good stopping place.

Quote (Pam)

If I'd made a mistake on space for "hooks in a rebar cage," I would investigate the situation to determine how to handle it.

You're right, bad example. I would hope that most engineers are willing to deal with a problem that they share fault in at no cost. I know this isn't always the case with some less ethical engineer but I unintentionally implied that a fine billing practice equated with such poor ethics. Not my intent.

Quote (Dan)

I'm surprised you don't see the other side of the coin...

Perhaps it's because I'm often on both sides of the coin simultaneously that I felt it merited playing devils advocate here. I often find myself as intermediary between EOR and contractor. So, it's not that I don't see the other side of the coin but that perhaps I was concerned that each side of the coin wasn't being fully considered.

Quote (Pam)

I would appreciate the same consideration.

It would be unethical for me to do otherwise, hopefully I've explained my position adequately. For emphasis, please disagree with me. I'll happily say I agree or disagree but I don't feel this is an instance where only one answer can be the right one.

Professional Engineer (ME, NH, MA) Structural Engineer (IL)
American Concrete Industries
https://www.facebook.com/AmericanConcrete/

RE: Invoicing

The real answer is that it depends. What is standard in your industry and your area? Anything that requires a seal is fair game, IMO. That would include a beam deflection calculation. We send plenty of sealed report addenda for no charge where I work. But we also charge more on the front end than a lot of competitors. It is part of providing excellent customer service, justifying the higher cost. However, there is a limit. That limit typically depends on how valuable the client is and how much work is involved. There's no formula. But we deal with mostly lump sum work, so it might take more time than its worth to write a change order, get it signed and then do the extra work. However, you need to be careful when doing extra work outside of your contract scope without a change order that defines and limits your new scope, lest you get accused of being responsible for even more things than you expected in your own mind.

RE: Invoicing

TehMightyEngineer, thank you for the clarifications. Much appreciated.

I've worked with engineering firms that charged the Client for everything including pencils, paper, etc. They tracked everything, from what one told me. They assumed no business expenses for projects. To an extent, for my solo business that's extreme. For a large firm, it may not be.

Pamela K. Quillin, P.E.
Quillin Engineering, LLC
NSPE-CO, Central Chapter
Dinner program: http://nspe-co.org/events.php

RE: Invoicing

I would stick with a minimum of an hour charge or whatever you think is necessary for typical small tasks you do.

Simple solution is to use a preloaded invoice template in word or excel and just keep them in a file to be marked as paid. Once they get paid you can transfer them into a paid folder. Or they have nifty phone apps that keep and track everything for you. QuickBooks would take care of everything but that has a good learning curve and is probably more than you need.

RE: Invoicing

(OP)
Well, I am sticking with the somewhat minimum charge or 2 hours for new clients and no less than 1 with existing clients.

The original client that generated the OP is not killing me on the smallest of projects. He wants me to prove something will work when I told him it won't no matter how hard we try. Been through 4 iterations already. To his defense he is dealing with an EOR who is sticking to a code interpretation and is correct.... but there is no way to make the correct code interpretation work.

Recently I have been sucked into a YouTube series called "Pure Living for Life" or something like that. A man and a woman are trying to build a debt free home in the middle of nowhere. I think they have been working on this project for 2 years. This ongoing project/series specifically highlights the issues with the invoicing practices indicated above. They are constantly calling their engineer as asking questions a qualified GC would be able to answer on his own. I can only image two outcomes:

1) The engineer wants to reach through he phone and strangle those two.
2) The invoice for the engineering is going to be huge.

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