How to Invoice for Hourly Work

When people estimate their working week from memory, they overstate it by 5 to 10% compared with a time diary, according to research published by the Bureau of Labor Statistics. If you bill by the hour, memory is a poor ledger, and an invoice built from it is either generous to you or to your client. Here's how to get from honest time records to an invoice a client pays without questions.

Record Time as You Work, Not at the End of the Week

Memory errs in both directions. Long weeks get remembered as longer than they were, while individual tasks get remembered as shorter: a review of the research found that people recall past tasks as taking less time than they did (Roy, Christenfeld and McKenzie, Psychological Bulletin, 2005). How you ask matters too. A follow-up BLS analysis found that "how many hours did you work last week" lands close to diary figures, while "how many hours do you usually work" overstates them by two to four hours (Frazis and Stewart, 2014).

Lawyers, who have billed by the hour longer than almost anyone, settled this long ago. The State Bar of California calls records made at the time of the work "almost universally acknowledged" as best practice, and treats time reconstructed later as much less likely to be accurate. Its billing advisory also notes that a run of round entries (8.0, 9.0, 10.0 hours) is probably an estimate. A timer you start and stop as you switch tasks is the simplest way to stay on the right side of that line.

Round Fairly, and Describe the Work

Two habits make hourly invoices easy to accept. First, round in small, disclosed increments. The same California advisory considers six-minute (0.1-hour) increments acceptable when the client knows about them, and flags quarter-hour minimums as a way bills get inflated. Courts agree: the Ninth Circuit upheld a 20% fee cut because a firm billed 15 minutes for emails and calls that took a fraction of that (Welch v. Metropolitan Life, 2007).

Second, describe each piece of work on its own line. A single entry reading "project work, 14 hours" invites a phone call; "homepage layout revisions, 3.5 hours" doesn't. The bar advisory calls lumping several tasks into one entry, known as block billing, a practice that "hides accountability". You're not a law firm, but your client reads your invoice the same way their legal department reads a lawyer's.

What the Invoice Itself Needs

In the U.S. there's no federal invoice format, but the IRS counts invoices among the records that support your income, and generally expects you to keep records for three years (six if income was under-reported by more than 25%). For hourly work, a clear invoice shows the period covered, each task or project with its hours and rate, the total, the due date and how to pay.

Elsewhere the rules are firmer. UK invoices must carry a unique number, both parties' names and addresses, a clear description, the supply and invoice dates and the amounts (GOV.UK), and HMRC's VAT guidance names an hourly rate as a valid unit price for services. In Australia, a GST-registered business must issue a tax invoice on request for sales over $82.50, showing its ABN and the GST. In Canada, what an invoice must show for your client to claim GST/HST credits rises with its size: your registration number from $100, and the client's name, payment terms and a description of each item from $500. This is general information, not tax advice.

A Simple Routine

• Track daily. Run a timer, or log time the same day, with a short note of what you did.
• Mark what's billable. Admin and pitching are real work, but usually not your client's.
• Invoice on a fixed rhythm. Weekly or monthly, so no batch of hours is old enough to be argued about.
• Review before you send. Read the lines as your client will: does every one say what was done?

What BillGrid Does Today

BillGrid has a timer you start and stop as you work; it keeps running if you close the tab or switch devices. You can also add time by hand, and see it by day or by week. Each entry carries a note and a billable flag. When you're ready to bill, Import to invoice gathers your time for a date range, client and project, billable only if you like, and builds the invoice. You choose one line per entry, with its date, project and note, or one line per project and task. Hours carry over exactly, to two decimal places, at the hourly rate you enter. Once the invoice is saved, those hours are locked against edits. The help article on billing your time shows each step.

Clients then pay the invoice by card, and BillGrid's reminders follow up if they don't.

Where We Think the Product Should Go Next

Checking this guide against the product turned up gaps we'd like to close:

• Rates per project and per person. Today one hourly rate applies to the whole import, so mixed rates mean separate imports.
• Optional rounding. A disclosed six-minute or quarter-hour increment, applied consistently, instead of rounding by hand.
• Budgets against tracked time. Projects can carry an hours or amount budget, but tracked time isn't shown against it yet.