How to invoice for hourly work

The short answer

Agree the rate, the rounding increment and how often you invoice before you start. Log time as you go, with a date, the hours and one line about what you did. On the invoice, list the hours per day or per task, multiply by the rate, add tax if you charge it, and attach or summarise the timesheet. If the client gave you a budget, say how much of it is used.

Before the first hour

Most disputes about hourly invoices come from things nobody agreed at the start. Put these in the quote or the contract:

• The hourly rate and the currency.
• The billing increment: 15 minutes, 6 minutes or whole hours.
• What counts as billable. Calls, emails, travel, rendering time, research. Decide now.
• Minimum charges, for example one hour for any call or small change.
• How often you invoice: weekly, every two weeks, monthly, or at milestones.
• Any cap or estimate, and what happens if you reach it.

If you are not sure what to charge per hour, the freelance hourly rate calculator works it out from the salary you would otherwise earn, and the day rate calculator starts from the income you want.

Rounding increments

Few tasks take a round number of minutes, so you need a rule. The common ones:

Six-minute increments are standard in law firms. Fifteen minutes is the norm in most design and creative work and is what I use. Whole hours are hard to defend on short tasks, and clients notice.

Two rules keep rounding fair. Round each work session, not each tiny task, or five 2-minute emails become 75 minutes. And write the rule down, so "1.0 h" on a 50-minute call is not a surprise.

Log the time when you do the work

An hourly invoice is only as good as the record behind it. Reconstructing a week from memory on a Friday always comes out wrong, usually in the client's favour, because you forget the small things.

Use any tracker you like, or a spreadsheet. Each entry needs:

• The date.
• The hours, in your increment.
• What you did, in words the client would recognise: "Revised hero render after feedback, new lighting" rather than "Render v4".
• The project or task, if the client has more than one.

Keep non-billable time in the same log, marked as such. It tells you later how much of your week actually ends up on invoices.

A worked example

A week of work for a client at 65 per hour, 15-minute increments, invoiced weekly, VAT registered at 20%:

The arithmetic:

Hours: 1.25 + 4.50 + 2.75 + 3.00 + 0.50 = 12.00
Fee:   12.00 h x 65.00                 =  780.00
VAT:   780.00 x 20%                    =  156.00
Total                                  =  936.00

On the invoice this can be one line ("Design work, 5 to 9 October, 12.00 h at 65.00, 780.00") with the timesheet attached, or five lines, one per day. Both are correct. One line is cleaner on the invoice; separate lines save a round of questions with clients who check. I use one line per task for anything over a day or two of work and attach the full log as a second page.

If you are not VAT registered, the total is the fee: 780.00. Don't add a tax line you are not entitled to charge. My guide on what to put on an invoice lists the fields that must be on it either way.

How much detail to show

Enough that the client can see what they paid for without reading your diary.

• Too little: "Design, 12 h". The client has to ask what that was.
• Right: one line per task or per day, in plain words, with hours.
• Too much: every 15-minute block. It invites the client to question each one.

Big clients sometimes need the hours split by their own cost codes or purchase order lines. Ask once at the start and set up your log to match.

Caps, estimates and not-to-exceed amounts

Clients agree to hourly work more easily when there is a limit. There are three common versions:

1. An estimate: "We expect 10 to 14 hours." Not binding, but tell the client before you go over it.
2. A cap or not-to-exceed amount: "Up to 14 hours, 910.00." You don't bill beyond it without written approval.
3. A budget block: the client approves 20 hours, you report what is used on each invoice, and you ask before starting a new block.

With a cap of 14 hours at 65, the most you can bill is 910.00. If you reach 12 hours and the work is not done, tell the client then, not after you have done 16. Show the running total on each invoice: "Used to date: 12.00 of 14.00 hours". Clients rarely object to an overrun they heard about early. The guide to tracking project budget against hours shows how to keep that number in view.

When the client questions the hours

It will happen, usually on the first invoice with a new client. Answer with the log, not with a feeling. Send the entries for the days in question and explain what took the time: "The revisions on 7 October were the second lighting pass you asked for on the call."

If the client still disagrees, decide whether the relationship is worth more than the difference. Writing off half an hour once, and saying so on the invoice ("Call on 9 October, not charged"), costs little and often buys goodwill. Doing it every month means your rate is wrong or your scope is unclear. Fix that in the next quote instead of on the next invoice.

What you should not do is cut hours quietly before sending. The client never sees the discount, and your records stop telling you how long the work really takes.

Expenses and other costs

Stock images, fonts, render farm time and travel are not hours. List them as separate lines, at cost or with a handling fee if your contract says so, and keep the receipts. Don't fold them into the hourly line, because the client may account for them differently.

When to stop billing by the hour

Hourly billing suits small changes, support and open-ended work. On defined projects it punishes you for getting faster and makes the client nervous about every extra hour. Once you can predict how long a type of job takes, a fixed price is often better for both sides. The guide on how to price a freelance project covers when to switch.

When you are ready to send, the free invoice generator takes hours as the quantity, the hourly rate as the price, and any currency and tax rate, and gives you a PDF. If the client is slow to pay it, the guide to payment terms covers what to put on the next one.

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