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Invoice for hourly work: A guide for agencies & creatives
Published:May 08, 2024

Invoice for hourly work: A guide for agencies & creatives

Maybe you’re just striking out on your own — congrats! — and learning the best way to collect payment from clients for the first time. Or, maybe you’re a professional small agency switching up your payment strategy. Either way, it can feel like your invoicing options are overwhelming.

How do I charge? How do I send clients bills? How can I make sure I get paid on time so I can keep the lights on for myself and my team?

Those are all valid concerns — and hourly billing and invoicing may be your solution.

Find out if you’re a good fit for hourly invoicing, how to do it flawlessly, and best practices for getting those well-crafted invoices paid on time every time.

What does it mean to invoice hourly?

Saying you “invoice hourly” means you charge a set dollar amount for each hour worked. In other words, an hourly rate. That dollar amount may differ depending on the task. For example, a creative agency or freelancer may charge less per hour to create content for social media than they would for building a global advertising campaign.

An hourly invoice tracks all of the hours worked over a certain period (bi-weekly or monthly invoices are most common), multiplies each hour by the hourly rate for each task, and totals it so your client knows how much to pay you.

The description of services portion of an hourly invoice example

Even if you don’t charge a different rate for each service you provide, including a breakdown of work in your invoices is still helpful. That way, you give clients insight into what they’re paying for.

But that’s just a sneak peek of the best practices and details involved in creating professional hourly invoices. We’ll jump into more of those after we cover another important topic — why go with hourly at all?

Why use hourly invoices?

With so many options for invoicing, what’s the benefit of “billing hourly”?

You get paid for every hour worked

One of the most apparent benefits of billing and invoicing hourly is that you get paid for every hour tracked against a client’s project. Meetings? Your time is covered. Rework? You’re compensated. Is the project taking longer than expected to wrap up? You won’t struggle to make ends meet because your client will pay for that time under your hourly billing structure.

Scope changes? No problem

If a project grows in scope, you don’t have to dread the extra work because you didn’t account for it in your initial pricing. Hourly invoicing is highly flexible. You don’t have to stress if your client wants you to complete extra tasks. Simply send another invoice for hours worked above the original scope.

Clients just *get* it

One less-frequently mentioned benefit of hourly billing is that it’s straightforward. It’s easy for you to calculate and even easier for clients to understand. For clients, it ensures transparency and helps them track budget usage. Plus, they don’t have to worry about what is and isn’t within the scope of a project. If they know your hourly rate and their remaining budget, they can ask you for a simple time estimate to ensure they still have enough left in the bank for add-ons.

Challenges that come with hourly invoicing

Of course, every pricing strategy has its pitfalls. Here’s what you should know if you’re interested in adopting invoicing for hourly work.

It’s hard to provide estimates

Understandably, many clients like to understand what a project will cost upfront. And unfortunately, they often don’t have a solid understanding of how long most tasks take — that’s why they’re bringing in outside help to get the job done. Without digging into the intricacies to figure out how long something may take you, it can be hard for you to give them that solid price estimate they want.

Expertise isn’t always rewarded

Perhaps the biggest drawback to invoicing hourly is that the better and more efficient you get at your job, the less you get paid. That’s because you’re getting everything done in fewer hours. This factor alone is probably the strongest motivation for creatives to adopt other strategies, like flat rates, monthly retainers, and value-based pricing.

A comparison of different billing models for professional services by billing type, service, rate, details, and cost

It may be a little too transparent at times

Generally, transparency is a great thing. However, when clients know exactly how much you charge for every service you provide, it can open the door to several unfavorable circumstances. They can question whether you should be charging that much per hour, they may begin to poke at why specific tasks take X amount of time, and, worst of all, they might even use this knowledge against you to shop around for another firm or contractor who will agree to do it for less per hour.

How to create your first hourly work invoice: Step-by-step guide

If you’ve weighed the pros and cons and decided to adopt an hourly pricing and billing strategy, there’s just one more thing you need to know — how to build a professional invoice.

Build (or download) an hourly invoice template

To make sure your invoices are consistent and look professional every time, we recommend creating or downloading a ready-made hourly invoice template. We advise looking for one that is easy to customize and presents all the information the recipient needs to know in an organized way.

We put together a blank invoice template here that you can use to get your first basic invoice off the ground.

Add your business information

Shows the business information section of the invoice template and an example of how to fill it out

Place your key business information near the top of your invoice. This includes your name or the name you’re doing business as, the name of your LLC, or the name of your creative agency.

Contact information like email address and phone number is also good to include in case a payment department needs to contact you. An address is vital if the recipient will need to send you a physical payment — but it’s also helpful if they need to send you tax documents later.

If you already have a logo you love, you can include it here to make your invoice more personal.

Complete the invoice details

The 'Invoice details' portion of the invoice template appears, along with what it looks like completed

We highly recommend numbering your invoices to make tracking and referencing them easier (for taxes or payment reminders). If you love to be a nerd about this stuff, read more about how to number your invoices here.

Your invoice details should also include the date you sent the invoice and when it’s due. Putting this information up top makes it easier for recipients to find so they can pay your invoices more quickly.

Enter the recipient’s business information

The 'Recipient Information' portion of the invoice template, along with what it looks like completed

We’re almost done with the informational part — we just need to add a few client details!

In this section, you can include the person, department, or full name of the company you’re working with. You may also want to document their business contact information and physical address, just for your reference if you need to reach them.

Build a robust services section

The 'Descriptions of services' portion of the invoice template, along with what it looks like completed

Now, for the good stuff.

One of the most critical parts of your invoice is the services section. This is where you give either a name or description of a service, how long you spent on it, and your hourly rate for that service. Finally, you tally it up so your client knows how much you worked on this service and how much they’re paying. Repeat this with every service type until you’ve accounted for all work done during the invoicing period.

Under this section, you want to total your hours worked and the subtotal due. Then, we get to a part that can be somewhat sticky: taxes.

You probably won’t include taxes on an invoice if you’re a contractor or freelancer working on a 1099 basis in the U.S. Of course, this is a complex topic, so if you haven’t thought about freelance taxes or started saving for them yet, you can begin your research here.

However, if you’re a business and the recipient will owe taxes on this invoice, put that in a separate line item. We certainly aren’t tax experts, so we recommend checking in with your finance department to ensure you fill out this section correctly.

Last but not least, add one final line that shows the total due from the recipient.

Finalize payment instructions and notes

The 'Payment instructions & notes' section of the invoice template, along with what it looks like completed

Payment instructions sometimes get forgotten because they typically come at the end of the hourly rate invoice — but they’re critical. Instructions are where you specify accepted payment methods: credit card, check, money order, bank transfer, Venmo, etc. With each of these, provide the information the recipient will need to complete the transaction (whom to make checks payable to, your Venmo name, and so on).

If there is any information you don’t feel comfortable sharing in this format (like your full banking details), see if you can send it to the recipient’s financial department separately via a photo or zip file in an email, fax, phone, or any secure sharing service they may already use (like Dropbox).

You may also want to reiterate the amount due and by when.

And finally, add other notes as you see fit.

This section can be good for a few things, such as detailing what happens if payment is late. For example, you could add that the recipient will owe a late fee of X% every week that an invoice is overdue. (Read this helpful guide to learn more about late fees.)

It’s also the perfect space to end on a high note — a thank you. Research shows that using “please” and “thank you” in invoices could correlate with faster payments.

Best practices for getting paid accurately and quickly

None of us want to sit around reminding clients over and over to pay their invoices. After all, we’ve got (hourly) work to do!

These tips may help your invoices get paid more accurately and, if not super quickly, at least on time.

Explain how you track time

We mentioned before how transparency can be good and bad for hourly workers. However, one place where we really recommend being transparent is in how you track your time.

Whether invest in an agency-grade time tracking + project management combo like 7pace Timetracker for monday.com or keep it old school with Google Timer and a spreadsheet, clients are much more likely to take invoices at face value and pay without hesitation when they know you’re careful about monitoring your hours.

Tighten up those payment terms

Clarity in your payment terms is crucial to getting paid promptly, and so is sticking to them. Clients with frequent outstanding invoices will only change their behavior if they have to pay for their delinquency per your agreed-upon late fees.

Also, you may find it beneficial to shorten the time between issuing an invoice and payment being due. Sometimes, financial folks with a lot on their plates simply forget if something is allowed to sit long enough!

Consider early payment discounts

If you’re having ongoing payment problems, peek at your profit margins to see if there’s wiggle room for discounts. If so, it might be worth providing a slight discount to early payers. You may get paid a little less, but at least you can consistently count on it.

Enjoy your new hourly adventure

As you transition to working and invoicing hourly, remember the old saying that time is money.

That’s true for both you and your clients. Making it as an hourly freelancer or firm means consistently reporting your time so you and your clients can enjoy a transparent relationship and timely payment.

Agencies can add pro-level time tracking from 7pace to monday.com today by signing up for a free trial.

Whether you’re a budding freelancer or a seasoned agency looking into going hourly, use the tips, templates, and best practices outlined here to craft invoices that reflect the actual value of your work — and get promptly paid for it.

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