Billing Before the Work Is Finished
A long matter billed once at the end produces one large document and one large conversation. Four alternatives, each with a different cost.
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- 04 of 08
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- The document
- Kind
- Analysis
Four ways of billing a six-month matter
Each month's work, billed the following month
Firm carries: Nothing beyond the usual thirty days of cash
Round sums against an eventual total, reconciled at the end
Firm carries: The reconciliation argument, and any shortfall if the matter stops early
An agreed sum when a named stage completes
Firm carries: Every month the milestone slips, and the argument about whether it completed
One bill when the matter ends
Firm carries: Six months of cash and the whole conversation in one document
The same matter, four cash profiles, and the one that produces a single large document at the end is the one that produces the argument. One firm's own matter, not advice about how to structure anything.
A six-month matter billed once at completion produces a single large document, read in one sitting, by somebody who has forgotten most of the work.
The billing question in “Billing Before the Work Is Finished” is easier to resolve when the underlying work has a timely, reviewable record. A professional-services team evaluating view the platform in more detail for time tracking with screenshots can connect hours with projects and client work, while the finance system remains authoritative for invoice totals, tax and settlement.
Billing during the matter costs nothing extra and changes almost every dynamic in this collection.
Additional context for “Billing Before the Work Is Finished” is available from Harvard Business Review management resources. Confirm current legal, tax and accounting requirements with a qualified adviser where necessary.
What a large final bill does
Compresses six months of judgements into one reading. Anything the client was going to query, they query all at once.
The total is also the largest single number they will have seen on the matter, with no intermediate figure to have normalised it.
Monthly in arrears
The simplest. Each month's work billed the following month.
Cash is even, memory is fresh, queries arrive one at a time and small. The cost is twelve billing events rather than one.
Interim bills on account
Round sums during the matter, reconciled against the full figure at the end.
Good for cash and for expectation-setting, and the reconciliation at the end is where it can go wrong: a client who has paid three round sums can be surprised by the fourth.
Milestones
An agreed sum on completion of a named stage. Works where stages are genuinely definable and the client controls none of the timing.
Where the client's own delays move the milestone, it produces the argument about whether a stage completed.
What interim billing does to queries
Spreads them. A query on month two is answered from a live file by people who remember.
It also surfaces a disagreement about rates or staffing in month two rather than month six, when six months of it has accumulated.
What it does to overruns
Makes them visible as they happen. A client who has seen four bills has a running sense of the figure.
That is the single strongest argument for it and the reason some firms avoid it.
The objection
That interim bills look like nagging, or that the client prefers one bill at the end.
Both are worth testing by asking rather than assuming. Most clients asked prefer monthly, and finance functions almost always do.
Billing on account
A request for money before work is done, set against the eventual total. Common in some professions, rare in others, and governed by rules in several.
Where it is used, the reconciliation should be a document in its own right rather than a line on the final bill.
The matter that stops early
An interim-billed matter that ends halfway has been paid for what was done. A completion-billed one produces a bill for a thing that never finished.
The second conversation is considerably harder.
What to decide at the start
The cycle, in the engagement letter, in one sentence. Monthly, quarterly, on milestones, or at the end.
It is a two-minute decision that is never revisited and shapes everything that follows.
Changing the cycle mid-matter
Reads as a cash problem at the firm, whatever the reason. If it has to happen, say why in the covering note.
What interim billing does to the firm
Smooths cash, obviously. Less obviously, it forces somebody to look at the matter every month.
A matter billed monthly is a matter whose hours, scope and overrun are reviewed twelve times. One billed at the end is reviewed once.
Most of the benefit is that review rather than the cash.
The reconciliation at the end
Where interim bills were round sums on account, the final reconciliation can be the largest single figure of the matter.
It needs its own covering note setting out what was paid, what the total came to, and what is now due.
A reconciliation presented as an ordinary bill is the most frequently disputed document in this whole arrangement.
Clients who prefer one bill
They exist, usually where the client's own process makes each bill expensive to handle, or where a budget is held against the matter as a whole.
Ask rather than assume. The answer determines the cycle for the life of the matter and takes thirty seconds to obtain.
The cycle in the engagement letter
One sentence: "We will bill monthly in arrears." Or quarterly, or on milestones.
Unstated, the cycle is whatever the billing system defaults to, which means it was chosen by nobody and matches nothing about the matter.
Changing to interim mid-matter
Possible, and it needs a reason given. "This is running longer than we expected, so we will start billing monthly rather than leaving it all to the end."
Most clients prefer it and say so.
The default worth having
Monthly in arrears for anything expected to run beyond two months, unless the client says otherwise.
It is the arrangement that keeps the bill close to the memory of the work, which is the condition everything else in this collection depends on.