Project Financial Management: 5 Steps to Take Before You Bill the Client

Financial management is an important part of any project, especially when you work with your client on a time and material base. Making a client comfortable and in a full agreement with the services you invoice for is always a challenge.

Throughout my years of project management experience, I have developed 5 steps I always take before billing my client:

1. Budget Estimate Approval: Approving the estimate is a crucial step that you can never skip. Most of the clients have internal budgets in place and reporting to higher management is a required part of any project they are undertaking. Rightfully so clients would want to see the budgeted numbers in advance to report on project budget vs project actual.

2. Approval to Start Work: Even after budget estimate approval has been obtained, the client needs to approve the project kick-off date. You need to make sure that the proposed date is aligned with the client’s priorities and does not interfere with other projects. This would allow the client to meet the internal milestones, reporting KPIs, objectives and goals.

3. Communication Plan Approval: When you have a meeting that includes more than one stakeholder those hours are expected to be billed. Therefore, it is important to have a pre-approved communication plan whether it is for an internal follow-up or status call/progress/requirement gathering/review or retrospective meeting.

4. Delivery Type and Structure Approval: It is a common question that one will ask the client to assure that the definition of “done” is the same for you and for the client. Some clients might expect a delivery that is related to more than a code, or a demo, etc…The delivery type and the delivery structure should be approved by the client so when you think you have finished your work the client is on the same page with you. When the deliverable is met the client should send you an official approval acknowledging the delivery.

5. Periodic Approvals: Before you send a yearly bill to the client you need to make sure you get monthly approvals for the hours completed or before you send a monthly bill you need to get weekly approvals. You don’t want to surprise clients with unexpected hours on your invoice.