Invoicing and Getting Paid

You did the work. You delivered a strong proposal. Now you need to get paid — and this is where many consultants, especially early in their careers, lose money through bad habits, unclear terms, and reluctance to follow up.

Setting Payment Terms

Your payment terms should be in the contract before work begins. The three decisions:

When to Invoice

Milestone-based (50% deposit, 50% on delivery) is the most common for project work. For retainers, invoice at the beginning of each month. For hourly work, invoice biweekly or monthly — don't wait until the project ends.

Payment Window

Net-15 (payment due within 15 days) or Net-30 (within 30 days) are standard. Net-30 is more common in the nonprofit sector, but Net-15 is increasingly accepted. Whatever you choose, put it on the invoice.

Late Payment Terms

Include a late payment clause in your contract — typically 1.5% per month on overdue balances. You may never enforce it, but having it in writing signals that you take payment seriously.

The Deposit Is Non-Negotiable

Never start work without a deposit. This is the single most protective practice in your billing process. A deposit:

Confirms the client is serious about the engagement
Compensates you for the initial research and planning work
Reduces your financial risk if the engagement is canceled
Creates momentum — a client who’s paid is a client who’s invested

Fifty percent upfront is standard for project-based work. For larger engagements, 30% at signing with milestone payments is reasonable. For retainers, payment at the beginning of the month for that month’s work.

Clients who resist paying a deposit are the same clients most likely to cause payment problems later. A deposit isn’t just financial protection — it’s a qualification tool.

What a Good Invoice Looks Like

Keep invoices clear and professional. Include:

Your business name and contact information
The client’s name and billing contact
Invoice number (sequential — makes tracking easy)
Date issued and date due
Description of work completed (specific enough to match the contract)
Amount due, broken out by line item if multiple deliverables
Payment instructions (bank transfer, check, PayPal — whatever you accept)
Your payment terms and late fee policy

Pro tip

Use invoicing software — even a simple one like Wave (free), FreshBooks, or QuickBooks. It tracks what’s been sent, what’s been paid, and what’s overdue. Manually tracking invoices in a spreadsheet works until it doesn’t, usually around client #5.

Following Up on Late Payments

This is the part nobody teaches you: what to do when the invoice is overdue. Many consultants avoid following up because it feels uncomfortable. That discomfort costs real money.

Day 1 past due: Send a brief, friendly reminder. “Just a reminder that Invoice #XXX was due on [date]. Please let me know if you have any questions.”

Day 14 past due: Follow up again, slightly more direct. “Following up on the outstanding invoice below. Could you provide an expected payment date?”

Day 30 past due: Phone call. “I wanted to check in on the outstanding invoice. Is there an issue I should know about?” Sometimes the problem is bureaucratic — the invoice got lost in the approval process, or the person who signs checks was on vacation.

Day 45+ past due: Written notice referencing your contract’s late payment terms. At this point, you should also stop any active work for this client until the balance is resolved.

Cash Flow Management

Even with good payment practices, consulting income is inconsistent. A few habits that help:

Keep 3-6 months of expenses in reserve. This is your buffer for slow months, late payments, and unexpected gaps between engagements.
Invoice promptly. Don’t wait two weeks after completing work to send the invoice. Send it the day the deliverable is final.
Diversify your client base. If 80% of your revenue comes from one client and they delay payment, you have a cash crisis. Aim for no single client representing more than 30-40% of your revenue.
Track your accounts receivable weekly. Know exactly who owes you what, and when it’s due. Surprises in cash flow are almost always preventable.

Tax Considerations

As a consultant, you’re likely operating as a sole proprietor or single-member LLC. A few things to plan for:

Estimated quarterly taxes. The IRS expects self-employed individuals to pay taxes quarterly, not annually. Set aside 25-30% of revenue for taxes.
Business expenses. Track everything — software subscriptions, professional development, home office, travel to client meetings. These reduce your taxable income.
Retirement planning. No employer match means you need to fund your own retirement. SEP-IRAs and Solo 401(k)s offer significant contribution limits for self-employed individuals.

Consult a tax professional familiar with consulting businesses. The upfront cost pays for itself in properly structured deductions and compliance.

Check your understanding

A long-term client's invoice is 25 days past due. They haven't responded to your email reminder. You have active work in progress for them. What's the best approach?

Key Takeaways

Always collect a deposit before starting work — 50% upfront is standard for project engagements
Invoice promptly, track receivables weekly, and follow up on late payments without hesitation
Keep 3-6 months of expenses in reserve and diversify your client base for cash flow stability
Set aside 25-30% of revenue for quarterly estimated taxes and consult a tax professional

Next Lesson

Money is handled. Now let’s talk about staying relevant — professional development in a field where AI, funder priorities, and best practices are all evolving rapidly.