Invoicing clients has many steps. If you want to invoice correctly, it’s more steps than you’re probably thinking of. One step that many freelancers and small businesses forget about is putting together project estimates.
Typically we like to get things done as quickly as possible. Most of the time that means eliminating extra work. Creating and delivering a project estimate is just another thing that adds to your growing pile of tasks. So what’s the point? Are they actually important?
Here’s why you should use project estimates when invoicing clients.
Eliminates risk.
Moving forward on any project is a risk for both the client and contractor. For you, it’s going to require time and effort. For the client, it’s going to cost time and money. Creating project estimates allows you to assess the potential returns comparable to the cost. The more thorough your estimate, the more accurate you can be when assessing risk.
For example if you’re building software you should provide the client with a detailed scope that outlines a feature by feature cost for development. This way your client can determine if they have enough funds to complete the project. As the contractor, your ultimate goal should be to finish development on time and without issues. This way, the client will likely return for more work in the future. If the project flops because the client is out of money it’s a loss for both of you.
You won’t need to have any ‘uncomfortable’ conversations down the line.
When building a project estimate, you’re forced to think of every possible scenario. This is because you want to ensure accuracy. This will help prevent any awkward situations down the line.
For example, let’s say you’re a designer. You have tons of experience with web design, but are just getting started with mobile. Your client wants both web and mobile from you. If you decide to take on the project, you’re going to need to tell the client mobile will take longer than usual. Your project estimate is a great place to do this.
Starts the relationship on the right foot.
If your engaging with a new client, project estimates are especially useful. This is because it kicks the relationship off on the right foot. It shows your willing to go the extra mile to ensure the client is comfortable moving forward with the project.
You’ll detail the services provided, costs, check-points, and much more. If you kickstart the project on a positive note, it’ll set a precedent from the rest of the working relationship moving forward.
You’ll be able to budget accordingly.
Last but not least, project estimates will allow you to budget accordingly during the engagement. If you’re a freelancer, cash flow is essential for your survival. If you run out of cash during a project, you’ll be stuck asking the client to pay early or worse. When you work through an estimate, you’ll be able to plan a payment schedule and budget various expenses around that.
One piece of advice I can give is to always plan for “rainy days”. When budgeting, you should always give yourself some breathing room. This can be an emergency fund, asking for a deposit, or an expedited payment schedule. Whatever it is, always have a back-up plan.
There’s simply no denying the effectiveness of providing a project estimate. That said, make sure you put one together before starting work for your next client.
