Business Management – Be upfront about billing

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This is another installment of my Business Management posts, geared towards those of us who are business owners and/or consultants.

Being upfront about billing goes a long way when you’re dealing with your clients. People hate being surprised by bills. This is the same no matter what industry you’re in. Most of us have been there with cell phone billing at one point or another, where we suddenly got some huge bill for ‘pay per use’ services that we didn’t know cost every time we used them. No one likes to get surprised by a bill, and it doesn’t do much good in the way of client relations.

My business, which you know provides 3rd party IT support services to clients, is often hired on to overhaul networks. Usually this involves replacing servers, routers, switches and other related hardware. When a client wants this done, we of course provide a quotation beforehand. Quoting hardware and equipment is easy. There’s a straight forward cost and that’s that. Quoting time and hourly billing, that’s a different story.

Estimating time can be very tricky, and you have to be careful. If you do it wrong, then you will either lose money (because you’ll be working the extra time without being able to bill for it), or you’ll be billing a lot more than you estimated. If you do the latter, then your clients are going to start wondering about things. At best, they will wonder if your estimation abilities are no good. At worst, they will think you purposely estimated low to beat out any competing quotes, and just planned to bill extra from the beginning. Really, both of these scenarios aren’t good for you or your business’s reputation.

Personally speaking, I’ve done a lot of ‘free’ work. In the early days, I often underestimated the amount of time it would take to complete projects or installations. In most cases, I just sucked it up and did the work anyways, without billing for it. Yes, I’ve done dozens and dozens of hours of work for free, because I screwed up time estimates. That said, I was personally doing the work, so I personally was out money, but my business wasn’t taking a loss because of it. I’ve learned from that and have gotten much more experienced, and now I can assess time requirements with a much higher degree of accuracy.

However, in some cases, you simply can’t ‘dismiss’ the additional costs. There will be times where you bring in another 3rd party to do work for you, like an electrician to do cabling. In these scenarios, it’s not as simple as you just putting in more time and sucking it up, as you’re going to have a real bill to pay at the end. In cases like this, the only suggestion I have is to be upfront with your clients. If you screwed up, or if costs are growing significantly larger than your estimate, let you clients know. Explain what’s happened. In some cases, this won’t really be anyone’s fault. If a building is not constructed to code and an electrician has to spend more time on the cabling runs, that’s not necessarily your fault. You estimated the installation based on the building having been built to code. You can’t see behind walls before the job begins. In cases like that, your clients will most likely understand.

In any scenario, it is extremely important to be as upfront as possible about billing. Remember, clients will respect you and appreciate that you’re willing to inform them of increased costs beforehand. They may not be happy about them, but at least you aren’t just quietly putting them on an invoice and hoping no one notices. That causes more frustration and broken trust than just being honest and upfront about it.

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Martin Lehner

Martin Lehner is an technology professional working for an IT services firm in Whitehorse, Yukon (Canada). He has been working in the technology field for over a decade. With a degree in Business Admin and numerous industry certifications, Martin leads a team of IT professionals that provide third party support for clients. Originally starting a company to offer web development services, Martin quickly realized that clients wanted the entire spectrum of technology services. When Martin is not at work (which is not often, since his company offers 24/7 support), he is busy at home spending time with his family.

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