Minnesota

Companies:	17,513
Products and Services:	427

Articles and publications:	63
Tenders & Vacancies:	1

Is your Company in our Directory?

How to do Time and Material Invoicing in Field Service: Invoicing Tips with Free Template

Recently updated

3/18/2024

Learn all about time and material invoicing for improved field service management. Use our free templates and invoicing tools to streamline payments.

How do I get paid on time and in full?

This is a question that keeps many service business owners up at night. The unique thing about field service is that the actual job takes place outside the office, and in most cases, the owner is not present there to collect the payment. Even if you are, there is no guarantee that you’ll get paid instantly or for the total amount—for a host of reasons. But perhaps the most significant reason for delay, in the case of field service management, is an inaccurate invoice. If you cannot provide an invoice that matches the estimate or satisfies the client, the chances are really slim when it comes to getting paid on the spot. And this is more likely to occur if you are working with a time and material pricing model.

Sounds familiar? It has got to be. You are not alone in suffering from the hassles of time and material billing. But this is something that you cannot overlook at any cost, for a delayed or missed invoice is going to seriously affect your revenue and sustainability. But there is a simple solution to this problem.

Field Promax Provides the Best-in-Line Invoicing Solutions. Sign up to learn more.

Every day, new service-providing businesses are emerging across the globe. With the advent of new technologies, it is now possible to organize all of a company’s field service activities on a single platform in order to provide a better service and customer experience. Known as field service software, this amazing digital tool can help you streamline your workflow, including billing and invoicing.

In this blog, you are going to learn two important things—how to create a perfect time and material invoice to get paid on time and, more importantly, how to do it fast and accurately with field service software. To help you further, we have also put together a few worksheet samples that show how to do this kind of invoicing correctly. You can also go ahead and download them to use as your time and material invoice templates as well.

Fixed vs. Time and Material Invoicing: Market Best Practices

Before we tell you how to do time and materials billing, let’s get a few basic things in order.

When it comes to invoicing in field service, there are two primary models of invoicing that are accepted as industry practice, i.e., a fixed pricing invoice and a time and material pricing invoice.

In a fixed-price contract, the service provider agrees to finish a job within an agreed-upon total cost. Many project owners like the set price method because the costs and timelines are known ahead of time, but the contractor takes on more risk in this scenario. If the project plan is clear and there aren’t too many change orders, the price shouldn’t change from what was agreed upon at the start of the project. However, if things change and additional services or products are required during the project, the pricing may vary. And that is going to be a problem if the cost is determined beforehand.

To avoid such risks, billing for this type of deal is typically based on the percentage of work completed within a stipulated time. Fixed-price contracts often include bonuses and incentives for meeting certain goals and finishing early. This pricing plan is easier to manage because owners don’t have to send detailed bills. Before the project starts, the price is set and agreed upon.

The time and material billing model, on the other hand, is a way to bill the client based on the price of materials and the cost of hourly labor. Usually, everyone agrees ahead of time on hourly rates, costs for equipment usage, markups for any subcontractors, along with supplies.

This way of setting prices is usually more flexible than the fixed price model. Like a fixed-price contract, a time and materials billing model would still need the whole project scope to be planned out in advance. The job would have to be done in stages, though. Every time a bill comes in, the contractor and project owner get together to talk about the time and products used. This model takes a much more comprehensive approach to managing a job order and, therefore, is rather popular in terms of field service management.

Field service management is made easy with Field Promax. Sign up to get paid on time.

Advantages of Time and Material Invoicing

Time and material invoicing is regarded as a practical and transparent approach for businesses. Its flexibility, adaptability, and transparency make it a favorable choice for industries where project dynamics are subject to change. By aligning the invoicing method with the project’s nature, businesses can enhance client relationships, encourage efficiency, and ensure accurate compensation for their efforts.

Here are some more advantages to using this method:

- Flexibility and Accuracy

Time and material invoicing offers flexibility by charging clients based on the actual hours worked and the materials used. This method ensures accuracy in billing, as clients pay for the exact resources devoted to their project. It eliminates the risk of overcharging or undercharging, providing a transparent and fair billing structure.

- Adaptable to Changing Projects

In dynamic projects where requirements may evolve, time and material invoicing prove advantageous. It allows businesses to adapt to changes smoothly, accommodating adjustments in project scope without the need for frequent renegotiations of fixed prices. This flexibility is particularly valuable in industries where project specifications are subject to change.

- Client Transparency

Clients appreciate transparency, and time and material invoicing delivers just that. With detailed breakdowns of hours worked and materials used, clients gain insight into the tangible efforts invested in their project. This transparency builds trust and fosters open communication between businesses and their clients.

- Suitable for Complex Projects

For intricate projects with uncertain timelines and variable requirements, time and material invoicing is a suitable choice. It allows businesses to bill based on the complexity of the work and the actual resources expended. This method ensures that businesses are adequately compensated for their efforts on projects that may be challenging to estimate accurately upfront.

- Incentive for Efficiency

Time and material invoices provide an incentive for businesses to work efficiently. As clients pay based on the actual time spent, businesses are motivated to optimize their processes and complete tasks promptly. This dynamic encourages productivity and ensures that clients receive value for the hours billed.

- Reduced Disputes

The detailed breakdowns in time and material invoices contribute to reduced disputes. Clients can see precisely what they are being billed for, minimizing misunderstandings and promoting smoother invoicing processes. This transparency helps maintain positive client relationships.

How to Create Time and Material Invoices

Now that you know what a time and material billing model is, let’s find out how to create one perfectly.

Just follow these steps:

- Time and Record Keeping

For a contractor to do well under a time and materials contract, the first step is to keep very thorough records. This means keeping records of materials, services, labor, and equipment bought or rented for the specific job.

- Documentation

Every job order has different invoicing requirements, such as what supporting papers the client wants to be included with the final invoice. Some of the common backups required for time and material billing are:

- - Invoice providing a summary of the total amount, including total billable hours, labor rate, material costs, and the overall markup.
  - Transaction lists indicating a detailed report of the total billable hours and material costs for which the client is billed (this is really important, for the client might want this to review the invoice for accuracy or for their own reporting and accounting purposes)
  - Copies of receipts and payable invoices to reflect the costs of third-party purchases and rentals required for the project.
  - Copies of certified payroll reports or timesheets to review the total billable hours.
- Line Items

A time and material invoice should clearly mention the following things:

- - Specific goal of the project
  - Estimated deadlines for different tasks within the project
  - Fixed price for labor that includes wages/hourly rate, overhead, administrative and general costs, and markup for profit (usually between 15%-30%)
  - Quality and type of materials, along with price
  - Time and material not-to-exceed clause (T&M NTE)
  - Payment milestones (for long-running or recurring projects)

Once you have all this required information, you can go ahead and put it all together to calculate and create your final invoice. Use this simple formula to calculate your final time and material invoice.

(Total Labor Hours X Fixed Hourly Rate) + Material Cost + Markup = Final T&M Invoice

Time and Material Invoice Template

T&M Invoicing with Field Service Software

Look at the section above. Now take a moment and think—are you doing all this work by yourself? Just think about the sheer amount of paperwork the entire process involves! Not to forget the time and effort required to get the details right. There’s no way you can ensure accuracy and transparency if you plan to do this manually. Even if you are confident about your skills and experience, you cannot fully rely on other people to provide all the necessary information and paperwork on time. One thing is missing, and the whole system goes sideways.

Well, there is no need to panic or feel stressed. Now you have amazing digital tools at your disposal to get this right. Since the advent of field service software solutions, creating T&M invoices has become easier than ever.

Here is what you need to create a flawless time and material invoice with field service software:

- Choose the Right FSM Software

Select a field service management software that supports time and material invoicing. Look for features such as time tracking, inventory management, and invoicing capabilities. Field Promax is a good choice in this regard.

- Configure Rates and Labor Costs

Within the FSM software, configure your hourly rates for labor and define the costs associated with different types of labor. Ensure that the software allows you to set rates for different skill levels or roles within your team.

- Set Up Materials Database

Create a comprehensive database within the FSM software for all materials used in your field service projects. Include details such as item descriptions, costs, and stock levels. This database ensures accurate tracking of material costs.

- Employee Time Tracking

Utilize the time tracking feature of the FSM software to record the hours your team spends on each project. Ensure that employees log their work accurately, associating their time with specific tasks or projects.

- Capture Materials Usage

Integrate the FSM software with your inventory management system to capture materials used during field service activities. This integration helps in real-time tracking of material consumption, preventing discrepancies between field activities and invoicing. Better yet, go for a field service software system that offers integrated inventory management features. That way, you can streamline your operations and have all the tools you need on the same platform.

- Project Management and Scheduling

Use the project management and scheduling features of the FSM software to assign tasks to your team and track project progress. This ensures that all billable hours are accounted for and projects are completed on time.

- Generate Detailed Invoices

Leverage the invoicing capabilities of the FSM software to generate detailed invoices. Include a breakdown of labor hours, rates, and materials used. Some software, like Field Promax, also allows you to attach photos or notes, providing additional context for the client.

- Implement Electronic Signatures

Integrate electronic signature capabilities into your invoicing process through the FSM software. This facilitates a quicker and more efficient approval process, reducing delays in payment.

- Mobile Accessibility

Choose FSM software that offers mobile accessibility. This enables your field service technicians to input time and material data directly into the system while on-site, promoting real-time updates and accuracy.

- Training and Support

Ensure that your team is adequately trained on using the FSM software for time and materials invoicing. Provide ongoing support and encourage regular updates to maximize the benefits of the software.

- Regularly Review and Optimize

Periodically review your invoicing processes within the FSM software. Identify areas for improvement and optimize your settings, rates, or workflows to enhance efficiency and accuracy.

Wrapping Up

Considering the wide range of features and capabilities you require to generate an accurate T&M invoice, it is evident that nothing but the best field service software can do this job for you. And your best bet in this regard is Field Promax. Let us tell you how.

To begin with, Field Promax offers the best invoicing tool available on the market right now. But more importantly, it offers an end-to-end automation solution for all your processes, including billing and invoicing. With Field Promax, you don’t even need to focus on time and material invoicing in particular. It will do the entire job for you.

When you sign up for Field Promax, it gives you a comprehensive dashboard where you can see all your work orders. You select a particular project and enter the customer and job details, and that’s it! After this, the assigned technician will add the time, materials, and additional overhead to the job order. They can also upload images and documents, such as receipts for purchases and rentals, to be included in the final invoice for client review. This way, you don’t have to worry about the paperwork or manual error. Once you enter the job details and requirements, the software will automatically turn them into line items in your final invoice as well.

Once they mark the job as complete, the technicians can create the final invoice, including all the necessary details, right on the job site and send it directly to the client. So, you don’t have to worry about invoicing at all! Yet, you get an accurate invoice on the spot, driving the customer experience at the same time.

Furthermore, Field Promax provides all the features and capabilities mentioned above, such as scheduling, dispatching, monitoring, inventory, time-tracking, and more, required to automate T&M invoicing. This means that with Field Promax, you have access to all the necessary tools on a single platform.

Now comes the best part. Field Promax integrates with QuickBooks, the leading accounting software. With this integration, your managers/technicians can view work order details, update job progress, manage accounting, and create T&M invoices—all from a single platform. Result? Less hassle, zero risk of error, and timely payment. Overall, it is a win-win situation for everyone involved.

So, what are you waiting for? Sign up for Field Promax field service software today and make time and material invoicing a breeze.