Milestone billing, also known as phased billing, is great for firms with mid to long-term projects looking to avoid scope creep.
Milestone billing, also known as phased billing, is a popular billing model in the A/E and professional services industries due to the industries’ project-driven revenues. To determine if this phased billing model is right for your firm, consider the length of your projects. If you often conduct mid to long-term projects and would like to avoid scope creep, a phased billing model can be a beneficial option for you. Phased billing is excellent at defining objectives, deadlines, and deliverables.
Milestone billing allows you to bill in phases, hence the description “phased billing”. Using the phased billing model, you can bill for project work by each milestone that you define with your client. When a milestone is reached, your client is billed for the designated partial amount of the total amount of the project. Milestones can be billed for services that involve multiple work orders and resources delivered over time.
Each milestone is essentially a sub-goal that helps to achieve the main project goal. When you use the phased billing model, instead of invoicing every couple of weeks, you can set up a phased billing agreement where your client pays for each milestone/deadline as it’s reached.
The amount due at each milestone and each deadline can defer from project to project, this model is project-specific and will be unique to each new case.
You’re probably most familiar with project-based billing. Project-based billing offers upfront pricing with all your project costs already negotiated and resolved before the project even begins. This type of billing is great for short-term projects; however, it can be unsuitable for longer projects. This is where milestone billing comes in.
Milestone billing allows you to space out invoices to make larger projects more manageable. This is especially beneficial for the client and a good way to get them to agree to a larger, more expensive project that they may not want to pay for all of it up front. It’s also helpful for your firm to maintain a steady cash flow over a longer length of time and set goals for your team to work toward.
A phased billing model can help structure budgets and make sure everyone stays within those budgets if the project takes longer than anticipated. It’s also a beneficial way to visualize a relationship between payment and progress.
A phased billing model isn’t for everyone. If your project doesn’t have concrete deliverables, milestone billing might not be the best option. Administrative work is a good example of where a phase billing model wouldn’t work. Administrative tasks are typically ongoing, without any milestones, so hourly compensation or a salary would make more sense in this case.
If you’re working on a smaller project, you can still use milestone billing, but if there are not a lot of deliverables, this type of billing could just cause confusion. Instead, for shorter projects, paying directly at the start makes more sense.
When you’re using a phased billing model, it’s important to make sure you’re tracking time alongside it. Every milestone will have its own unique amount of time and effort involved. If there is ever a discrepancy when it comes to the estimated vs actual time spent on a milestone, your time tracking can resolve this quickly.
Time tracking software, such as BQE CORE, can help streamline milestone billing with the following benefits:
Track and link travel expenses and receipts to their individual projects for smooth billing
Upload photos of receipts to create digital expense records that includes tax and expense type
Track time accurately for projects, overhead, and time off
Capture time down even to the exact second with pause-and-play timers connected to timecards
Eliminate manual entry that can cause errors for milestone billing with automated copied timesheets
Track time and expenses anywhere with BQE CORE’s mobile app
BQE CORE lets you create unique schedules for project milestones. Easily split invoices ensure all parties are appropriately accounted for. This includes:
Invoice values based on fixed amounts or total contract %'s.
Distribute services and expenses to one or more clients.
Standard contract types: hourly, fixed fee, cost plus, unit cost, and percentage.
You can ensure your clients receive project invoices on time, every time. With BQE CORE you can create a customizable process flow that meets your firm's unique needs.
20+ standard invoices & customizable templates.
Create invoices based on preferred schedule and frequency.
Schedule automatic invoicing based on variable values or contract types and retainers.
Not all firm management software has the phased billing capabilities to help you easily incorporate milestone billing into your projects. And with so many firms working on large projects, this feature is incredibly important. BQE CORE not only includes phased billing, but also provides an all-in-one platform that incorporates accounting, invoicing, time and expense tracking, project management, HR, and more.
To start automated milestone billing today, try a free demo of BQE CORE.
For most firms, it’s easy to say that work is busy. Having a lot of projects is great! But wouldn’t you like to be able to manage these projects with as little stress as possible? When your firm has too much work on their plate, and not the right tools to manage it, this can result in lower staff morale, increased stress, low quality of work, poor client service, and increased errors. Now is the time to make the right moves so that you’re setting your firm up for the most profitable year to come. And the first move that can help you see more profits than ever before is investing in firm management software.
Firm management software is as critical as CAD/BIM software. The primary purpose of firm management software is to help you manage your back-office automation so you can better power front office insights. This makes firm management more agile, informed, and data-driven. All-in-one firm management software, such as BQE CORE, has numerous advantages. Combining project planning, resource management, finance and billing, team collaboration, time tracking and reporting, you can seamlessly manage projects from beginning to end.
To see your project and employee profitability increase, you need to help your employees make better use of their time. If your employees are using multiple point solutions software, struggling with manual processes, or plucking away at complicated software, you’re never going to see the profitability you want. Instead, give your team the right tools that can really help them shine. The best way to do this is by getting an easy-to-use firm management platform that eliminates manual work and streamlines operations, so they have all the data they need when they need it.
Now that you have all your data in one place with firm management software, you can easily delegate tasks and use document sharing features. Firm management software keeps your team members in the loop about even the smallest project details.
Email and spreadsheets are frustrating to manage and trying to find important conversations can take forever. Firm management software prevents conversations from getting lost in email treads or Excel notes. Also, knowing who is meant to work on what eliminates confusion and encourages timely completion of tasks.
When your team has all the information they need, it is now convenient to communicate with clients on status updates.
For increased project and employee profitability, improve your team’s time and ability to get the work done. Firm management software helps improve time management by using features for time tracking, project management, creating Gantt charts, scheduling, analyzing data, creating automated reports, and so much more.
Budgets are one of the most important items when it comes to controlling your projects. To move forward and see increased profitability, it all depends on how well you can deliver within the provided budget. Firm management software gives you the project management tools your firm needs to help control the budget from the initial statement of work to the final delivery.
In the new year, stay on budget with the many benefits firm management software can provide, such as:
Full view of financial performance at every level: company, client, project, phase, and staff.
Ability to integrate business accounting with project accounting so project managers can be more accountable to the P&L.
Simple, yet powerful accounting with a full general ledger so you can choose between cash, accrual and engagement-based accounting.
Key data all in one easy place: profit & loss, financial reports, trial balance, and more.
When it comes to financial budgeting, your time is valuable. Don’t waste another moment in the new year. Make sure you’re making the most of it with up-to-date reporting and efficient accounting procedures, so you stay on budget every time.
You want to see every detail of your projects to ensure you’re increasing your profitability. Firm management software with a high-level dashboard will let you do just that.
Dashboards organize and display information so that it’s easy to read. They give you a snapshot to handle any situation through KPIs, valuable metrics, and action items all in real-time. Think of a firm management dashboard as what you use in your car. Every little detail about your car you need to know immediately is right there. Now think of going back in time with your car and not having that access anymore. You’d feel a little lost. This is the same with your project management dashboard. If you are not currently using one, you’re not getting a full look at your project’s profitability.
A dashboard informs you not only about your projects, but also about your finances and staff performance. You can share dashboards between users or set it to private for a single user.
BQE CORE lets you create an unlimited number of dashboards that you can customize the layout and share with your team. While you will have a default dashboard, you have the option of looking at any dashboard instantly to monitor the different aspects of your business.
The more insight into your firm’s projects, the more insight into how to make this coming year the most profitable one yet.
We live in a remote world now more than ever before. So as each new year approaches, you want to be as remote-friendly as possible. If all your data is stored in-office, and you have team members that are on job sites or working from home, accessing this information can slow a project’s process down immensely.
Firm management software allows most of your data to be stored in one place, so your whole team can track project progress, see the due dates, onboard a new project, and work from any location. Other benefits include:
Staying up-to-date with real-time notifications
Submit and even approve workflows from your dashboard
Track time and expenses
Create and send invoices
Access mobile reports and performance screens
View any KPI
Upload photos of receipts to automatically file by tax and expense time
There’s never a bad time to implement firm management software, however buying new software in Q4 means you’re onboarded and ready to go in Q1. BQE CORE’s award-winning customer support is ready to help you see if firm management software is right for you. Try a free demo today and feel confident going into Q1 ready to make it your most profitable year yet.
BQE University is a hub of brilliant thought leaders in the architecture, engineering, and professional services industry. Each article offers a unique approach to education that emphasizes the importance of developing a business-thinking mindset for your firm. Their valuable knowledge and insights helps transform your business from a mere service provider to a thriving organization that consistently delivers projects that satisfy clients and generate profits. By learning from the experts at BQE, you can build a better firm and achieve your professional goals.
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