9 Tips For Tracking Project Expenses
When you’re working on a project for a client, you sometimes have to spend a little money in order to get to the point where you can invoice your client. Maybe you have to register a domain name. Maybe you have to pay for a stock image. Maybe you have to subcontract part of the project. No matter what expenses are a part of your project, it’s important to keep close track of them so that you can report them on your invoice and get your client to cover them.
- Check your client’s needs first: Depending on the client you’re working with, you may be asked to submit copies of receipts with any expenses you add to your invoice. That’s information that will come in handy before you start invoicing, so make sure you know exactly what your client needs in able to process your payment.
- Keep a list of fixed expenses: For certain kinds of projects, you may have the same reoccurring expenses. For instance, every time you set up a new website, you have to purchase a domain name. Use your list to double check that you haven’t missed anything when you’re getting ready to invoice your client.
- Make sure your expenses are worth billing: I’ve seen designers charge clients for a CD to burn files to. That small of an expense may not be worth the trouble and paperwork — it may be more practical to add a couple of dollars into your own price to minimize the little expenses you have to pass along.
- Choose just one method of payment: If you can simplify your expenses, they get a lot easier to keep track of. I actually have a credit card that is only used for business expenses, so that they don’t get mixed up with my personal expenses. Even little expenses, like stamps, go on that card, so that I can just review everything at the end of the month.
- Avoid petty cash, if you can: While making payments with cash can be a lot easier, having a paper trail can make it easier to justify your expenses to a client.
- Record expenses where you record invoices: Most invoicing applications these days have the ability to track expenses related to the client you’ll be billing built in. If you make a practice of recording every expense as it is incurred, adding them to your next invoice is a matter of a click or two.
- Write down the client: In the event that you’re working with paper receipts for any of your expenses, write the client’s name directly on the receipt the moment you receive it. If you just shove it in your pocket, it’s easy to forget exactly what a receipt was for when you get around to dealing with it.
- Keep the receipt: Even if your receipt is just an email from the web host, you need to file it away with the rest of the information for the particular project. I tend to staple all the receipts and invoices for a particular project together so that I don’t have to worry about losing any small slips of paper.
- Analyze your expenses: If there are expenses you have on project after project, it may be worth checking if there’s a way to reduce those expenses, perhaps by buying in bulk. Being able to offer a reduced cost to your client can keep them coming back.
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I’m always interested in reading articles that deal with expenses and invoicing. I find it helpful for figuring out my exact methods. I’m slowly coming to a process that is working for me but find that the recording of information can be tedious and I don’t necessarily “want” to do it.
Great article Thursday!
@Rik, I think that having a process that works for you is the best possible goal for figuring out expense tracking. I know the system I use doesn’t work for half the freelancers I know, but, then again, there are a lot of systems that don’t work for me either. Despite the differences, there are a lot of factors our systems have in common.
I use the app ‘TimeLog’ for a while now, and it is really fantastic for these kind of jobs. It has a great time tracking function and also possibilities to control budgets, or generate reports. It is also possible to add products to it, so you can have ultimate control over expenses you make on a project in combination with the budget you have.
Thank you Thursday for the wonderful insight! Project management may sound easy in theory, but its a major nightmare when things go wrong… Your practical advise is really helpful!
Great tips Thursday. I’ve still not got my head around client expenses, I normally absorb these costs into the project cost and maybe include them as items on the main invoice at the end. That way I talk less about money with the client and concentrate on the job. These tips however will make me think for future projects and how the bill efficiently to maximise project while reducing the tedious admin.
Another thing that I make sure to do is not to let the tracking pile up (this is fairly important in any endeavor, really), but things can get complicated if you go too long without making sure everything’s on the up and up.
Under #1: “Check your client’s needs first”, I would add “talk to clients on what they can expect” as you go along.
I’ve noticed a growing trend with web hosts to charge extra for small things that used to be provided (such as 1-click installs for WordPress, more than 1 database, more than 1 email address, ect).
When working with web clients for the first time, I’ve found it immensely helpful to include a price list of the selected host for various services that may come up in the future. Two important things to ensure are on this list: 1) Price subject to change, as the host is collecting the fee and I am not, 2) Costs are not charged if services are not elected.
I hate sticker shock.
From my past experience, I have the most trouble with keeping track of my expenses. But lately, my iPhone has been changing the way I organize things. Been using ProOnGo Expense to take pictures of my receipts, and then having my expense reports automatically filled out for me.