Use custom invoices when you need to present detailed information or provide creative solutions. For example, use custom invoices for retainer-based billing, deposits and credits, discounted rates, and administrative markups.
This article will provide several examples so you can get a better understanding of how and when it makes sense to use custom invoicing. First, we’ll create some parameters to set up our scenarios. Then, we’ll provide multiple scenarios based on the parameters.
Note: Subsequent articles in this custom invoicing article series refer to the scenarios in this article.
Deposit Invoice – Parameters
Let’s walk through an example of a deposit invoice. These are the parameters:
- Minimum Deposit Balance is $5,000
- Deposit Payment is $10,000
Your customer gives you $10,000 as a down payment when the contract is signed. Each time I create an invoice against that project, I’ll create a credit for 10% of the fees. If I have $1,000 worth of billable time, I’ll give you a credit for $100. And I’ll work down this deposit that the customer prepaid.
However, I want to have a perpetual deposit. As I create invoices, if my balance falls below $5,000 I want to charge another $10,000.
With these details in mind, let’s consider several scenarios.
Say we’ve got a T&M (Time and Materials) invoice that has $10,000 in fees and $5,000 in expenses. This invoice is generated monthly with different amounts. Each month the deposit balance will change, as underscored in the scenarios below.
Scenario 1 – Deposit Balance Is $0
In the first month, the balance is zero because there’s no deposit yet. So in month one when we create an invoice, we’ll create it with a deposit amount using a single line time that says “deposit” for $10,000.
Scenario 2 – Deposit Balance Is $10,000
Month one has passed, and we have the $10,000 from the customer. Recall that 10% of the fees are credited back against the deposit. So I have a deposit credit of $1,000 because I have a deposit balance of $10,000. This scenario continues month after month -- until I get below $5,000. Then, I need to add another $10,000.
Scenario 3 – Deposit Balance Is $3,000
The deposit balance is only $3,000 -- it’s fallen below $5,000. Now I have two additional line items in the invoice:
- Deposit credit for $1,000, because I have $10,000 in fees.
- Deposit for $10,000, which is a replenishment amount because the deposit balance is less than $5,000.
Scenario 4 – Deposit Balance Is $500
After a few months, I’ve had a lot of deposit credits and my deposit balance is only $500. Although I have $10,000 in fees, 10% of $10,000 is more than I can afford. I can only afford a $500 credit. But I’ll still bill you $10,000 to replenish the deposit.
A standard invoice template won’t accommodate these scenarios. We need to tell BigTime that in addition to the standard line items, we need some customized line items to accommodate our needs.