Invoicing for Consultants & Freelancers

Hourly rate vs fixed project invoicing

Both billing models are common for consultants and freelancers. The right choice depends on the nature of the work:

Hourly rate billing: Best when scope is uncertain or the client expects the work to evolve. You are paid for all time spent. Record time carefully — invoice disputes often come down to hours claimed vs hours expected.
Fixed project fee: Best when the scope is clearly defined and you can estimate the work accurately. Provides certainty for the client and protects you if you work efficiently. Include a scope statement in your agreement to manage scope creep.
Milestone billing: A variation of fixed-fee billing: you invoice at defined deliverable stages (e.g. 30% on engagement, 40% on draft, 30% on final delivery). Reduces your exposure on large projects.

How to describe consulting services on an invoice

A vague description such as "consulting services" is not sufficient for a good tax invoice. Be specific enough that the description makes sense to someone who did not attend the meetings. For example:

"Strategic review of supply chain — 8 hrs @ $180/hr — 1–15 June 2026"
"Website copywriting — homepage, about page and 3 product pages — fixed fee"
"Financial modelling — three-year forecast model — milestone 2 of 3"

A good description also helps your client's accounts payable team allocate the cost to the right cost centre — which speeds up payment.

Reimbursable expenses

If your engagement includes reimbursable expenses (travel, accommodation, software subscriptions, printing), include these as separate line items on your invoice. Under ATO guidance, expense reimbursements are generally part of the taxable supply and attract GST — they are not a separate non-taxable supply unless your agreement specifically provides otherwise. See the ATO guidance on reimbursements and seek accounting advice if you are unsure.

Milestone billing for project work

Milestone billing protects both parties on larger engagements. A typical structure might be:

30% deposit invoice on engagement (before work commences)
40% on delivery of the draft or interim deliverable
30% on final acceptance

Each milestone payment should be linked to a specific deliverable in your professional services agreement, so there is no ambiguity about when each invoice is triggered.

GST on consulting services

Consulting services provided to Australian clients are generally taxable supplies under the GST Act, meaning you charge 10% GST if you are registered. Exceptions include:

Services supplied to overseas clients where the recipient is not in Australia and the services are not connected with real property in Australia — these may be GST-free exports. See ATO: Exports of services.
If your turnover is below $75,000 and you are not registered for GST, you do not charge GST at all.

Professional services agreements and invoicing

Your invoice is not a substitute for a written agreement. Before the engagement begins, have a signed letter of engagement or services agreement that covers:

Scope of services
Fees and billing model
Payment terms (e.g. 14 days from invoice date)
Expenses and approval process
Intellectual property ownership
Confidentiality
Late payment interest clause

When your invoice references the agreement, it is much easier to enforce payment — there is a clear paper trail connecting the work to the obligation to pay.

Setting payment terms for consulting

14-day payment terms are a reasonable default for consulting invoices. 30-day terms are common but result in slower payment — you are effectively providing a free credit facility. For new clients, consider requiring a deposit before commencing work.

Always state the due date explicitly on the invoice (e.g. "Due: 13 July 2026") rather than just "net 14". See the guide to setting payment terms for a detailed breakdown of options.

Frequently asked questions

Do I need to register for GST as a consultant or freelancer?

You must register for GST if your annual turnover is $75,000 or more (or $150,000 for non-profit bodies). If you are below this threshold, registration is optional but you cannot charge GST or claim GST input tax credits. Once registered, you must issue tax invoices and lodge BAS returns.

How do I invoice for retainer arrangements?

A retainer is a recurring payment for a set number of hours or an availability commitment per month. Issue a tax invoice at the start of each billing period (e.g. the first business day of each month) for the agreed retainer amount. Include a description such as 'Consulting retainer — [Month] — [X] hours reserved'. If the client uses more hours than the retainer covers, invoice the excess separately.

Can I charge interest on overdue consulting invoices?

Yes, if your engagement letter or terms of service include an interest clause. The clause must be disclosed before the work begins. A common rate is 2–3% per month on the overdue balance. Without a pre-agreed interest clause, enforcement is more difficult. You may also be able to recover debt collection costs if your terms provide for it.

Should I include reimbursable expenses on the same invoice as my fees?

Yes, the simplest approach is to include reimbursable expenses as separate line items on the same tax invoice. Both your fees and reimbursed expenses are generally part of the taxable supply — the ATO's view is that reimbursements form part of the consideration for the supply. Attach receipts or a summary if your engagement letter requires it.

Related tools and resources

Free Invoice Generator — create a consulting tax invoice in minutes
Setting Payment Terms
Payment Reminder Templates
How to Get Paid Faster
ATO: Registering for GST