Billing for services - simple, transparent and fair

1. Invoicing of consulting services
   1. Challenges
   2. Solutions
2. The Oraroo approach
   1. Invoice Review
   2. Invoice approval
   3. Validation of the Invoice
3. The Oraroo advantage

1. Challenges

Invoicing of consulting services can be defined as the process of generating invoices for knowledge-based, revenue-generating services performed by professional services teams. Invoicing of consulting services can cover a variety of industries, including IT services and technology consulting, software companies, creative and digital agencies, management consulting, accounting and auditing firms, architecture and engineering.

At first sight, invoicing for consulting services might seem simple. You download an Excel invoice template, enter the hours and rates, generate the invoice for professional services provided and send it to the client. For professional services organizations with only a few consultants, this is often addressed. Of course, as teams grow beyond 15 consultants, firms begin to focus on making this process more efficient.

However, invoicing is one of the few actions in a consulting firm that has the greatest impact on maintaining the profitability and sustainability of the business. Even a small mistake could cost the company large sums, often without anyone knowing.

It is necessary to structure the process and supervise each step of the process – creating, checking, approving, adjusting and sending invoices.

But manual processes introduce inefficiencies and reduce the visibility of top management on the company's performance.

There are frequent cases when, without structure and controls, billable times or expenses reimbursable by the client are never invoiced.

2. Solutions

Invoicing for consultants' work should be simple and transparent. But a first step is to give up Excel and use a specialized online platform.

The biggest mistake a business can make when deciding which type of invoicing solution to use is choosing one where they can't accurately model their business.

For example, there are companies that prefer a single person to review the invoices before they go to the client. Others understand the blockage that can occur if the volume increases. Then decentralize this step by making it more efficient by reviewing the invoices by each project manager on the corresponding projects. And in these situations, a risk-averse approach can lead back to final validations by the hierarchical manager on all invoices. One way to reduce volume is to delegate control for invoices below a certain amount. Or have a senior manager review only invoices that have registered changes above a certain amount.

It is ideal for the specialized online platform to offer flexibility in achieving an efficient process of examining and approving invoices. Also, provide enough control to encourage accountability and accuracy.

Revenue leakages take two main forms:

• lost in transit (manually re-entered into a different system or checked out and then reloaded incorrectly)
• forgot (human error)

Generating invoices from the same system where time and expenses are collected eliminates the lack of tightness in the invoicing process. This approach inherently eliminates the first category of revenue leakage. For the 2nd category Oraroo implements functionalities so that its time and expenses cannot remain unbilled for too long or maybe forever. For example, to track when a billing reference point has been reached, alert when things are not going according to plan, a detailed view of how much billable time is anticipated in a certain period, etc.

Operations and finance teams can complete their invoicing process in hours, instead of the days that manual processes take. More importantly, this structure drives accountability throughout the billing process. Senior management has a detailed view of exactly what was billed, how it was adjusted. This helps reduce the company's month-end process and frees up time to pursue other high-value projects.

The flow of issuing an invoice can only be triggered by Project Administrators. A person with this role accesses the contract they want to invoice. Then he presses the ISSUE INVOICE button, after which he selects the services he wants to invoice.

In Oraroo, the Invoicing Flow is done in 3 steps: Invoice Review (optional), Invoice Approval and Invoice Validation. These will appear in the My Tasks section, under the heading Review/Approve/Validate Invoice, as applicable.

1. Invoice Review

It is done by the Contract Manager or the Project Manager on whom the contract depends.

In this step, the invoice reviewer can view the following information or perform the following actions:

• Checking the information that will be included on the invoice: effort (when applicable), applied rate, invoiced period, taxes and final amount;
• Verification of the invoicing data of the Company and the Client to whom the invoicing is carried out;
• Deleting or adding lines on the invoice;
• Modification of the existing information on the invoice lines (Description of the invoice line,Quantity, U.M., Unit Price, Tax Percentage);
• Change of issue date and due date;
• Exchange rate change (when applicable);
• Adding or editing comments on the invoice;
• Adding attachments and comments to the stream;
• Canceling the invoice.

Reviewing the Invoice is an optional step. At the contract level, it can be decided whether to review the invoices issued on that contract or not after pressing the ISSUE INVOICE button. If the invoice review option is not enabled at the contract level, the invoice will go directly to the Validation step.

At the same time, for the invoice revision step, a minimum billable value can be set at the company level for which no revision is needed. For example, if we set a minimum value of 1000 RON, invoices issued that will have a value less than 1000 RON or equal to 1000 RON will not go through the review or approval stage and will go directly to the Invoice Validation step.

2. Invoice approval

It is done by the direct manager of the person issuing or reviewing the invoice (when the review step is enabled).

The issued invoice reaches the Approval Step only when the person who performed the Invoice Review made changes to the initial information (example: changed the description on the invoice line, the original price, the date of issue, added comments or attachments, etc.).

In the Invoice Approval step, you can view the following information or perform the following actions:

• Checking the information included on the Invoice: effort (when applicable), applied rate, invoiced period, fees and final amount, attachments, comments;
• Adding comments to the stream;
• Invoice Approval: after the invoice has been approved, it reaches the Validation step;
• Invoice Rejection: after the invoice has been rejected, it reaches the person who made the changes in the Invoice Review step (Contract Manager or Project Manager) in the Review step.

3. Validation of the Invoice

It is done by the person who has the right of Invoicing Administrator in Oraroo.

This step is very important, because at this moment the invoice number from the invoice range is assigned. Invoices are considered issued only after they have been assigned an invoice number and approved by the Billing Administrator. In this step you can view the following information or perform the following actions:

• Checking the information that will be included on the invoice: effort (when applicable), applied rate, invoiced period, taxes and final amount;
• Modification of the existing information on the invoice lines (only Description of the invoice line, Quantity when it comes to invoiced hours and Tax Percentage);
• Changing the issue date (only when an invoice number has not been assigned) and due date;
  Exchange rate change (when applicable);
• Adding or editing comments on the invoice;
• View attachments and comments on the stream;
• Allocation of the invoice number – according to the invoice series set at the company or organizational unit level;
• Invoice Approval – the invoice can only be approved after an invoice number has been assigned; if approved, it is considered ISSUED.
• Invoice Rejection – after the invoice has been rejected, it goes to the Review step to the Contract
• Manager or Project Manager (even if contract-level invoice review is initially set to inactive).
  The invoices for which the invoice issuance flow was initiated can be found in the list of Contract Invoices.