Invoicing by the hour
An hourly invoice is hours times a rate, and almost everything that goes wrong with one is about what counts as an hour.
How an hourly invoice is worked out
Hours multiplied by the rate give the figure for each row, and the rows are added together. Expenses are added at face value. Everything after that is the order the invoice editor on this site prints:
| Hours | Every row, hours multiplied by the hourly rate |
|---|---|
| Expenses | Added as entered, never multiplied by hours |
| Subtotal | Hours plus expenses |
| Discount | Taken off the subtotal, never off the tax |
| Tax | Charged on the subtotal after the discount |
| Total | Subtotal, minus the discount, plus tax |
| Balance due | Total minus whatever has already been paid |
One row per rate, not one row per day
A single row of 40 hours at one rate is arithmetically identical to eight rows of five, and it is the version a client queries. Split the rows where the rate changes — a different task, a different person, out-of-hours work — because that is the split the invoice has to justify. Splitting further, one row per day, turns an invoice into a timesheet, and a timesheet invites a line-by-line argument about work already done.
Expenses are not billable hours
An expense you are passing on belongs in the expenses section, where it is billed once. Putting it in the hours section at a quantity of one works out to the same total, but it reads as an hour worked, and it sits in the column your hourly rate is in.
Where you mark an expense up rather than pass it on at cost, enter the marked-up figure. The calculator has no markup field on purpose: a markup that is calculated for you and never shown is a number on an invoice you cannot explain when asked about it.
Tax-inclusive and tax-exclusive rates
Rates already include tax when the rate you quoted is what the client pays. That is a setting on the calculator and a decision on a real invoice. The tax is then extracted from the total rather than added to it, so the total does not move when you change the rate — only the tax line does. Leave it unticked and the tax is added on top, which is the usual practice for business-to-business work in most of Europe and North America.
On 40 hours at 25, exclusive tax at 10 per cent is 100 and the total is 1,100; inclusive tax is 90.91 and the total stays at 1,000. The difference is easy to miss, and it is yours to absorb if you get it the wrong way round.
Deposits, and why the balance stops at zero
A deposit larger than the total is clamped to the total, so the balance due stops at zero rather than going negative. That is the rule the invoice editor applies, and the two have to agree or the figures would change on the way into the invoice editor. An invoice that owes the client money is a refund, and a refund is a document with its own number rather than a negative line on this one.
Short version: Each row is hours times its rate, expenses are added once at face value, and the discount, tax and any deposit follow. Split rows where the rate changes rather than by day, and keep expenses out of the hours column.
Last updated 22 September 2026