Most contractors submit timesheets to their agencies or end-clients to record the hours and days they spend on contract duty. We look at how time is recorded, how this is communicated to your agency, and how the payment process works.
Record your time
Depending on the terms of your contract, you will have to record the time spent on the contract—either the number of hours or days—on a weekly or monthly timesheet.
At the end of each period or work (typically each week or month), you must sign the timesheet yourself and get the client to countersign it. This is usually completed only, as paper-based timesheets are rarely used.
When you start your contract, you should always establish who will be responsible for signing your timesheets and who will take over this duty if the main signatory is away.
Many contractors will have stories to tell about the difficulties they have had getting their timesheets signed on time.
Key points for time recording
Online platforms: Most agencies now use digital timesheet systems. Paper-based timesheets are virtually extinct these days.
Real-time or batch logging: Contractors can typically log their hours in real-time, or at the end of a week or month.
Weekly/monthly submissions: Your contract will state how often you should submit your timesheets.
Submit your timesheet to your agency, umbrella or client
Most agencies use online timesheet systems. Once you’ve recorded the hours/days you’ve worked, your client will receive an email asking them to log in and validate your timesheet.
To guarantee prompt payment, you must typically enter your hours worked within a fixed time window. Missing the cut-off date means you will have to wait until the next weekly/monthly payment cycle.
If you are ill for a week, many agencies prefer that you still enter your hours—even if this means a ‘nil’ entry.
If you work directly for a client, there may be various methods to validate your hours worked.
Similarly, if you work for an umbrella company, you usually submit your timesheet directly to the umbrella company rather than the agent. The umbrella is your employer, who will send the recruiter the timesheet.
What is self-billing?
Many recruiters use self-billing to streamline the administration process. This means that once timesheets are approved, your agency automatically invoices the client on behalf of the contractor.
Key features of self-billing
No need for separate invoices: With self-billing agreements, you don’t need to generate and send invoices. The agency does this automatically once the client has approved your timesheet.
Accuracy and consistency: Self-billing helps with accurate invoicing, as the software automatically calculates VAT and completes the contractor’s limited or umbrella company’s details. Make sure you update your agency if any of your company details change at any time.
Signatory still required: Under self-billing, invoices will not be created until the client has signed off on the work done.
Why recruitment agents prefer self-billing:
Streamlined admin: Reduces the workload for both the contractor and recruiter – and umbrellas if relevant.
Improved accuracy: Minimises errors in invoicing and VAT calculations and keeps compliance officers happy.
Speedy payments: Speeds up the payment process as the possibility of invoicing errors is reduced.
Invoicing
How do you invoice your agency or end client? It depends on whether you’re a limited or umbrella contractor.
Limited company contractors:
Self-billing: In a self-billing agreement, the agency generates the invoice on behalf of the contractor (see above).
If you work directly for a client: You will have agreed specific payment and invoicing terms in your contract.
VAT invoices: If your limited company is VAT registered, list the net weekly contract fees due, the VAT element payable, and the gross amount (contract fees + VAT payable).
Umbrella company contractors:
Self-billing: In a self-billing agreement, the agency generates the invoice on behalf of the umbrella company (see above).
Manually to the umbrella company: If you don’t have a self-billing arrangement, forward a copy of the timesheet to their umbrella company (your employer), which will invoice the agency on their behalf.
Payment
Payment terms are defined in your contract. Agencies and clients typically commit to paying contractors within 7 to 14 days of receiving an approved timesheet or invoice.
Limited Company Contractors:
BACS or FP: Payments are typically made directly to your company bank account via BACS (Bankers’ Automated Clearing System) or Faster Payments.
Self billing payments: Payments are made after each timesheet is approved, eliminating the need for additional invoicing.
Umbrella Company Contractors:
Umbrella payment process: The agency pays the umbrella company, which processes your payment after deducting income tax, National Insurance, pension contributions and other employment costs. Your net pay is paid to your bank account.
Some ideas to avoid payment delays
Here are some useful tips to improve your chances of being paid on time.
Submit your timesheets early: To avoid missing the cut-off dates, submit your hours worked as soon as possible.
Make sure you know who signs your timesheets: This is crucial. Find out who the primary and secondary signatures are as soon as you start a new contract.
Use accounting software: If you’re a limited company contractor, tools like FreeAgent, Xero or QuickBooks can help track invoice payments and follow up as needed. This assumes you’re not on a self-billing arrangement, of course.
Our guide to invoicing clients, including templates, is here.
