Guide to timesheets, invoicing and payments for contractors

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 of work (typically each week or month), you must sign the timesheet yourself and get the client to countersign it. This is now usually completed online, 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.
• 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

If you contract via your own limited company, you deal directly with your agent or end client.

Most agencies use online timesheet systems. Once you’ve recorded the hours or 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 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 are several ways to validate your hours, depending on the contract.

Similarly, if you work for an umbrella company, you usually submit your timesheet to the umbrella, which will then pass the information to the agency. The umbrella is your employer.

What is self-billing?

Many recruiters use self-billing to streamline administrative processes. 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.
• Accuracy and consistency: The system automatically calculates VAT and includes your company or umbrella details. Make sure you update your agency if anything changes.
• Sign-off still required: Invoices are only generated once the client has approved the timesheet.

Why recruitment agents prefer self-billing:

• Streamlined admin: Reduces workload for both contractor and recruiter.
• Improved accuracy: Minimises invoicing and VAT errors.
• Faster payments: Reduces delays caused by incorrect invoices.

Invoicing

How you invoice depends on whether you operate via a limited company or an umbrella.

Limited company contractors:

• Self-billing: The agency generates the invoice on your behalf.
• Direct to client: You invoice according to agreed terms.
• VAT invoices: If your company is VAT registered, include net fees, VAT, and the total amount due.

Umbrella company contractors:

• Self-billing: The agency invoices the client on behalf of the umbrella.
• Manual process: If not using self-billing, the umbrella will invoice the agency based on your approved timesheet.

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 Faster Payments: Payments are made directly to your company bank account.
• Self-billing payments: Payments follow timesheet approval without separate invoicing.

Umbrella company contractors:

• Umbrella payment process: The agency pays the umbrella, which then pays you after deducting tax, National Insurance, pension contributions, and other employment costs.

Some ideas to avoid payment delays

• Submit timesheets early: Avoid missing cut-off dates.
• Know who signs them: Identify both primary and backup approvers.
• Use accounting software: If you’re a limited company contractor, tools like FreeAgent, Xero or QuickBooks can help track payments and follow up where needed.

Our guide to invoicing clients, including templates, is here.