Milestone billing is the smarter way for Australian agencies to get paid faster, more fairly, and with less admin. Instead of waiting months for lump-sum payments or chasing overdue invoices, break your projects into clear phases, assign fees to each, and automate invoice triggers using billing software built for agencies.
This guide walks you through how to structure milestone payments, set client expectations early, and use automation to improve cash flow—without the chaos.
We often hear that cash flow is the lifeblood of any business. However, managing cash flow isn’t as easy as it sounds—especially for agencies juggling multiple projects.
An update from the Payment Times Reporting reveals that the average payment term to Australian small businesses is 35.4 days.
Waiting this long to get paid, especially when clients are already overdue, can definitely strain your agency’s finances.
So, how can you solve this? The answer is through milestone payments.
Milestone payments paired with the right billing software Australia agencies trust ensure your business gets paid on time, every time.
In this article, learn how to structure milestone payments for your agency, so you can maximise cash flow and minimise stress.
Why milestone billing matters for agencies
Project-based work doesn’t always fit the traditional billing models, such as hourly or lump-sum billing, especially when timelines are unpredictable.
Some issues that spring from traditional billing models are:
- Scope creep: The little requests slowly expand the project scope, but the total payment doesn’t keep up.
- Late payments: Clients drag their feet and don’t feel the need to pay immediately, especially if the project has been delivered.
- Lump-sum issues: You might struggle to cover your expenses if projects take months to complete and get paid.
Milestone billing solves these issues by breaking the project into manageable phases, so you still get paid regularly as you complete major tasks.
Through milestone billing and using invoicing software for freelancers and agencies, you can track your progress and manage your cash flow even as a small team.
Step-by-step guide to structuring milestone payments
Structuring milestone payments for agencies isn’t as hard as it sounds, especially if you use billing software Australia businesses trust. Here are the steps you should follow so you can start getting paid by milestones instead of waiting for project completion:
1. Break the project into clear phases
Start by dividing the entire project into clear phases that fit your actual workflow, such as design, development, revisions, testing, and launch.
Structuring these phrases makes it easy to stay organised and gives clients a glimpse of what they’re paying for.
2. Assign a percentage or fixed fee to each milestone
Once the phases are set, decide how much to charge at each milestone.
You can go with a simple 30/30/10 model or customise it based on the time, effort, and risk involved in each stage. Just make sure it works for both you and the client.
3. Align payment triggers to project events
To keep things simple, set clear triggers for when each payment is due. For example, you can require 30% of the entire payment upon approval of the initial design.
Using a smart invoice app automates this step, making it possible to send invoices as soon as you hit a milestone without chasing clients manually.
How automation helps you get paid on time
Even with clear milestones, managing your billing and staying on top of invoices can still be challenging.
Just imagine manually sending hundreds of invoices, tracking deliverables, and following up on clients one by one. That sounds like a nightmare.
But with the right tools and automation, you can do all these tasks without lifting a finger. Here’s how automation helps:
- Auto reminders: Set automatic reminders so clients can receive friendly reminders about their payments.
- Milestone-based triggers: Invoices automatically go out when you finish a project phase.
- Payment tracking: Quickly check who has paid and who needs follow-ups.
Tools like auto invoice software make these easy and achievable, even for small teams or agencies!
And here’s the kicker: 84% of companies that fully automated their invoicing processes report improved cash flow and more savings.
While shifting to a smart invoice app seems like a small switch, it can actually make a big difference to your bottom line.
Communication tips: Set expectations early
Clear communication from day one saves you from all the headaches later. Here are some tips you should follow so clients will always know what to expect before the bill hits their inbox:
Include payment terms in your contract
Always spell out your payment terms clearly in the contract. If necessary, your payment terms should include the due dates, milestone triggers, and late fees.
Laying down these payment terms protects your business and ensures you and the client are on the same page.
Walk through milestones during project kickoff
Go over all the milestones and payment points with the client during the project kickoff.
This way, your clients will know what’s coming up and when. The walkthrough also allows them to raise questions, so there’s no confusion once the project starts.
Use easy billing software to keep the process transparent and documented
To keep everything crystal clear, use a smart invoice app to track milestones, upcoming invoices, and due dates in just one platform.
Apart from automating your process, this invoicing software for freelancers and agencies also documents each step so you have a clear record of what and when it was done.
Milestone billing checklist for agencies
Milestone billing is a smart financial strategy for agencies, especially if your work is mainly project-based. Here’s a quick checklist to help you roll it out in your agency:
- Define phases clearly. Break down the project into clear and logical stages.
- Attach deliverables to each: Ensure each phase is tied to a specific output.
- Use automation to trigger invoices: Spend less time on admin work by automating your billing steps using auto-invoice software.
- Track payments in one dashboard: Quickly review payments and cash flow to spot issues early.
- Communicate updates regularly: Keep clients and team members in the loop to align tasks and expectations.
Common mistakes to avoid
After setting up your milestone payments, a few pitfalls can throw off your process. Here are some common mistakes you should watch out for and avoid:
- Vague milestones: If milestones are too broad or unclear, clients may not understand when to pay and push back on invoices. Be specific about what each phase includes and explain it to your clients.
- Delaying the billing conversation: Waiting until the end before talking about payments almost always backfires and makes conversations awkward. Set expectations early so clients won’t be shocked when the invoice comes.
- Relying on manual follow-ups: Chasing payments manually takes too much time and energy. Instead, use easy billing software to automate sending invoices and reminders.
- Using tools not built for agencies: Generic billing software always falls short regarding milestone billing. It’s best to use specific invoicing software for freelancers and agencies to ensure things run smoothly.
Localised support: Why Australian agencies need tailored tools
Not all billing tools are built with Aussie agencies in mind.
When choosing easy billing software, you should also consider whether it is set up to follow GST requirements or ATO standards. Your tool should also cater to local payment methods like PayID or BPAY.
This is where billing software Australia-based agencies can rely on shines—built for how Aussie agencies do business. The tool already supports your agency's workflow, eliminating the need for complex workarounds.
Cash flow without the chaos
Milestone payments give your agency the structure it needs to stay on track with your projects while keeping the cash flowing. And when you pair these features with automation, you can build a system that saves you time, avoids payment delays, and keeps clients happy.
If you’re ready to take the first step and take the stress out of getting paid, explore a smart invoice app like Handl!
Handl is the trusted billing software Australia agencies and freelancers use, helping you maximise your cash flow with your workflow in mind.
Sign up for a free trial or book a personalised demo today and see how easy billing can be.
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Running a digital agency is exciting—you get creative freedom, rewarding projects, and the chance to build something unique. But let’s be honest: the financial side can be a real headache.
Milestone billing is often praised as the answer, bringing structure to payments and ensuring businesses get paid progressively.
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Running a digital agency is exciting—you get creative freedom, rewarding projects, and the chance to build something unique. But let’s be honest: the financial side can be a real headache.
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