What Is Prebilling? Definition & Examples

Detailed Explanation

The term has two uses. In law firms, accounting practices and other businesses that bill for time, a prebill (also called a pre-bill or proforma bill) is an internal draft generated from recorded time and expenses. The responsible partner or manager checks it against the engagement letter, edits the narratives, writes down time that should not be charged and approves it. Only then is the final invoice issued and posted to accounts receivable. Outside professional services, prebilling usually means advance billing: asking for payment before goods ship or work starts, then applying that amount against the final invoice. The two meanings need different documents, so say which one you mean.

Example

A firm's billing system produces a prebill showing 18.6 hours on a matter. The supervising partner removes a 1.2-hour duplicate entry and approves a final bill for 17.4 hours.

Why It Matters

Fixing an entry at the prebill stage is an internal edit; fixing it after the invoice is sent usually needs a credit note and a new invoice. For advance billing, the type of document decides when tax and income arise, so the label on it matters.

Key facts

A law-firm prebill is an internal working draft, kept separate from issued bills. In AbacusLaw, for example, an invoice number can be assigned manually only to bills, not to prebills.
Typical prebill edits are removing duplicate or vague time entries, correcting rates that differ from the engagement letter and recording write-downs. Billing software such as Intapp Billstream routes prebills to lawyers for review and approval and keeps an audit trail of the edits and the reasons for them.
In project-accounting software the word can mean an advance request instead. Deltek Vantagepoint's pre-invoices are requests for payment that are not recorded in the general ledger; receipts go to an offset account, typically a liability, and a paid pre-invoice is applied automatically to the next regular invoice.
UK VAT: issuing a VAT invoice or receiving a payment before the goods or services are supplied creates the tax point at that earlier date (HMRC VAT Notice 700, paragraph 14.2.2). A pro-forma used to request payment is not a VAT invoice and should be clearly marked “this is not a VAT invoice” (paragraph 17.3).
US federal income tax: a business on the accrual method generally includes an advance payment in income in the year it is received, unless it elects under Internal Revenue Code section 451(c) to defer the part not yet recognized as revenue in its financial statements to the next tax year.
This entry is general information, not legal or tax advice. Check how advance bills are taxed with your tax authority or an adviser.

How it shows up in practice

Illustrative example: a five-lawyer firm bills monthly. On 1 November its billing system generates a prebill for a commercial-lease matter: 14.0 partner hours at $400 ($5,600), 6.5 associate hours at $250 ($1,625) and an $85 court filing fee, $7,310 in total. Reviewing it, the partner finds a 0.8-hour associate entry that was recorded twice ($200) and a 0.5-hour partner entry for internal scheduling, which the engagement letter says is not billable ($200). After both write-downs the final invoice is $6,910, issued on 3 November with its own invoice number. Because the changes were made before the bill went out, no credit note or corrected invoice is needed, and the $400 is recorded as a write-down with its reason rather than chased as an unpaid balance.

Common mistakes

Sending the prebill itself to the client, so they see unreviewed entries and later write-downs look like discounts.
Writing time down without recording the reason, which leaves no trail for realization reports or a fee dispute.
Issuing an advance request as a VAT invoice in the UK, which moves the tax point to the issue date even if the client pays months later.
Not applying the advance payment against the final invoice, so the client is billed twice or the payment sits unallocated.
Using “prebill” in a contract without defining it, when the client may read it as a demand to pay in advance.

Frequently asked questions

What is a prebill?

A prebill is a draft invoice produced from recorded time and expenses for internal review. A partner or manager checks and edits it, and once approved it becomes the final bill sent to the client. It is not normally sent to the client and is not the invoice itself.

What is the difference between a prebill and a proforma invoice?

In law firms the two words are often used interchangeably for the internal draft. In trade, a proforma invoice is sent to the buyer before shipment, for example to arrange payment or an import licence. Neither is the final invoice, and in the UK neither should be presented as a VAT invoice.

What is the difference between prebilling and advance billing?

Prebill review happens before any bill reaches the client and changes nothing the client has been asked to pay. Advance billing asks the client to pay before the work or delivery. The advance then has to be applied against the final invoice, and in VAT countries the type of document decides when the tax becomes due.

Is a pre-invoice a real invoice?

Usually not. A pre-invoice is a payment request or a draft that is not posted as a sale. Deltek Vantagepoint, for example, keeps pre-invoices out of the general ledger and applies paid amounts to the next regular invoice. In the UK, mark a payment request “this is not a VAT invoice” if it is not meant to be the VAT invoice.

Can I prebill in InvoiceQuickly?

Not as a review workflow. InvoiceQuickly has no approval step or prebill stage. On Pro you can track time and bill selected hours into a draft invoice, but no one else reviews it before it goes out. You can save an invoice as a draft and edit it until you send it, but the invoice number is assigned when the draft is created. For advance billing, Pro estimates can be accepted by the client and converted into an invoice; deposit and retainer invoices are not available.

Related Resources

Last verified: October 2026

What Is Prebilling?