Construction Invoice Template

When you accept a construction project, you commit to a significant investment of time, money, and labor. If the customer fails to pay, you could face financial hardships and a protracted legal fight. Using contractor agreements and construction invoices can improve your chances of being paid.

What a Construction Invoice Is

A construction invoice informs a customer of work performed, costs incurred and amounts due.

Key Parts of the Invoice

The parts of your invoice will depend on the payment terms in your independent contractor agreement. However, most include specific sections.

Work Performed

You will describe the labor performed on the project. The description may include milestones reached, hours worked or projects completed.

Expenses incurred

You will list any costs you incurred for materials and equipment rentals.

Amounts Owed

The construction invoice will end with a description of the amount owed. Again, this amount will depend on your billing structure and payment terms.

Invoicing Methods to Choose From

Your paramount concern when choosing an invoicing method is cash flow management. You need cash to pay workers, rent equipment and buy materials. However, most customers will not pay for an entire project up front. Thus, you must decide how often to invoice and what to invoice for.

You have several options, including:

• Lump sum: You create a cost estimate and bill for the entire project
• Time and materials: You bill for costs and time spent
• Unit price: You charge as you complete each unit, such as square feet
• Cost plus: You bill for equipment, material, and labor costs and add a fee for profit

Each of these invoicing methods has drawbacks and benefits. You may also use different invoicing methods for different project types. For example, you may use a different plumbing invoice or roofing invoice.

How to Create One Step by Step

Most construction invoices will include a section for hard costs and labor. They will include documentation of both costs and labor, such as receipts and timesheets. You will then calculate the invoice total based on your invoicing method.

Managing Change Orders and Retainage

You should address how changes will be billed in your contractor agreement. You will typically invoice for changes using the same method used for the overall project.

Retainage will also be addressed in your contractor agreement. The invoice should clearly state the amounts owed and the amounts due if the customer is entitled to hold any amounts back for retainage.

Common Invoicing Challenges

The most common invoicing challenge is documenting all costs and labor. Another challenge is describing the work and expenses clearly so the customer knows what was done.

Best Practices to Get Paid on Time

Invoicing regularly will help ensure you get paid. Moreover, address any unpaid invoices promptly to ensure your customer does not get too far behind.

Creating a Clear Construction Invoice

The right construction invoice and invoicing method can increase your chances of getting paid. Use ConsumerShield’s forms and guides to create an invoice that meets your needs.