A construction invoice is a valuable document for contractors and construction businesses to bill clients for services performed and details the total costs of labor, materials, and other related charges. It can also help you create a consistent billing procedure for all accounts receivable, which enables you to stay organized and assures clients of your professionalism.
Billing is one of the primary challenges a construction company faces. Whether you bill progressively throughout the project or provide one final invoice upon completion, payment for your services is critical for keeping the business running.
When to Use
There are many types of construction services you may want to invoice for:
- Residential construction
- Commercial construction
- Mixed-use construction
- Industrial construction
- Heavy civil construction
- Institutional construction
What to Include
Due to the complex nature of construction projects, a detailed invoice is crucial for providing clear expectations. Invoices for construction work should include the following information:
- Construction company details – Include your company name, address, phone number, and other contact information
- Client information – Address the invoice to the company or individual receiving construction services. If multiple companies or representatives are involved, ensure all appropriate parties are named.
- Invoice number – Assign a unique number to each invoice as you issue it. This allows both parties to keep track of payments owed and received.
- Invoice date – Putting a date on your invoice ensures your client knows when payment is due. You may also use it to calculate late fees and interest if you still await timely compensation.
- Project description – Include an overview of the project, work to be performed, project location, and project name.
- Materials – List the materials used and their prices. Even if your project is for a lump sum, including information about the materials used in the invoice period is wise.
- Labor breakdown – Include the number of employees, hours worked, and hourly rate to substantiate labor charges. A lump sum contract may include this in the overall price, but it is wise to track labor hours to ensure your project remains within its budget.
- Miscellaneous expenses – If your contract includes mileage, supplies, parking fees, and other costs, list these on the invoice. Include copies of receipts or other documentation to substantiate the charges.
- Total cost – Tally expenses, labor, materials, taxes, and other charges on the invoice so the client can see the price breakdown. Include any calculations for discounts, credits, and cost-plus percentages.
- Payment terms – Inform the client of the due date and acceptable payment methods. If the client has a payment arrangement, include a list of invoices submitted, payments to date, and the remaining balance.
Depending on the terms of your agreement, you may include legal disclaimers and penalties for non-payment or add a payment plan agreement for payment in installments.
How to Invoice Construction Clients
To invoice a construction client, follow these steps:
Enter the Project Information
Provide the project location, name, number, and scope of work. Include lists of all materials, hours, and expenses that will be included in the contract.
Tally the Full Costs
Show your calculations, including the materials, hours, expenses, taxes, and discounts. Note any previous payments received and their associated invoice numbers. If payments are made in installments, indicate the remaining balance.
Send the Invoice
Depending on your agreement, you may send the invoice to the client, their representative, or their accounts payable department. You can send it by mail or email or deliver it in person. Be sure to include dates and invoice numbers to make it easy for their internal payment processors.
Making Sure the Invoice Results in Payment
Timely payment for construction services is crucial to keep your business running.
Establish a Clear Construction Contract
The first step in a successful invoicing policy is establishing a construction contract agreement or specialized service agreement with a description of the project and payment terms. Consider putting a copy of the invoice in your contract so the client knows what to expect when you begin billing.
Outline the Scope the Work
Ensure that the scope of work is detailed in full. Consider adding instructions for change orders in case the client requests services outside the agreed scope of the project. List the agreed pricing for the scope of work and confirm that any work outside the contract scope will require a change order.
Provide Transparent Payment Terms
Keep your payment terms clear and concise. Set a time frame for paying the invoice and penalties for failure to pay on time. Provide payment options, such as payment apps, online portals, or mailed checks or money orders. Include the mailing address for payments by check or money order.
Send Invoice Reminders
Send invoice reminders before the due date. A friendly reminder keeps clients from forgetting payment deadlines so they do not incur penalties.
Send a Notice of Intent to File a Lien
If your customer fails to pay their construction invoice on time, you may have to use more forceful methods to obtain payment. A mechanic’s lien or construction lien allows you to secure payment for your work via a legal claim against the property. Sometimes, a notice of intent to lien is sufficient to obtain payment. If not, you may need to file a lien or take additional legal action.
See below a sample of a construction invoice, and download your own template in Word or Excel format: