Tips for Creating an Effective Construction Invoice

Invoice with Paid Stamp - three invoices with paid stamped on them. All details are imaginary.

Keep your construction company running smoothly by creating effective invoices. This guide will show you how to create one easily.

If you’re a contractor, invoicing is a skill you’ll have to master. Where payments and money are involved, this can seem like a daunting task at first.

The good news is, creating an invoice isn’t tricky. Once you’ve created one, you can use it as a template for all the jobs that follow. The real challenge lies in keeping track of your hours, materials, and projects so you can send accurate invoices for your construction work. So, in this article, we’ll take a look at how to create a contractor’s invoice.

Let’s dive in!

How to Create an Invoice for Construction Projects

Invoices are quite simply documents you send to your clients that contain the billing information, payment deadline, and payment info necessary for your client to pay you.

well-formulated invoice makes sure you get paid correctly and on time. Here is what it needs to include:

Identify the Document as an Invoice

It’s essential to label your invoice in the header clearly. This makes it immediately apparent to the client what they’re looking at. Most invoices include the word ‘invoice’ in a large, bold font.

Include Your Relevant Business Information

Still, in the header of the invoice, include your business’ contact information, and your construction company’s logo if you have one. Add your name, address, email address, and telephone number.

If ever there is a dispute, having this information on your invoice means that you can prove you have provided all the necessary details to get in touch with you to solve any issues.

If your client handles several contractors at once, they’ll appreciate being able to see who the invoice is from and who to contact with questions.

Include Your Client’s Contact Details

Below your own contact details, define the contact information of your client. Ask your client for the correct billing contact for your invoice. With larger companies, there is often a dedicated billing department.

The person who pays you may be different from your point of contact during the completion of the work.

Add the Date and Assign a Unique Invoice Number 

Every invoice should include a unique invoice number. This mostly helps with your own record keeping, both for you and your clients. It’s easier to refer to a specific invoice if any issues arise. You can use sequential numbers, beginning at #001.

Note on the invoice when it was created and sent out. This is important for your records and will allow you to measure how long it takes for payment to arrive.

Detail the Services Provided

This section forms the bulk of your invoice. Create a table with four columns, which you’ll fill with an itemized list of your services. In the first column, add a quick description of the service.

This could be ‘window replacement’ or ‘wall plastering.’ You can further break up the services into sub-sections if you keep track of your bills for steps in the construction process.

In the next column, you determine the quantity. This could be specified by how many times you performed a service, or how many hours you’ve worked. It’s up to you how to bill your clients. In the third column, you can list your rate of pay.

Finally, enter the fourth column should include the subtotal for each service. Below this table, list the total amount due and make a note of any VAT or taxes that apply.

Include Your Payment Terms

This should include the payment methods you accept. If you have a late-fee policy, you should also include this. In order to enact this, your invoice should also include a payment due date.

Construction Invoicing Best Practices

It can take construction companies an average of 73 days to get paid. That’s a long time. So, by following these invoicing best practices can increase the chances of you being paid on time.

With this in mind, always make sure you:

  • Send your invoice immediately. The sooner your client has the invoice, the quicker you can get paid.
  • Always itemize and segment your services so your clients can clearly see what material and hourly costs went into the full price. This can help settle disputes and ease any confusion.
  • Always set reminders in case the customer doesn’t pay on time. You are within your right to demand payment within the time specified. If a client fails to pay you, don’t panic – they might simply have forgotten.
  • Remind them firmly but politely that they still owe you money and refer them back to your invoice.
  • Use an electronic invoicing system. This makes it easier to deliver, resend, track, and manage your invoices, and more importantly, payments. If your business uses construction accounting software, this usually includes features that help you track your costs and time too.

Other Tips

Avoid extended payment terms. YOU ARE NOT A LENDER! Payment terms should not exceed seven days. Otherwise, you might fall behind on expenses you owe yourself. Think of any laborers you also employ.

For the sake of your own business running smoothly, ensure that clients are encouraged to pay within a week.

Keep all your purchase receipts and note down your hours. If any disputes arise, it is good to be able to prove what you spent and when, as well as name the precise times you showed up to work.

In the unlikely case, a dispute will go to court; this information will be crucial.

Making Construction Invoicing Easy

We hope having read this article, you have a better idea about how to produce and manage contractor invoices.

LMS Project provides a range of tools to allow small construction business to track their budget, send online invoices, collect electronic payments, and simplify their paperwork. Contact us today to see how we can take the hassle out of getting paid! 

LMS Project

https://www.lmsproject.com

LMS Project is an online platform for managing payments and budgets for construction projects. We provide a simple to use solution for contractors to keep project budgets on track, reduce paperwork, and get subs paid fast without breaking their own bank account!