What are construction invoices used for?

Whichever billing method you choose for a construction project, you’ll need to send the client a document that itemizes your services, time, material costs or whatever other items you’ve agreed upon. This invoice, also sometimes called a construction bill, tab, bill of sale or purchase invoice, serves as a record for both the client and you of how much and when the client needs to pay you. And while looking at a construction invoice template to get a basic idea of what to include is helpful, understanding each of the components can help you create ones that fit each project and the terms of your contract with the client.

Why do construction professionals send invoices?

The main function of sending an invoice is to get paid — and as quickly as possible. But this document serves other purposes as well — and when you’re learning how to write an invoice for construction work, you’ll want to understand the other benefits as well. For instance, an invoice can help you:

• Keep track of past-due balances. If an invoice isn’t paid within the required amount of time — say, 30 days — you can send a reminder. 
• Organize client information. Keep the invoice in the client’s digital or physical file to create a complete record for the project.
• Keep financial records for tax purposes. Keeping all of your accounts receivable files with your accounts payable files will help you create accurate IRS filings.
• Customize the client experience. Every construction invoice form you use should be tailored to the project and the client, and should also look professional.
• Simplify statements about discounts, taxes and payment installments. No need to remember all the details about any special financial incentives or payment terms, because they’re all written down in one place. 

When do you send a construction invoice?

Your billing method will determine when to send invoices. Here’s the breakdown.

• Advance billing: Send one invoice before any work is done.
• Arrears billing: Send one invoice after all work has been completed.
• Cost-plus or time and materials billing: Send one invoice before or after any work, depending on the contract terms. 
• Unit price or AIA progress billing: Send an invoice upon completion of every specified part (unit) of the project.

What should be included in a construction invoice?

As you’ll see from our downloadable construction invoice template, several components must be included. These are as follows.

Document title. Often this is simply “Invoice.”

Logo. If your company doesn’t have one, skip this.

Your construction business contact info. Include the name, billing address (which might differ from the street address), phone number and email address.

Customer info. If a specific person on the client’s end should receive the bill, include the name after the company name and “Attention:” and make sure to include contact info.

Invoice number. This will change progressively with each invoice and acts as an identifier.

Date of invoice. Essential to help you keep track for tax purposes as well as payment purposes.

Date(s) of work. This might be a range. 

Payment due date/terms. This is whatever you and the client have agreed upon, per the contract. Be sure to note any fees for late payment.

Labor section: work completed and time spent. It’s a good idea to include this even if you’re charging a flat fee for the entire project, for the sake of transparency. Include the description, hours, rate and total amount. Learn more about Construction Billing Methods and How to Price Construction Jobs precisely here.

Materials section: raw materials, supplies and products. Include the material type, quantity, cost per unit and total cost.

Miscellaneous charges. This is where you’ll account for things like permit fees and equipment rental costs.

Discounts (if applicable). Include the full invoice rate for tax purposes, the discount percentage or fixed dollar amount, the subtotals (if applying the discount to more than one area) and the grand total.

Client signature line. Just a blank line where the client will sign. Additional notes or terms. Include anything extra that doesn’t fit in any of the above categories.

How to create a construction invoice step by step.

Now let’s walk through the entire process of how to write an invoice for construction work.

1. Download a construction invoice template, such as our free one, or choose software that has an invoicing feature.
2. Import your original bid or estimate and double-check that it’s still accurate. Don’t forget to add any change orders or any line items that were added after you created the initial bid.
3. Especially if the project has a very long time frame, check competitors’ rates to make sure yours are still in an acceptable range for you and the client. Consult with the client if any adjustments should be made.
4. Once you’ve verified all the line items and rates, and made sure all of the other components in the previous section are included, note on the invoice any deposits or other payments the client has already made and deduct that amount from the grand total.
5. Give your invoice a final once-over for errors.
6. Submit the invoice to the client via the agreed-upon method — email, software or snail mail.
7. If you’re doing everything manually, keep the invoice in a “to be paid” file so you can follow up on payment if necessary. If you’re using software, it should be easy to see unpaid invoices at a glance.

Alternatives to manually creating construction invoice templates

Downloading a construction invoice example is a great way to get a feel for what you should include and what your invoice might look like. But using software that has a built-in invoicing feature is often the better way to go, especially if you have multiple clients and more than one project underway at a time. Here are a few benefits of using software vs. using a construction job invoice template. 

• Improved accuracy. Automated calculations and things like pre-populated line items reduce the chance for human error.
• Faster completion. You won’t have to manually write in every line item and rate every time (thanks to digital templates), and you also won’t have to then add everything up using a calculator, so you’ll save lots of time.
• Automated invoice tracking. Invoicing software often tracks payments for you and sends reminders about unpaid bills.
• Streamlined financial accounting and tax reporting. Most invoicing software allows you to see paid vs. unpaid bills using a filter, as well as export data either to financial accounting software or as a spreadsheet.
• Professionalism. You’ll be able to easily find invoices if the client has a question vs. having to search through piles of paperwork, even if the project was completed a long time ago. Sending invoices online through software also shows that you’re keeping up with the times and putting your most professional foot forward.

Tip: Houzz Pro’s invoicing feature has everything you need to create and track invoices and get paid quickly. It lets you generate invoices right from estimates with a click, accept payments online (deposited right into your bank account), keep track of payments with ease and stay on top of unpaid bills. You can even split an invoice into multiple payment requests. Houzz Pro software also can generate reports, letting you view the data by project, client, payment method and more.

Keep learning how to improve your invoicing process and check out our Guide to Creating Construction Payment Schedules.