Construction Invoice Template

Why construction uses progress invoices

Building projects run for weeks or months and tie up large sums in labour and materials long before handover. Instead of one final bill, contractors usually invoice at agreed intervals, often monthly or at defined milestones, for the value of work completed so far. Owners, lenders and general contractors are used to this rhythm, and many contracts require it.

Each progress invoice should be easy to reconcile with the previous one. Use the same line items in the same order, carry forward what was billed before, and show only the new value earned in this period. The sample shows a typical mid-project bill: one stage complete, another partly finished, materials stored, labour hours, an approved change order and site costs.

Schedule of values and percent complete

A schedule of values breaks the contract sum into trade or stage items that add up to the total contract price. On each invoice you report how much of every item is finished. For lump-sum items, that is a percentage: 60% of a $38,000 slab is $22,800. For measured items, it is the quantity installed times the unit rate.

Be realistic with percentages. Over-billing early, sometimes called front-loading, may help cash flow briefly but erodes trust with owners and inspectors, and lenders often send someone to verify progress before releasing draws. A site photo log attached to each invoice is the simplest evidence of progress.

Retainage: money held back until completion

Many construction contracts let the owner retain a percentage of each progress payment until the project is complete and defects are fixed. That retained amount, called retainage or retention, is released with the final invoice or after a defects period. On US federal construction contracts, the Federal Acquisition Regulation says a percentage of a progress payment may be retained when satisfactory progress has not been achieved, and that retainage should not be used as a substitute for good contract management.

Private contracts set their own retainage rules, and some states and countries limit the percentage or the release timing. Read your contract, then show retainage clearly on every invoice: gross value of work this period, retainage withheld, and net amount due. Track total retainage held to date so the final release invoice is straightforward. In Prima Invoice you can enter retainage as a negative adjustment in the notes or as a discount line with a clear label.

Change orders and variations

Owners change their minds, ground conditions surprise everyone, and design gaps appear. Any work outside the original scope should be priced and approved in writing as a change order (in some countries called a variation) before it is carried out. Bill each approved change order on its own line that quotes its number, a short description and the approved value.

Never fold extra work into an existing line or bill it without signed approval. Unapproved change orders are the most common source of construction payment disputes, and many contracts state that unapproved extras will not be paid at all.

Materials: installed, stored and delivered

Contracts often allow you to bill for materials delivered and securely stored on site, or sometimes off site in a bonded warehouse, before they are installed. Owners may require proof of ownership, insurance and secure storage. Label these lines clearly, as in the sample's structural steel, so they are not mistaken for completed work.

Large purchased items such as windows, HVAC units or lift equipment can be billed on delivery if your contract allows it. Keep delivery tickets and supplier invoices ready to attach.

Lien waivers and payment paperwork

In parts of the United States and elsewhere, contractors, subcontractors and suppliers can register a lien against a property when they are not paid. Owners and lenders therefore often ask for lien waivers or releases with each payment application, conditional on receiving payment. The forms and rules vary by state and country, so use the ones your contract or jurisdiction requires and keep copies with each invoice.

Other documents that commonly travel with a construction invoice include certificates of insurance, inspection sign-offs, subcontractor payment confirmations and the updated schedule of values. Send them as one package to avoid back-and-forth.

Labour, equipment and site costs

Time-and-materials contracts, and the time-based parts of fixed-price ones, bill labour by the hour or day per worker or crew. State the crew size, trade and dates in the description. Equipment hire such as excavators, scaffolding, cranes, generators or concrete pumps should show the rental period and unit.

General conditions, the costs of running the site such as temporary fencing, site toilets, dumpsters, site supervision and temporary power, are sometimes billed monthly as their own line and sometimes built into the stage prices. Follow the structure in your contract.

A worked example from the sample lines

The sample bills $12,500 for completed site preparation, 60% of a $38,000 slab ($22,800), $14,750 of stored steel, 160 framing hours at $65 ($10,400), change order 03 for $4,180, five excavator days at $450 ($2,250) and three dumpster swaps at $525 ($1,575). The gross value of work this period is $68,455 before tax and retainage.

If the contract withholds 5% retainage, the net due for this period would be the gross amount less 5%, before any tax. The numbers are illustrations only; your contract, location and market set the real figures.

Subcontractors billing a general contractor

Subcontractors usually submit invoices to the general contractor on a schedule tied to the GC's own billing to the owner, often a few days before the GC's cut-off. Late submissions can slip a whole month. Ask for the cut-off date and the GC's preferred format at the start, and include their job number, cost code and the subcontract number.

Many subcontracts contain pay-when-paid or pay-if-paid clauses that link your payment to the owner paying the GC. Their enforceability varies by jurisdiction; know what you signed before the first invoice goes out.

Final invoice and retainage release

At practical completion, issue a final invoice for the remaining contract value, closing out every line of the schedule of values. Retainage is often released in a separate invoice once punch-list items are fixed and any defects liability period ends. Include the documents the owner needs to close the project, such as warranties, as-built drawings, operation manuals and final lien releases where required.

Taxes and local rules

How building work is taxed differs widely between countries, and sometimes between labour and materials or between main contractors and subcontractors. Prima Invoice never adds a rate for you. Enter the tax label and rate that your accountant confirms, and add any required wording to the notes.

Measured work and the units trades use

Unit-rate contracts pay for quantities actually installed, so the units must be unambiguous. Concrete is usually measured in cubic yards or cubic metres, rebar by weight in tons or tonnes, excavation by volume or truckloads, drywall and plastering by square foot or square metre, skirting and trim by linear foot or metre, roofing by the square (one hundred square feet) or by area, and pipework or ductwork by length with fittings counted separately. Brickwork may be priced per thousand bricks or per square metre of wall.

Write the measurement basis into each description, for instance "Blockwork, 140 mm, 86 m2 laid this period", and keep the takeoff sheets or site measurements that support it. Quantity surveyors and cost consultants who check payment applications will ask for them, and a clean measurement record shortens their review dramatically.

Home renovations versus commercial projects

A kitchen remodel or loft conversion for a homeowner rarely needs the full formality of payment applications. Homeowners prefer plain milestones: deposit, demolition and first fix, plastering, second fix and finishes, completion. Keep the vocabulary friendly and attach photos. Commercial, institutional and public projects, by contrast, often require standard payment application forms, certified progress, signed continuation sheets, insurance certificates and sometimes certified payroll reports. Match the level of paperwork to the client, but keep the same numbering discipline and sequence for both.

Delays, weather and disputed valuations

Rain days, late deliveries, design queries awaiting answers and access restrictions all affect what you can bill. If the owner causes delay, your contract may entitle you to an extension of time or prolongation costs; claim them through the contract mechanism, with diaries and correspondence, rather than adding unexplained amounts to a routine invoice.

When an architect, engineer or employer's agent values your application lower than you claimed, ask for their breakdown, agree the undisputed part so it is paid on time, and resolve the remainder separately. Splitting disputed amounts into their own lines on the next application keeps the conversation focused on specifics instead of the whole bill. Adjudication, mediation and arbitration routes differ by jurisdiction, so involve an adviser early if sums are significant.