What a contractor invoice needs that a basic invoice doesn't
- Your license number. Many states require it on bids and contracts. California's Contractors State License Board requires it on every bid, contract and ad. Putting it on the invoice keeps the paper trail consistent.
- The job address, separate from the billing address. Lenders, insurers and lien filings go by the property, not by where the owner gets mail.
- What it bills against. Name the estimate or contract, and which draw this is if you bill in stages.
- Change orders on their own lines, each with the date the client approved it. Most payment disputes on remodels start with an extra that was agreed out loud.
- Pass-through costs marked as pass-through. Permits, engineering and dumpsters are easier to get paid for when the client can see they are not your markup.
Billing a job in stages
On anything longer than a couple of weeks, most contractors bill a deposit, then progress draws tied to milestones the client can see (rough-in passed, drywall done), then the final. Each progress invoice should show four numbers: the contract total, what was billed before, what this invoice bills, and the balance left. A client who can check those four numbers in ten seconds pays faster than one who has to reconstruct them.
Commercial work adds retainage, where the owner holds back a percentage of each draw, commonly 5 to 10 percent, until the job is complete. If the job runs on a schedule of values (the AIA G702 and G703 forms are the usual standard), mirror its lines on your invoice one for one.
An invoice does not protect your lien rights on its own
Mechanics lien rules are set state by state, and many states require a preliminary notice early in the job to keep the right to file later. California's is due within 20 days of first furnishing work. Check your state's deadlines at the start of the job, not when a payment is late.
Questions contractors ask
Do contractors charge sales tax on an invoice?
It depends on the state. In many states a contractor pays sales tax on materials when buying them and does not charge the client tax on the finished improvement. Other states tax the contract price. Check your state's department of revenue for how your work is classified.
How soon should a contractor send the invoice?
The day the milestone or job is done, while the client can still see the finished work. Invoices sent weeks later get paid later.
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