What are the invoicing best practices for the construction industry?

2 Invoice according to the contract terms

Another important invoicing best practice is to invoice according to the contract terms that you have agreed with your client. The contract terms should specify the frequency, format, and method of invoicing, as well as the payment terms, milestones, change orders, retainage, and dispute resolution procedures. You should follow the contract terms closely and invoice only for the work that has been completed and approved by the client. You should also include any supporting documents, such as progress reports, receipts, lien waivers, or certificates of completion, that can verify your work and facilitate the payment process.

3 Track your time and expenses

A third invoicing best practice is to track your time and expenses accurately and transparently. Tracking your time and expenses can help you calculate the correct amount to invoice, avoid underbilling or overbilling, and justify your charges to your client. You should use a reliable time tracking and expense tracking software that can record your hours, tasks, rates, and receipts, and generate detailed reports that can be attached to your invoices. You should also update your client regularly on your time and expenses, and notify them of any changes or deviations from the budget or the scope of work.

4 Send your invoices promptly and electronically

A fourth invoicing best practice is to send your invoices promptly and electronically. Sending your invoices promptly can help you get paid faster, improve your cash flow, and avoid late fees or penalties. You should send your invoices as soon as you complete a milestone, a phase, or a project, or according to the agreed invoicing schedule. You should also send your invoices electronically, preferably by email or through an online invoicing platform, as this can speed up the delivery, reduce the paper waste, and enable online payment options. You should also confirm that your client has received and reviewed your invoices, and follow up with them if necessary.

5 Monitor and manage your invoices

A fifth invoicing best practice is to monitor and manage your invoices effectively. Monitoring and managing your invoices can help you track the status of your payments, identify and resolve any issues, and maintain a healthy cash flow. You should use a reliable invoicing software or system that can store, organize, and update your invoices, and send you reminders, alerts, or notifications of any overdue or outstanding invoices. You should also communicate with your client regularly, and address any questions, concerns, or disputes that may arise regarding your invoices. You should also thank your client for their payment, and provide them with a receipt or a statement of account.

6 Comply with the invoicing laws and regulations

A sixth invoicing best practice is to comply with the invoicing laws and regulations that apply to your construction project. Invoicing laws and regulations can vary depending on the state, county, or city where your project is located, and they can affect your invoicing requirements, procedures, and rights. You should familiarize yourself with the invoicing laws and regulations that govern your project, such as the prompt payment laws, the lien laws, the tax laws, and the consumer protection laws, and ensure that your invoices meet the legal standards and expectations. You should also consult a legal or accounting professional if you have any doubts or questions about your invoicing compliance.