Contractor Invoice Template

Invoice or pay application? Decide this first

Contractors bill two ways, and using the wrong document is the most common reason a bill sits in someone's inbox. An invoice bills a complete amount for work or service: a service call, a T&M repair, a small project for a homeowner or a property owner who hired you directly. It has line items, tax, terms and a due date, and the customer pays it from their accounts payable like any other bill. A pay application bills a percentage of progress on a fixed-sum contract against a schedule of values, with retainage withheld, on a monthly cycle — the format every general contractor requires from its subcontractors.

The rule of thumb: if the customer is a GC, use the pay application template. If the customer is an owner, a manager or a homeowner, use this one. Some GCs want both, an invoice on top of the pay application for their AP system — in that case the invoice references the application number, matches its current payment due, and carries the same retainage.

What goes on a contractor invoice, field by field

• Your company and license number — the license is not decoration; many owners and property managers will not pay an unlicensed contractor, and their AP software asks for it.
• Bill to and project / job — who owes the money and where the work happened. Keep the job address even when it matches the billing address; commercial customers file by property.
• Invoice number, issue date, due date, terms, PO / reference — the five things an AP clerk needs to approve payment without calling you.
• Amount due, boxed at the top — the customer is looking for one number. Put it where they look.
• Line items with a taxable flag — description, quantity, unit, unit price, amount. Marking which lines are taxable is what lets the workbook tax materials and not labor.
• Subtotal, taxable amount, sales tax, total — the tax base is shown so the customer can check it.
• Less retainage held, less payments received, balance due — deposits and holdbacks are subtracted in the open, not buried in a lump sum.
• How to pay, notes, payment terms — check and ACH instructions, the memo line, completion date, warranty, when retainage is released, and the late charge.

A worked example

The completed example is an owner-direct job: the developer who owns the medical office campus where the sample subcontractor is already working asked them to add two ductless split systems to a server room in the neighbouring building, outside the GC's contract. Four material lines (two 2-ton systems at $2,840.00 each, line sets, condensate pumps, disconnects and pads) come to $6,598.00 and are marked taxable; 24 hours of installation labor at $98.00, a subcontracted electrical circuit at $1,180.00 and startup at $340.00 are not. The subtotal is $10,470.00.

Sales tax at Denver's 8.81% applies to the $6,598.00 of materials only — $581.28 — for a total of $11,051.28. The owner's work authorization holds 5% retainage on the work, $523.50, released on final acceptance, and a $3,000.00 deposit was received in August. The balance due, and the number in the box at the top, is $7,527.78, due October 8 on Net 30 terms. The notes say when the work was completed and when the retainage will be invoiced, so nobody has to ask.

Progress invoices and retainage on invoices

On a larger direct-to-owner job you will invoice in stages: a deposit, one or more progress invoices, and a final. Each progress invoice bills the value of the work since the last one, subtracts payments received, and — if the owner holds retainage — subtracts the holdback on this invoice's work. Carry a running total in the notes ("contract $48,000; billed to date $31,200 including this invoice; retainage held to date $1,560") so the customer sees the same numbers you do. When the job is accepted, the retainage is invoiced on its own, usually alongside a final lien waiver. Our retainage guide covers rates, release and what to do when it is late.

Payment terms and late fees that actually work

Terms are a date, not a phrase. "Net 30" on an invoice issued September 8 means October 8 — print the date. State a late charge (1.5% per month is common; check what your state allows), say what it applies to, and apply it when the time comes; a term that is never enforced is not a term. Give the customer every way to pay you: check with the address, ACH details on request, and the invoice number on the memo line so the payment lands on the right job. Send the invoice the day the work is done. The single biggest predictor of when you get paid is when you asked.

Common mistakes

• Invoicing a GC for progress work — they need a pay application against a schedule of values.
• Taxing labor in a state that does not tax it, or not taxing materials in one that does.
• Netting the deposit into the line items instead of showing it as a payment received.
• Omitting the retainage release terms, then arguing about them at closeout.
• A lump-sum line with no backup — attach the signed T&M ticket or the accepted quote.
• Renumbering or reusing invoice numbers; issue a credit and a new invoice instead.

When invoices come from the job record instead of a blank file — the accepted quote, the approved pay application, the logged T&M — the numbers agree and the invoice goes out the same day. That is what invoicing in BuildWorkPro does.