Running a contracting business involves more than scheduling jobs and completing the work. Billing customers and tracking what you’ve collected are also part of keeping the business moving.
Invoices help organize that process. They show customers what they’re paying for while giving you a record of billed work and outstanding balances.
In this guide, we’ll break down what goes into an invoice, the different types contractors use, and how to create one for your business.
What is an invoice?
An invoice is an itemized bill that a business sends to a customer to request payment for products or services. It tells your customer what they owe for the work your business performed.
Invoices help contractors manage several parts of the billing process:
- Request payment for completed work, materials, or project deposits.
- Give customers an itemized breakdown of their charges.
- Track how much you’ve billed and collected for each job.
- Keep records for bookkeeping, taxes, and accounting.
- Document additional work or charges added during a project.
- Set clear payment amounts, due dates, and terms.
Why are invoices important?
The primary purpose of an invoice is to request payment from a customer. Invoices also create a record of what your business billed for each job and what the customer agreed to pay.
When you have several projects underway, those records help you see which customers have been billed and which invoices still have an outstanding balance. They also provide information you can use for bookkeeping and other financial reporting.
For contractors, invoices can reflect what actually happened in the field. If the scope changes during a project, an invoice can account for approved additional work, materials, or other charges. Photos and other project documentation can provide context for those line items when needed.
What should an invoice include?
The details on an invoice can vary by business and job, but every invoice should give your customer enough information to understand what they’re paying for, how much they owe, and when payment is due.
A contractor invoice typically includes:
- Business information: Your company name, logo, address, phone number, and email.
- Customer information: The name and billing information of the person or business responsible for payment.
- Project or service address: The location where the work was performed.
- Invoice number: A unique number used to identify and track the invoice.
- Invoice date: The date the invoice was issued.
- Payment due date: The date payment is expected.
- Line items: An itemized breakdown of the products or services included in the bill.
- Quantities and rates: The quantity, unit, or rate associated with each line item when applicable.
- Taxes: Any applicable taxes added to the invoice.
- Deposits or previous payments: Payments that have already been applied to the project total.
- Total amount due: The remaining balance the customer needs to pay.
- Payment terms and methods: Instructions for when and how the customer can pay.
You can also attach job site photos, files, or other documentation that helps explain the work included on the invoice.
Common types of invoices for contractors
The way you bill a two-hour service call can look different from the way you bill a roof replacement or multi-month remodel. Contractors can use several types of invoices depending on the project and payment schedule.
1. Standard invoice
A standard invoice requests payment for products or services your business provided. For jobs completed in a single visit or phase, a standard invoice may be the only invoice the customer receives.
For example, an electrician could send a standard invoice after completing a panel upgrade. The invoice could list labor and materials as separate line items along with the total balance due.
2. Deposit invoice
A deposit invoice requests a portion of the project total before work is complete. Contractors may collect deposits when a customer approves the project, before materials are ordered, or before the project is scheduled.
For a $20,000 roofing project with a 25% deposit, the initial invoice would request $5,000. That payment would then be applied to the overall project balance.
3. Progress invoice
A progress invoice requests payment as a project reaches specific stages of completion, allowing payments to follow the work as the project moves forward. This type of billing is common on larger projects where payments are tied to milestones or an agreed-upon schedule.
A remodeling company, for example, might invoice for a portion of the project after a scheduled phase is completed and bill the remaining balance later in the project.
4. Recurring invoice
A recurring invoice is issued on a regular schedule for ongoing services. The invoice can follow the same billing cycle for as long as the service agreement remains active.
Landscaping companies, maintenance providers, and other home service businesses with repeat customers may use recurring invoices for work performed weekly, monthly, or according to another service schedule.
5. Final invoice
A final invoice requests the remaining balance when a project is complete. It can show the total project price along with deposits or progress payments already made.
Approved changes, additional work, or credits can also be reflected in the final amount. Project documentation can support these charges by showing the work completed during the job.
Invoice vs. estimate
Estimates and invoices both include pricing information, but customers receive them at different stages of a job.
- An estimate gives a customer an expected price before the work is approved or completed.
- An invoice requests payment based on the agreed-upon billing terms.
For example, a roofing company could provide an $18,000 estimate after inspecting a homeowner’s roof. Once the project is approved, the company could send an invoice for the required deposit. The final invoice would account for the total project cost and payments already made.
Invoice vs. proposal
A proposal outlines the work your business is offering to perform. Depending on the project, it can include the scope of work, materials, timeline, pricing, terms, and supporting photos.
An invoice requests payment associated with that work.
The documents can work together throughout a project. After a customer approves a $10,000 proposal, the contractor can use that agreed-upon project total to create the appropriate deposit, progress, or final invoices.
Invoice vs. receipt
An invoice requests payment from a customer. A receipt documents a payment after it has been made. Together, the documents provide a record of what you billed and what the customer paid.
If you invoice a customer for $750, the invoice records the $750 amount due. Once the customer pays, the receipt provides a record of that payment.
How to create an invoice
Contractors can create invoices with a spreadsheet or document, use an invoice template or online invoice generator, or manage billing through invoicing software. Whichever method you use, the invoice should reflect the information associated with the job.
- Start by confirming the customer and project details.
- Review the completed work and add the appropriate line items, quantities, and pricing.
- Account for deposits or previous payments, calculate the remaining balance, and add your payment terms.
- Review the invoice against your project records before sending it to the customer. Photos, notes, proposals, and other documentation can help confirm what was completed and what should appear on the bill.
This can be especially useful when the person preparing the invoice works in the office while the work itself happens in the field. Keeping project information accessible gives your team a shared record to reference during billing.
Create and send invoices with CompanyCam
CompanyCam keeps your job documentation and billing connected to the Project where the work already lives.
With CompanyCam Invoices, you can create an itemized invoice, pull pricing from your Price Book, attach job site photos and files, and send it directly to your customer. Or, if you’ve already sent over a proposal inside CompanyCam, you can create an invoice directly from it.
And with built-in payment processing, customers can pay online by card or bank transfer from the click of a button.
Keep billing connected to the work.
CompanyCam keeps your project details, invoices, and payments connected from start to finish.
Frequently asked questions
What is the purpose of an invoice?
An invoice requests payment from a customer and provides an itemized record of what they’re being charged for. Businesses can also use invoices to track billed revenue and outstanding payments.
When should a contractor send an invoice?
The timing depends on your payment schedule and the type of work. You may send an invoice to collect a deposit before a project begins, request a progress payment during the job, bill immediately after a service call, or collect the final balance once work is complete.
Does an invoice mean the customer has paid?
An invoice shows an amount that has been billed to the customer. Once the customer makes the payment, a receipt can provide a record of the completed transaction.
What does Net 30 mean on an invoice?
Net 30 means payment is due within 30 days of the invoice date. Other payment terms may give customers a different number of days or require payment upon receipt.
Does an invoice need an invoice number?
A unique invoice number helps your business organize invoices and match payments to the correct customer and project.
Can contractors include photos on an invoice?
Yes. Job site photos can provide context for the work included on an invoice. They can be especially useful for documenting completed repairs, approved additional work, or changes made during the project.
