How construction billing differs from a simple invoice
A plumber’s service call ends with one invoice. A construction job runs for months, so you bill against a contract in stages: a pay request each month or at each milestone, with retainage held back and a final invoice that releases it. Owners and lenders check every number, so the invoice needs to show the whole picture, not just this month’s amount.
The sample above is a typical construction work invoice. Edit the lines to match your schedule of values, set your rates, and the totals follow.
Progress billing with retainage: a worked example
Say your contract is $120,000 with 10% retainage. This is pay request #3. You have already been paid for $40,000 of work, less $4,000 retainage.
| Schedule of values | Contract value | % complete | Completed to date |
|---|---|---|---|
| Site work and excavation | $15,000.00 | 100% | $15,000.00 |
| Foundation | $25,000.00 | 100% | $25,000.00 |
| Framing | $40,000.00 | 50% | $20,000.00 |
| MEP rough-in | $30,000.00 | 0% | $0.00 |
| Finishes | $10,000.00 | 0% | $0.00 |
| Total | $120,000.00 | $60,000.00 |
| Pay request #3 | Amount |
|---|---|
| Work completed to date | $60,000.00 |
| Less retainage 10% | −$6,000.00 |
| Earned less retainage | $54,000.00 |
| Less previous payments | −$36,000.00 |
| Amount due this request | $18,000.00 |
In the editor, the simplest approach is one line per schedule item for this period’s value (framing 50% = $20,000) and a negative line for retainage on that amount (−$2,000). That gives the same $18,000 due. Put the cumulative summary in the notes so the owner can tie it to the contract.
Some public and lender-funded projects require a specific pay application form instead of, or alongside, your invoice. Use theirs when it is required and attach your invoice as backup.
Deposits, change orders and lien rights
Many contracts start with a mobilization payment or deposit. On residential work, states may limit it: California caps the down payment on a home-improvement contract at 10% or $1,000, whichever is less (Bus. & Prof. Code § 7159). Commercial work follows the contract. Check your state’s rules before you bill.
Change orders belong in writing, priced and signed before the extra work starts. Once approved, add them to the schedule of values as numbered lines.
Lien rights protect you if a payment never comes, but they come with deadlines. Many states require a preliminary notice within a set number of days after you start, and lien waivers are traded for payments as the job goes on. The rules vary by state, so check with your state licensing board or a construction attorney early.
Taxes, permits and the final invoice
Sales tax on construction depends on the state and on whether the job is new construction, repair or a lump-sum contract. Set the rate per line so materials and labor can be treated differently if your state requires it, and confirm with your accountant. Bill permits, inspections, dumpsters and engineering fees as their own lines.
The final invoice releases retainage once the punch list is done. List it as “Release of retainage” and note the completion date. When it is paid, mark it paid in My documents and create a receipt if the owner wants one.
Pricing a job first? Start with the construction quote template and turn it into an invoice once accepted. Smaller residential jobs fit the contractor invoice template; trade subs can use the electrical or plumbing pages. New to invoicing? Read how to make an invoice.