Top 9 tips for construction invoicing in 2023

Getting paid on time for the work you do is important to keep your business moving forward, but dealing with lost checks and chasing after clients for late payments can be a weekly headache.

Juggling invoices can feel challenging, especially when you’re already busy keeping up with project schedules, working with trade partners and keeping costs in check.

Find a method that works for both you and your client, so you can focus on delivering the best experience to them.

The importance of a solid construction invoicing process

Invoicing can be a complex and time-consuming task, but having a solid invoicing process is essential to the success of any construction business. It ensures you get paid for the work you do, and it keeps your business in the black.

Invoicing systems provide many advantages, including the ability to avoid payment disputes and ensure clients pay on time.

With a well-organized and detailed invoice, you can clearly communicate your work, the materials you’ve used and the costs involved. After all, the more trust you establish with your clients, the more likely they are to pay on time.

You can streamline your construction invoicing process with invoicing software. Ideally, you want to choose invoicing software specifically designed for the construction industry – something that offers features like progress billing, change order management and invoice customization. 

Buildertrend, which offers a range of construction management solutions, including construction invoicing software, can help contractors manage their businesses more efficiently. It can streamline your invoicing process, improve your cash flow and ultimately help you grow your business.

Top 9 tips for construction invoicing

Make sure you get paid on time by following these tips to make construction invoicing easy.

1. Set clear expectations in your construction invoices

Determine how the project will be billed. Some invoicing processes are progress payments, schedules, construction estimates, or even a bill from the selections sheet or construction change orders. However the costs are calculated, make sure both you and your client are aware of the payment terms.

Miscommunication is a big source of conflict in the construction industry. Get to know your clients, and establish payment guidelines. Be clear about due dates and deadlines, payment methods and contact methods. As much as you want their business, it’s important for you to not lose money on negligence and unreliability. 

As the construction project progresses, provide a log of adjustments so surprises are kept to a minimum. This way, your client doesn’t miss sections of the invoice, and they’re less likely to be surprised. Keeping a single source of truth regarding the bottom line leaves out any second guessing.

2. Create construction invoice templates

When making a construction invoice, be as clear as possible. Make sure “invoice” is at the top of the page so your client knows exactly what it is at a glance. Include important information such as your contact information, your client’s contact information and an invoice number.

List all services, materials and the final amount you want to collect in the invoice. If the invoice is only for part of a job, make sure it’s clearly stated too. Overcommunicating can lead to fewer errors.

To simplify this process, a digital professional invoice template saves time on recreating bills for similar jobs. For example, if you’re continuously using the same materials and charging the same amount for a drywall installation, a template saves the hassle of recreating the bill for each new job.

Decksouth can speak to this. The Atlanta outdoor builder needed a way to make every second count, so they switched to Buildertrend as a central tool for many use cases – one of them being invoice templates.

John Lea, CEO and founder of Decksouth, said, “When you run a small business, inefficiency is money lost. If just one thing takes 30 minutes longer a day and there’s an average of 30 days in a month, that’s 900 minutes wasted. Templates help cut that 30 minutes down to five. There’s only 24 hours in a day, and last time I looked they aren’t making more of them.”

Consider using construction invoicing software like Buildertrend to help create templates and streamline your processes. Users can automatically generate line-item invoices, and manual tasks, such as calculations or document creation, can be left to the software. Each time a new client is taken on, an invoice can be generated at the start of a project, cutting back on administrative work.

3. Set up online payments

Clients should be able to pay you easily. Using an electronic payment method cuts out the need to write a check. 

You can ensure you get paid on time and simplify the process for you and your clients with the help of a construction business platform. Integrating Buildertrend into your invoicing routine means you can send friendly payment reminders to your clients, helping avoid missed payments and late fees.

With Buildertrend’s Customer Portal, builders can chat with their clients right within the platform, keeping a neat record of all conversations. This helps everyone stay transparent and on the same page about payment agreements and due dates.

Embracing construction invoicing software like Buildertrend lets you easily organize invoices for construction work by creating a one-stop source for all your payment information. With this handy feature, you can keep track of payment deadlines, making invoices seamless and stress-free.

You should also specify how you prefer to pay (credit card, electronic bank transfer or check). Be sure to let your clients know the available methods and associated fees or processing times. If a client misses a payment deadline, follow up promptly and professionally and remind them of your payment terms. 

4. Generate real-time construction invoicing reports

Knowing where you stand financially during a construction project is critical. One benefit of construction invoicing software like Buildertrend is that it generates real-time cash flow reports showing where you financially stand in a project. This allows you to make any pivots and stay within budget.

Buildertrend’s Work in Progress Report also gives you a breakdown of items and displays how much you’ve billed and what’s left outstanding.

5. Use the same format and language for all your invoices

Using the same format for all your invoices will ensure that your clients easily understand and process all included information. It also presents a professional image and reduces the risk of errors and misunderstandings that could lead to payment delays or disputes.

To help streamline your invoicing process, consider using construction project management software like Buildertrend. Customizable invoice templates help create a standardized invoice format that includes your company logo and branding.

You can also use the software to track invoice status, send payment reminders and set up automatic payment processing for your homeowners.

Consistency in the language is also crucial. Use the same terminology and language across all invoices to avoid confusion or misinterpretation. When communicating with your clients about invoices, use clear and polite language to maintain a positive relationship.

Remember to include all relevant information, such as payment due dates and late fees, and record all communication with your clients. Buildertrend also offers a Customer Portal where you can contact your clients on the platform and keep a record of all communication. This can help prevent disputes and legal issues in case of missed payments or other issues.

6. Be transparent about any additional charges or fees

When working on a construction project, it’s important to communicate any additional charges or fees throughout the process. This way, you can avoid misunderstandings with your clients and ensure you get paid for your work.

To be transparent about additional charges or fees, communicate these costs to your clients as early as possible. This can include fees for change orders, unexpected repairs or materials or any other costs not included in the original contract or estimate. 

Also, consider project milestones, deadlines and any late fees or penalties for missed payments when setting your payment terms. Make sure you communicate these terms to your clients in writing, such as in your contract or invoice.

Construction invoicing software like Buildertrend makes setting and enforcing payment terms easier. You can also set up and customize payment schedules for each project and create automated payment reminders to ensure your clients stay on top of their payments, save time and help prevent errors.

You can also use software to communicate with your clients and update them on any additional charges or fees that may arise during the project.

For instance, GreenHalo Builds, a Scandinavian-style home builder based out of Minnesota, saw a surge of projects but wanted to keep efficiency and profits up. 

The solution? The Estimates feature, which allowed him to project the costs to build the new net-zero homes and check them against his desired price point. This made detailed, error-free estimates possible in a fraction of the time.

7. Use automatic reminders for late payments

One of the biggest frustrations for construction businesses is late payments from clients. This can put a strain on cash flow and impact the overall success of a project. 

To ensure timely payments, consider using automatic reminders through construction invoicing software like Buildertrend. These reminders can be set up to send an email or message to the client a few days before the payment is due or after the payment is late.

Using automatic reminders is a proactive way to reduce time spent chasing payments. It also shows clients that you take payment seriously and want to maintain a positive relationship. 

With Buildertrend, you can customize the frequency and wording of the reminders to fit your business needs.

Besides automatic reminders, following up with clients who are consistently late on payments is also a good idea. By keeping track of payment history and contacting clients directly, you can better understand any potential issues and work to find a solution.

8. Offer incentives for early payments

Incentivizing clients who pay their invoices early can encourage timely payments and help improve your cash flow. Examples of incentives you can offer include a discount on the total cost or extended warranties.

These incentives can also improve your relationship with clients by demonstrating that you value their business and are willing to reward their loyalty. 

However, you should ensure that your incentives are financially feasible and won’t negatively impact your business in the long run.

To ensure homeowners know your early payment incentives, use tools like Buildertrend Payment Processing to include them in your invoices and any related communication. This can also help incentivize clients who may not have been aware of the opportunity to pay early and receive benefits.

9. Keep a record of all your invoices, payments and receipts

Keeping track of your contractors invoice details can help you monitor your finances and cash flow, and overall ensure that you get paid for all the work you do.

You can keep track of your invoices, payments and receipts in a number of ways. One is using a construction project management software like Buildertrend, where you can create and send invoices directly from the software, track your expenses and payments, and generate reports to help you stay on top of your finances. You can also upload and store receipts for quick reference later on.

You can use accounting software like QuickBooks or Xero, which makes it easy to track your finances. These software solutions offer features like invoicing, payment tracking and expense management and can be integrated with other tools like Buildertrend for even greater efficiency.

Invoices, payments and receipts should be kept in a secure and organized manner, regardless of the method you choose. This can help you avoid the hassle of lost or misplaced documents and make providing proof of payment or expenses easier.

Learn how software makes construction invoicing easy

Invoicing can be daunting for construction businesses, especially if you’re using paper-based solutions. Manually inputting and tallying all transactions can take up valuable time and lead to errors. However, project management software can cut out a lot of the number crunching and paper chasing.

With Buildertrend, you can create and send invoices directly from the software, saving you time and effort. You can also customize your invoices with your company’s logo and colors and include any necessary details such as labor costs, material costs and taxes. In addition, you can track invoice status and payment history, so you always know where you stand financially.

Buildertrend’s invoicing feature is also integrated with accounting software like QuickBooks or Xero, streamlining your invoicing workflow and reducing the need for double entry. This integration encompasses your invoices and works with schedules, purchase orders and time clock data. This can save you even more time and reduce the likelihood of errors in your financial reporting.

To learn more about Buildertrend Invoicing and what this feature can do for your business, schedule a live demo today. You’ll see firsthand how our platform can make construction invoicing easy and efficient, giving you more time to focus on what you do best – building.

Construction invoicing FAQs

Check out some of these answers to common questions about construction invoicing.