How to Invoice for Construction Work
Construction invoicing has more moving parts than most trades — labor, materials, equipment, change orders, and often progress payments across a long job. Get the structure right and you keep cash flowing and avoid payment disputes. Here's how to invoice construction work clearly.
Fixed price, T&M, and progress billing
- Fixed price: one agreed total for the job, often invoiced in stages (progress billing).
- Time & materials (T&M): bill actual labor hours plus materials and equipment — good when scope is uncertain.
- Progress billing: invoice a percentage as the job hits milestones (e.g., 30% at rough-in, 30% at drywall, 40% at completion).
What to put on a construction invoice
- Your business name, license number (if required in your area), and contact details
- The client, the job/site address, and any PO or contract number
- A unique invoice number and the dates + due date
- Itemized labor (hours × rate or a stage amount), materials, and equipment
- Any change orders as separate lines
- The % complete or milestone for progress billing
- Subtotal, tax if applicable, retainage withheld (if any), and the amount due
- Payment terms and methods
Retainage explained
Retainage (or retention) is a percentage of each invoice — often 5–10% — that the client holds back until the job is finished and accepted. Show it as a separate line so both sides can see what's withheld and what's payable now, then invoice the accumulated retainage at the end.
A construction invoice example (progress billing)
| Description | Qty | Rate | Amount |
|---|---|---|---|
| Labor — framing crew (stage 2) | 40 | $55.00 | $2,200.00 |
| Materials — lumber & fasteners | 1 | $1,850.00 | $1,850.00 |
| Equipment rental — lift (3 days) | 3 | $180.00 | $540.00 |
| Subtotal | $4,590.00 | ||
| Retainage withheld (10%) | −$459.00 | ||
| Amount due this invoice (USD) | $4,131.00 | ||
Getting paid & protecting cash flow
- Ask for a deposit up front to cover initial materials.
- Invoice on schedule at each milestone — don't wait until the end of a long job.
- Keep change orders in writing and invoiced as separate lines.
- State a clear due date and your accepted payment methods.
FAQ
What is retainage on a construction invoice?
It's a percentage (often 5–10%) the client holds back on each payment until the project is complete and accepted, then releases at the end. Show it as a separate line.
How do I invoice progress payments?
Bill a percentage of the contract as each milestone completes, noting the % complete and what's been billed to date, so the client can track the job against the schedule.
Should I mark up materials?
Many contractors add a materials markup to cover handling and overhead — just make sure it aligns with your contract. Show materials as their own line for transparency.