Invoicing for Construction Companies
Invoicing is a crucial part of any business. An invoice serves as a reminder to your clients of their payment obligation for purchasing your products or availing of your services. It’s different from a receipt because the latter is typically given after the transaction has been completed.
The process of creating invoices is less straightforward in the construction industry because you have to consider the estimate or quote you sent to clients before the project started. Moreover, aside from recording the price of materials, you also have to track the time worked, which is a complex process in itself since it involves putting a price on the labor of your workers.
Here are some invoicing tips that you can use for your construction company:
1. Use A Template
You can find specialized invoice templates for construction companies, which include all the factors that the document should have. Using templates eases your burden a bit because you no longer have to worry about the design and layout of your invoice. With this, you only have to think about the details and things that should be attached to the file.
Make sure that you look for a sleek design with a readable font type and size to avoid misinterpretations and confusion on the amount due and other factors. See here for some construction invoice templates that will help you get paid promptly.
2. Keep A Record Of Everything
As mentioned above, you will need to track the number of hours that you and your team worked on the project, as well as the cost of the materials you used. Make sure that you can provide evidence of the times that your workers logged in and out from the site. You can do this by having them sign timesheets before and after work. You can also send your clients pictures of the site to keep them updated on the project’s progress.
For the cost of materials, make sure that you keep and compile all the receipts so that you can present them to your clients transparently. Have digital back-ups by scanning them and saving the soft copies on your computer or, better yet, on the cloud.
You won’t need to include the timesheets and receipts when sending the invoice. However, it does come in handy when you have to settle a dispute with a client.
As much as possible, update your invoice weekly to ensure the accuracy of your transactions, as well as to keep your clients informed of the project’s development. Make every effort to be transparent in this document to uphold the customer’s trust in your company. They have to know where each dollar is going.
3. Take Advantage Of Apps
To streamline your process and ensure accuracy, you should also invest in time-tracking and accounting software for your construction business. These apps can help you monitor your employees’ productivity, as well as keep track of your business expenses.
A time-tracking app can record the hours that your workers spend on a particular project. Nowadays, most programs allow employees to clock in through their phones. The recorded data will, then, be delivered to your accounting app, which totals the numbers on your behalf.
Accounting software can also help with your invoice because it automatically calculates the material expenses that you add. You just need to apply your markup, and it will modify your invoice according to the final price.
4. Create A Detailed Invoice
While you don’t need to spend so much time poring over each field in your invoice, you should also ensure that there won’t be any misinterpretations or confusion from it. Essential invoice information includes your company name, address, and contact number, as well as the material and labor costs, amount due, payment terms, and due date.
5. Study Your Payment Terms
Unlike banks, which can afford to extend payment for up to 30 days, construction companies need steady cash flow to keep them afloat. Study your payment terms and strive for the right balance between giving your clients ample time to pay and for you to pay operating costs without problems.
Conclusion
Invoicing is a different process for construction companies because they have to consider the time worked and quotation on top of the cost of materials. It helps if you use a template since you won’t have to think too much about the design and layout anymore. You can just focus on the details that you’ll put in the document. Apps can also help streamline your invoicing process.
Moreover, make sure that you keep a record of all transactions involved in the project, from the receipts of the products you bought or supplied to the timesheets of your workers. Create a detailed invoice to promote transparency in all your dealings, and study your payment terms to see what works well for your business.
