Question 1

What should a construction invoice include?

Accepted Answer

A construction invoice should include: your business/contractor license number, client name and project address, a detailed breakdown of materials costs (with quantities and unit prices), labor hours and rates, any subcontractor costs, retainage amount (typically 5-10% held back until completion), progress billing percentage if applicable, change orders, and total amount due. Always include your payment schedule and lien waiver language where required by state law.

Question 2

What is progress billing in construction?

Accepted Answer

Progress billing is invoicing based on the percentage of work completed rather than billing the full amount at the end. For example, you might bill 30% at foundation completion, 30% at framing, 20% at rough-in, and 20% at final completion. This improves cash flow for contractors and gives clients visibility into project milestones. AIA-style payment applications are the industry standard for larger commercial projects.

Question 3

How do I handle retainage on a construction invoice?

Accepted Answer

Retainage (or retention) is a percentage of the contract amount — typically 5-10% — that the client withholds until the project is complete and inspected. On your invoice, show the full contract amount, subtract the retainage percentage, and show the net amount due. For example: "Total: $50,000 | Retainage (10%): $5,000 | Net Due: $45,000." Once the project is complete, bill the retainage on a final invoice.

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