Invoicing for contractors: the billing run, in order

On a construction job an invoice is not a summary of the work. It is a claim, and it is checked like one. A billing that does not tie to the schedule of values goes onto a pile on somebody's desk, and that pile moves once a month.

Bill against the schedule of values

Break the contract into the same line items every month — the schedule of values — and bill percent complete against them. Each billing shows the scheduled value per line, the work completed this period, the total to date, retainage held, previous billings, and the amount due now.

Percent complete means value in place, not percent of the calendar. Under-bill and you lend the owner your money; over-bill and the whole application comes back, which restarts the clock rather than stopping it.

Three fields that get billings kicked back

The customer's legal name, not the site address, where owner, developer and paying entity are three companies. The purchase order or contract number, printed rather than agreed on the phone. And a description per line that identifies the work: "framing, second floor, 60 percent" is a claim, "renovation work as agreed" is a category.

Change orders go on their own lines, by number, and only the ones signed before that work began — writing the estimate says why.

Retainage belongs on a line of its own

Five or ten percent of every progress payment, withheld for months against labor and material you paid for weeks ago. Show it on every billing and carry it as a receivable with a release date, not as a rounding difference. Limits and release timing are a state question: retainage limits by state.

The waiver is the gate, and it has an exceptions box

On most jobs the check does not move until a lien waiver is signed. California prescribes the forms: one taken in exchange for a progress payment is void unless it is substantially in the statutory form. Two details on it are worth real money.

Conditional means it takes effect only when the check clears. Sign an unconditional waiver against a check in hand and you released the claim before the funds settled.

The form also carries an Exceptions block — retentions, extras you have not been paid for, earlier conditional waivers still unpaid. Fully signed change orders through that date go with the waiver unless they are listed there, so an empty box in a month with an unpaid extra gives away a claim with a signature.

What actually starts the clock

A proper billing, delivered. In California private work the owner pays the direct contractor within 30 days of a notice demanding payment under the contract, may withhold no more than 150 percent of a disputed amount, and owes 2 percent per month plus costs and fees on anything wrongfully withheld. Other states set their own days and their own interest: prompt payment, state by state.

Two things stop the first check before any of that applies: a missing W-9, where an absent or incorrect taxpayer identification number puts 24 percent backup withholding on your payments, and a certificate of insurance that lapsed mid-job.

Bill weekly, because the tax does not wait

On the accrual method income counts when the all events test is met — your right to the money fixed, the amount determinable — not when it lands. December's invoice is this year's income and next year's cash.

So put the run in the same slot every week, and close each job against what it consumed while the numbers are warm: job costing for contractors. Where the hours and photos sit before the run starts: Zirko for plumbing contractors.

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What Zirko does here: hours taken into a document carry an origin marker and drop out of the selection, so the same hour cannot reach two invoices; interim invoices are offset in the final invoice; a retention line sits below the total; and a finished invoice can no longer be edited — the correction is a credit note or a cancellation with its own number.