billing for construction projects

The longer South 216th Street bridge is needed to span additional lanes on I-5. These added lanes, currently under construction, will connect new on- and off-ramps between the future SR 509 expressway and I-5. The old bridge was 290 feet long, while the new bridge is 335 feet long.

  • Another benefit is the option to include a Guaranteed Maximum Price clause in the agreement, which will put a spending cap on the amount contractors can spend.
  • City planners have said for years the project is likely to take between 18 and 24 months from start to finish.
  • Create clear payment instructions and terms on your documents, so mistakes aren’t allowed to sneak in.
  • The schedule of values is the basis for reviewing payment applications.
  • When it comes to construction billing, there are several key components that play a crucial role in the process.
  • Only 43% of companies incentivize early payments or penalize late payments.

Frequently Asked Questions: Achieving construction invoice success

billing for construction projects

In this article, we will break down the five of the most common construction billing methods, taking a look at the advantages and disadvantages of each. When push comes to shove, it’s important that a construction business understands what tools are available to help recover payment. Mechanics lien claims may be the most powerful tool in this regard, and payment bond claims mirror the recovery tool for public works.

Billing Practices For Construction Companies

billing for construction projects

As a contractor or subcontractor, you need a detailed template to account for additional or emergency work that may be required for a project. This construction time and materials template prompts you to itemize quantities of materials and labor and cost per item, and it provides line-by-line totals. Enter bill-to and other miscellaneous information, and the template will auto-tally totals for all completed construction work. Time and material billing involves billing the client for the actual labor and materials used, plus a markup for the contractor’s profit.

Printable Construction Invoice Template

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This is a simple tweak to your payment terms that can expedite payments. They serve as a record of the customer’s order and are used as part of the approval process, while invoices are a record of the receipt of the products or services and the payment terms. So, an construction billing methods invoice will usually reflect terms agreed to via purchase order. An invoice is a document a contractor, sub, or supplier sends to their customer when payment is owed for work performed. Invoices establish a payment obligation, thereby creating an account receivable.

  • This project is included in the CTDOT’s 2024 Vendor Resurfacing Program.
  • It comes with a $12 million price tag and is fully funded with a $12.5 million budget, with $8.7 million in federal money, $2.5 million from the state and just over $1.3 million from the city.
  • At the same time, once payment comes, lien rights for that payment are permanently waived.
  • The payment schedule will denote project milestones, with each milestone serving as a billing period.
  • The trick is to make sure your back is covered before the construction project starts.
  • Once this is established, the contractor can begin submitting invoices based on completed work.

Fixed price (sometimes referred to as lump sum billing) helps facilitate the bidding process since the total contract price is visible from the beginning. This can help construction companies plan to come in under budget, ensuring a higher profit margin by the project’s end. One of the most common problems in approving construction invoices is double payment.

Or, if the job is botched, you may want to consider withholding payment until the work is brought up to snuff. You don’t want to pay for work that wasn’t expressly authorized or was performed by someone else. Making payment demands shouldn’t be the first step when payment is a little late, but it could become necessary. Keep in mind though – owners and customers don’t typically take kindly to lien threats.

billing for construction projects

Time and Material Billing

AIA billing, also known as the AIA billing process or AIA progress billing, is a standardized method for submitting and processing payment applications in the construction industry. Developed by AIA Contract Documents, AIA billing provides a structured framework for contractors to request payments for work completed on a project. By following these tips and tricks for progress billing management, contractors can better manage their cash flow while maintaining strong client relationships throughout every stage of construction projects. Keep your construction project running full force and ensure prompt payment with this easy-to-use construction job invoice template. In each construction-specific field, enter client contact information, details about the materials, the job date range, a description of work, a labor breakdown, and any miscellaneous charges. The template will automatically calculate individual cost subtotals, as well as the total, at the bottom of the template.

You can track the time spent on a project and automatically generate invoices based on the hours worked. Cost plus percentage billing is similar to time and material billing, but the contractor charges a percentage markup on top of the actual costs. This method can be more profitable for the contractor but can be challenging to sell to clients who prefer a settled price. To ensure accurate billing and maintain finances, the construction company must track all expenses and bill the client accordingly. Choosing the right billing method is essential to ensure accurate billing, reduce disputes, and maintain profitability. Therefore, before taking on a new construction project, you’ll need to understand how each billing method will impact your operations and cash flow.

Project owners use retainage as an insurance policy should the job fall short of expectations. Construction companies can streamline the billing process, reduce errors, and improve cash flow using reliable and efficient invoicing software, such as Moon Invoice. The platform enables professionals to explore numerous free billing templates to enhance invoicing and the overall billing process. The advantage of this billing method is that the client has greater control over the project’s cost, and the contractor has the incentive to stay within the agreed-upon maximum price. Two benefits of this approach are greater transparency and a lower chance of cost overruns.

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