The Construction industry has been infamous for inconsistent payment methods and procedures that have affected the construction industry severely. Not only small scale contractors have suffered losses frequently due to inefficient or ill-suited billing practices, but major contractors and even construction companies have taken several blows to their economy due to disorganized payment procedures such as allowing payments, expensive overheads, reliance on credit.
To tackle these payment-related issues efficiently and effectively so that the construction contractor or company can grow evenly, proper billing procedures and practices must be adopted, which can ensure accurate, fast, and transparent payment.
Invoicing Tips for a Construction Contractor
What are the various points that contractors should consider when invoicing for the work that they have completed?
To answer this question, invoicing can be done in any suitable way by the contractor, but for successful processing of these invoices that reflect the authenticity of the billed supplies, a detailed invoice should be prepared by the contractor which is transparent and allows the client to check and review the expenses effortlessly. Below has been given some ways to effectively carry out the billing process:
01 - Label the document as an Invoice
Labeling of the invoice document is natural to identify the contents but it is necessary to label the document as an invoice in the header so that it is instantly visible to the client. Try to put the word ‘invoice’ in as large and bold as possible and not overdo it.
02 - Inclusion of Business Information
The header where the document identifier is written must also include information related to the business’ contact details. These contact details basically comprise the name of a contractor or firm, central office address, email address, and phone number along with the logo of the company, if there is any.
Including the business’s contact details on the document may not seem important, but it is a great way of self-promotion since the company’s name is the most important aspect of any brand. This also signifies the fact that the client after taking a look at the invoice document can conclude that the client can reach out to the contractors or firms in case of any discrepancies or any other follow-ups.
The business information identifies an invoice for the client and makes sure that the clients know who to pay. Along with providing business information on an invoice document, the logo of the firm can also be included to give it a more professional look that allows the invoice to stand out among all others.
03 - Inclusion of Client’s Contact Details
The client’s contact information can also be included below the header to give it a more professional look. Adding the client’s information conveys a message to the client that the contractor is well aware of the client’s businesses, is detail-oriented, and is willing to put in sincere and strong work.
Sometimes there may be billing departments that act as daily business contact points in a large construction company but the invoice may be submitted to some other departments as prescribed, which shows that the contractor is well aware of the client’s information.
04 - Unique Invoice Number
Adding unique invoice numbers to all the documents submitted by the contractor or company can help with record-keeping operations for both the client and the contractor. These unique invoice numbers help the people referring to a particular invoice and make it easier for reference purposes in case of an issue in the future. The basic and easiest system for numbering invoices as per the project progress or timeline of the project can be 1, 2, 3, 4, etc or a, b, c, d, etc.
05 - Invoice Date
The date on which the invoice is being submitted must be mentioned on top of the document.
06 - Service Details
The invoice document must include the itemized list of services or supplies organized in a tabular format. This can be typically done in a minimum of four columns in which the first column may be allotted for a concise description of the services or supplies, the second column must include the number of items or hours of service, the third column must be filled with the pay rate as per quantity or time, and the last column can be filled with the total amount for each service or supply.
07 - Payment Terms
The contractor or the company must include the terms of payment in the invoice document along with the methods through which payments are to be made. In case they have a late fee policy, it should also be clearly mentioned in brief in the document.
The respective account details in which the contractor is going to receive the invoiced payment must be mentioned clearly without any mistakes because an error in writing even one digit of the account number can prove to be a blunder.
Nowadays payment terms and methods have been upgraded to digitized payment procedures such as UPI transfers, link transfers, etc. The payment terms and methods must be mentioned in detail and with clarity so that there is no hold-up in payment processing.
08 - List Total Amount
The total amount plus the respective tax owing for the bill should be listed at the bottom of the invoice document. This part depicting the total billed amount must be highlighted in any way such as highlighting it, using bold fonts, using a different text color, etc so that it stands out.
09 - Payment Deadline
The deadline for payment must be highlighted, printed in bold, and in an easy-to-use font so that there is no problem for anyone reading that section. The due date which the contractor includes in the invoice document must be as precise as possible such as including the time and day with the date of the deadline so that there is no confusion of any kind that can lead to subsequent delays.
In case of cheques or drafts or any other such payment types that can take more time to be processed must be done on a date so that the processing can be before the deadline.
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