Construction invoices can be so much simpler
Small Business Guides
5 min read
Running a construction or trade business is hard work. You probably spend most of your day on site. That only leaves evenings and weekends for sending invoices – and many of them are probably paid late. There's a better way.
Construction and trade invoicing is a big job
If you’re in construction or a trade, you’re probably really busy doing the work. It can be hard to make sure you get paid for it. Construction invoicing requires you to:
keep records of third-party costs
track time on site (which can be tough when you have a few jobs going)
match the estimate or quote that you gave (which could require you to itemise the bill)
It’s daunting. To make matters worse, most small businesses have to do invoicing after a full day’s work when they’re tired. But there are ways to take a lot of the pressure off yourself.
Ditch manual invoice templates
Many construction businesses use invoice templates downloaded off the internet. It’s an okay way to start but it won't take long before you're sick of using them. You still have to fill in all the third-party costs and calculate labour charges. It’s a brutal process, which is why most businesses only send invoices once a month.
But the longer you wait to send an invoice, the longer you wait to get paid. For healthy cash flow, it’s better to send construction invoices or trade invoices every week or two. If it's a small job, you should send the invoice as soon as you're done. An automated invoicing system allows you to do all that, without losing your mind.
Let apps do the work
Three types of app can transform your invoicing process:
a time-tracking app – to record exactly how much time you spend on each job
an accounting app – making it easy to record costs and assign them to different jobs
an invoicing app – to create and manage construction invoices or trade invoices
Some products combine these functions but you can also buy separate apps for each part of the process. Just make sure they talk to each other. It defeats the purpose if you have to manually transcribe the information from your time-tracking app into your invoicing app, for example.
Invoicing from your phone
Apps like these work on your phone or tablet, which means you can create and send invoices whenever you have the time. That allows you to bill clients from a job site, a truck, a supply shop, or during a lunch break.
If you stick with a desktop for invoicing, then you have to wait to get home – and you’re destined to spend your nights and weekends on the bookwork.
Trade and construction businesses are expensive to run. Cash flow can get tight. Good invoicing systems are key.
Finding the right apps for you
Not all invoicing and accounting apps are created equal, so choose yours with care. Ask acquaintances and colleagues what they use. Research online – read forums and see what works for other people, and what doesn't.
A good time-recording app will:
allow you and your workers to clock onto jobs from your phones
send time records to your invoicing app, so you can use the information to calculate what you’re owed
integrate with your payroll system, so you can work out how much to pay hourly workers
- link into your project management software, so you can check that labour costs aren’t blowing out
A good accounting app will:
enable you to assign expenses to particular jobs (with markup)
make it easy to claim tax deductions on applicable expenses
be compatible with time-recording apps and payroll
work with your invoicing app, so you can process income and expenses together
A good invoicing app will:
give you ready-made templates that are easy to customise (by dropping in your logo, for example)
let you prepare and send invoices on your mobile phone or tablet
alert you if a trade invoice or construction invoice hasn't been paid on time
send automatic reminders to clients who haven't paid
Best invoicing practice – five top tips
Only 41% of invoices are paid on time so you’ll often end up waiting on the money you’re owed. But there are things you can do to help get cash into your business faster:
- Invoice immediately
Many businesses invoice monthly, or every two weeks. It’s not enough. Send invoices weekly or even daily, so customers are on the clock as soon as possible.
- Keep your payment terms short
You're not a bank, so why give clients 30 days of credit? Almost half of small businesses now demand payment within seven days. This is perfectly acceptable, and you’ll benefit if you do it too.
- Put the detail in your invoices
Make sure the client knows what they're paying for. There’s a balance here. You don’t want to sweat over each invoice, but you don’t want to leave too much room for questions. Refer to the quote or estimate you supplied before starting the job.
- Keep evidence
Make sure you have proof of hours worked and costs incurred. You don’t need to attach it to the invoice, but keep that data somewhere you can find it. It’ll help in the case of a dispute.
- Chase payment
You completed the work, so you’re owed the money. Don't be embarrassed about it. If you haven't been paid by the deadline on your invoice, get on the phone and ask why not. Be polite but firm, and keep at it. Persistence will get you paid faster – this time and the next.
Construction invoicing is key to cash flow
Construction and trade businesses are expensive to run. You have a lot of overheads and often have to carry costs for materials. The last thing you need is to run out of money.
Invoicing is what brings money into your business. It’s critical to cash flow. You need to make your invoices accurate and send them quickly – then make sure you follow up when payment is due. The right combination of apps can help you do all this and keep your business in the black.