How to invoice as a contractor
Contractor invoicing is different from billing for a simple service visit. You take deposits, bill against milestones, mark up materials, and carry permit and inspection details on the record. This guide covers every field, the deposit and progress-billing structure, and the payment protection that keeps your margin in your bank account.
Why contractor invoices are different
A cleaning invoice is a receipt for a finished hour of work. A contractor invoice is a legal and financial record of a project in motion. Clients, lenders, and inspectors may all look at it, and disputes over scope, materials, and payment schedules are common enough that the invoice must stand on its own as documentation. That is why it carries fields a service invoice never needs.
| Element | Why contractors need it |
|---|---|
| Contract or estimate reference | Links the invoice to the agreed scope and price, ending scope disputes. |
| License and bond details | Required for lien rights and often for commercial clients' records. |
| Permit and inspection numbers | Documents the work for the client and for later warranty claims. |
| Labor vs materials split | Shows the client what they paid for and supports your markup line. |
| Percentage complete (progress bills) | Justifies each milestone invoice against the overall project. |
| Payment schedule and retainage | States when the balance is due and any withheld final payment terms. |
The required fields, line by line
The top of a contractor invoice should mirror your contract: your business name and license number, the client's legal name and project address, a unique invoice number, and the invoice date. Below that, list every line item with a description, quantity, unit price, and extension. Materials get their own lines with the markup shown either per line or as a single subtotal adjustment. Close with subtotal, tax, any retainage, and one clear total.
If you work in the trades and want a starting structure, the free contractor invoice template includes material, labor, and percentage-complete fields that suit HVAC, plumbing, electrical, roofing, and general contracting work.
Deposits, progress billing, and final payment
Deposits
On materials-heavy or custom work, take a deposit before you order anything. One-third down is a common starting point, with 50 percent for jobs where materials dominate. The deposit covers procurement and mobilization so you are not financing the client's project.
Progress billing
For projects that run more than a week or two, bill against milestones rather than waiting for the end. A typical split is 30 percent at rough-in, 30 percent at midpoint, 30 percent before final finish, and 10 percent at substantial completion. Each progress invoice states the percentage complete, the cumulative amount billed, and the balance remaining — an unmistakeable format that reduces end-of-job sticker shock.
Final invoice
The final invoice closes out the project. Reference the contract total, subtract everything already billed, add approved change orders, and state the retainage release if any. Issue it the day the punch list is done, not two weeks later.
Materials markup: charge for your procurement role
Marking up materials is standard practice because procurement is real work: you source, deliver, store, finance, and warrant the materials, and you absorb the risk of price swings between quote and purchase. Typical markup runs 10 to 30 percent depending on trade and job size.
| Trade | Typical materials markup |
|---|---|
| Electrical, HVAC, plumbing | 15–30% on parts and fixtures |
| Roofing, siding, flooring | 10–20% on bulk materials |
| Custom fabrication | 20–40% including design and coordination |
| Pass-through at cost (rare) | Only with an explicit management fee in the contract |
Whatever you charge, state the method on the invoice: a flat markup percentage, or cost-plus with receipts attached. Hidden markup is how contractors lose clients; a stated markup is how they keep them.
Payment protection that works
- Put terms on every invoice. Due dates, late fees, and interest on overdue balances belong on the page, not in a handshake.
- Schedule a reminder cadence. Follow up at day 1, 7, and 14. Most contractors who chase politely get paid; most who don't, don't.
- Use retainage correctly. Hold a small final percentage until the punch list is signed off, and release it promptly.
- Take online payments where you can. Clients pay invoices with a payment link faster than they mail checks.
If you are running more than a handful of projects, software keeps deposits, milestones, and payments straight: Jobber handles quotes, deposits, progress invoices, and online payments for contractors, while QuickBooks is the standard for job costing and bookkeeping once the work is billed.
Contractor invoicing FAQ
What should a contractor invoice include?
Business and license details, client and project address, invoice number and date, contract reference, itemized labor and materials, markup and tax, total due, payment terms, and payment methods. Progress invoices also state the percentage complete.
How much should a contractor charge as a deposit?
Most contractors take 10 to 50 percent, with one-third common on projects over a few thousand dollars. The deposit should cover materials and mobilization; bill the rest through milestone payments.
What is progress billing for contractors?
It splits a large project into stages and invoices as each completes — such as 30 percent at rough-in, 60 percent at midpoint, and 10 percent on completion. Each invoice shows percentage complete and the remaining balance.
How do contractors mark up materials?
Typically 10 to 30 percent, depending on trade and whether you handle procurement, delivery, and warranty. State the method on the invoice — flat percentage or cost-plus with receipts.