How to Invoice as a Contractor: A Guide for Small Businesses

As a contractor, there’s a lot that goes into each one of your projects. Whether it’s a major renovation, routine fix or one-off client request, you put in a lot of time to complete the work. Not to mention the countless hours it took to build your skills and expertise in the first place.

If I do a job in 30 minutes it’s because I spent 10 years learning how to do that in 30 minutes. You owe me for the years, not the minutes.

— D A V Y (@davygreenberg) February 15, 2019

The last thing you want to deal with after all that hard work is chasing your client to get paid. Just like running any type of small business, you need to be your own accountant and understand how to invoice as a contractor.

Whether you’re an independent contractor, subcontractor or getting your small business started as a handyman, our contractor invoicing guide is here to help get you paid for your hard work and save some stress during tax season.

In this guide, we’ll be covering:

• Why getting contractor invoicing right is critical to your business
• How to invoice for contract work
• Contractor invoicing tips
• Contractor invoice templates
• Roundup: let’s get paid!

Why getting contractor invoicing right is critical to your business

Every project has its own set of challenges. That’s why it’s important to nail your invoicing process right away rather than let it accumulate. You don’t want to be chasing payments weeks after the job is completed. Invoicing is all about staying organized so that you can get paid on time!

As your client list grows it’s important to have a system to properly track and manage all your invoices sent. We recommend including the invoice number in the filing system to help you easily identify your file in case you need to follow up. By creating a filing system with consistent naming conventions, it will become a whole lot easier to file your tax return come tax season.

Invoicing the “right way” means knowing how to invoice, when to invoice, and when to follow up in order to optimize your payment schedule.

How to invoice for contract work

There is a standard skeleton that you should follow when setting up your contractor invoice. Not sure what it looks like, download one of our free pre-built contractor-specific invoice templates. 

Regardless if you use our templates or not, to lay the proper foundation for your invoicing process, here’s what to include on your invoices each time in order to get paid quickly:

1. Business name and info

Your business name is a foundational element of a professional invoice. It identifies your business and establishes your brand.

2. Invoice number

A unique invoice numbering system helps you stay organized, especially come tax season.

3. Date of invoice

Date of when the invoice was generated and not when the goods or services were provided.

4. Payment terms

Any terms, deadlines or contractual descriptions you would like to include.

Pro Tip: It is important that these invoice payment terms follow your industry standards and to go over them with your client before beginning work on your project. 

5. Product or service details

Here’s where you input the details about the items and/or services you’ve provided to the client. This includes the number of hours worked or quantity of services provided. If you charge the client for materials, you want to include it in this section as well.

6. Bill to (client information)

Your client’s information including their full billing address and phone number.

7. Amount due

The amount you charge for a specific service. This will be hourly or per item depending on the project and services provided.

8. Fees/taxes

Any other fees or taxes that you may charge on your invoice.

9. Total amount, including sales tax

The total amount of your invoice after any sales tax, discounts, etc.

Contractor invoicing tips

Track your hours

Always keep track of your hours. This is how you’re going to get paid. Unless, of course, you’re charging for a custom project. However, in most cases a handyman’s services are charged by the hour.

At the start of a job, be sure to record when you started, when you finished and what you did. This will help you keep accurate accounts for your invoice and promote transparency with your client so they know what value they’re paying for.

Include materials in your pricing

Don’t Forget Key Items. When it comes to contractor invoicing, you don’t want to miss out on charging for materials. Contractors working in trades are generally expected to purchase supplies or parts to complete the work for a client. This cost is typically passed along to your client in the invoice with a mark-up: a percentage added to the material price to take home as profit.

Not sure what to mark-up? Percentages can vary depending on the material sourcing and the market you operate in. If you’re a plumbing contractor purchasing tubing cutters and hacksaws from a wholesaler, your markup will be higher than if you buy them from a retailer.

Accept all payment methods

Nothing is more frustrating than completing all that work and then going back-and-forth with a client on how you are going to be paid. When you offer flexible payment options (credit card, e-transfer, Venmo, etc.) you make it easy for your clients to pay you in a way that best serves them.

Pro Tip: Outline accepted payment methods in your payment terms section. 

Be personal and professional

According to an article from Signpost, “82% of small businesses claim referrals as their main source of new business.” With that in mind, you should look to the details outside of your work that add to a client’s positive experience.

On an invoice, this is your logo and the notes section. In the notes section, you can leave a personal note about the project or what it was like working with them. This works especially well if you have good rapport with your client. In fact, 45% of invoices that include “Thank You” in the notes or payment terms section get paid in fewer than 7 days.

The last thing you want to leave your clients with is the feeling that their needs were handled by a professional and your invoice should reflect that. Including your logo on easy-to-understand, professional invoices not only reinforces your reputation in the industry, but positions you as a trusted and reputable contractor. Your clients will have your company name at the top of mind, especially when a new work opportunity comes your way.

Send your invoices immediately (payment terms and schedule)

The best payment terms and schedule are the ones that get you paid as soon as possible. However, there may be industry best practices that must be considered when developing your own payment terms for your invoice.

Net payment terms are typical for most projects and indicate how many days until your invoice is due. However, some projects may be more complex and require a downpayment beforehand in order to secure supplies/materials.

Read our full guide on setting invoice payment terms.

Another critical part of invoicing is understanding your payment schedule, i.e. when you get paid. As soon as you’ve completed your project, send your invoice to the client. The longer you take to send it over, the longer it takes to get paid. It sounds simple enough, but surprisingly some small businesses forget to do it! Send your invoices right away to get paid as soon as possible and take control over your payment schedule, both for income and expenses.

Read our full guide on professional invoice follow-ups. We’ve included a few email templates here as well for you to use.

Follow up on your invoices

In the event that your client hasn’t paid their invoice it is important to follow up with them. When reaching out, be sure to be polite, courteous and professional. In some cases, your client may just be late. It’s better not to close any doors that could potentially lead to a referral. A gentle reminder can go a long way.

Contractor Invoice Templates

We understand that your time is important and you’d rather spend it growing your business. That’s why we’ve created a few free contractor invoice templates for you to download. These templates are free printable invoices for contractors like yourself to start using right away. Each template has the space for all the essential invoice information, you just need to fill it in and send it to your client. These templates are available in multiple file formats including pdf, Microsoft word and excel, as well as, Google Docs and Sheets.

View contractor invoice templates

Roundup: Let’s get paid!

Invoicing doesn’t have to be a difficult or tedious process. In fact, it can be a positive experience for both you (the supplier) and your client (the buyer). Test out these steps and tips and see for yourself how you can best stay on top of consultant invoicing.

And if you’re looking for a simpler invoicing solution than just templates, then we’ve got you! Start sending invoices completely free today with TrulySmall™ Invoices. Use it on your computer or download TrulySmall’s invoicing app today—it’s free and available on iOS and Android.