Construction Invoice Template: What to Include and How to Bill

Why Construction Invoices Are Different

Construction invoicing is more complex than standard service or product invoicing. Projects run for weeks or months, costs span labour, materials, and equipment, and billing often happens in stages rather than as a single lump sum.

A standard invoice template will not cover the specifics of construction work. You need a format that handles:

• Progress billing — invoicing for partial completion
• Retention — holding back a percentage until project completion
• Change orders — billing for work outside the original scope
• Multiple cost categories — labour, materials, equipment, subcontractors, permits

What to Include on a Construction Invoice

Header Information

• Contractor's business name and address
• Contractor's license number — required in most states
• Client's name and address (the property owner or general contractor)
• Invoice number and date
• Project name and project address — especially important when the project site differs from the client's billing address

Project Details

• Contract number or PO number (if applicable)
• Billing period — the date range the invoice covers (e.g. "1 March – 31 March 2026")
• Contract amount — the original agreed total for the project

Cost Breakdown

Break costs into clear categories:

Progress Billing: How It Works

Most construction projects use progress billing (also called percentage-of-completion billing). Instead of waiting until the end of the project to invoice, you bill monthly for the work completed during that period.

A progress invoice typically includes a schedule of values — a breakdown of the contract into line items, each showing:

Retention (Retainage)

Retention is a percentage of each progress payment — typically 5% to 10% — that the client withholds until the project is substantially complete. It protects the client against unfinished work or defects.

How to show retention on your invoice:

Retention is typically released in two stages:

1. At substantial completion — 50% of the retained amount
2. At final completion — the remaining 50%, after a punch list walkthrough

Check your contract and state laws for specific retention rules. Some states cap retention percentages or set deadlines for release.

Change Orders

When the client requests work outside the original contract scope, you issue a change order before performing the work. The change order documents the additional work, its cost, and any schedule impact.

On your invoice, list change orders separately:

Always reference the change order number and the date the client approved it. Without written approval, change order disputes are common — and difficult to resolve.

Sales Tax on Construction Work

Sales tax on construction is complicated in the US because rules vary by state:

• Some states tax materials but not labour (e.g. California)
• Some states tax the total contract price (e.g. Hawaii, New Mexico)
• Some states exempt construction entirely or have special rules for contractors vs subcontractors

Lien Waivers

Many clients — particularly general contractors and commercial property owners — require a lien waiver with each progress invoice. A lien waiver is a legal document confirming that the contractor gives up the right to place a lien on the property for the amount being paid.

There are four types:

Many states have statutory lien waiver forms. Use the correct form for your state.

Create a Construction Invoice

Our US invoice generator lets you add detailed line items for labour, materials, equipment, and subcontractor costs. Set your payment terms, add retention, and download a professional PDF.