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How-toLast updated July 25, 2026

How to invoice as a contractor

A contractor invoice needs six things to clear a client's accounts payable without a query: your legal business name and tax ID, their purchase order or job reference, the period or milestone covered, an itemised breakdown separating labour from materials, the payment terms with a computed due date, and how to pay. Most late payments in trades are not disputes — they are invoices returned for a missing PO number or an unclear scope line.

What accounts payable actually checks

Larger clients run invoices through a process before a human decides anything. It matches your invoice against a purchase order and a delivery record. Anything that does not match gets held, and nobody tells you — the invoice simply sits there until you chase it.

  • The PO or job number, exactly as they issued it
  • Your business name matching the one on their vendor record
  • Line items that map to the approved scope, not a single lump sum
  • Dates covered, so it can be matched to a delivery or timesheet
  • Tax charged at the rate their system expects

Progress billing and retainage

On jobs that run for weeks, invoice per milestone rather than at the end. Each invoice should show the contract total, what has been billed to date, and what remains — that running context is what stops a client questioning the figure.

If the contract holds retainage, show it as an explicit deduction rather than quietly reducing the total. Write the percentage, the amount withheld, and when it becomes payable. Retainage you never invoice for is retainage you never collect.

Change orders are where the money goes missing

Work agreed verbally on site and never written down is the most common way contractors lose money. Any change to scope should produce a written change order with a price, approved before the work happens, and it should appear as its own line on the invoice referencing that approval.

An invoice line the client does not recognise holds the entire invoice, not just the disputed line — which is why the approval matters more than the amount.

Terms that get you paid faster

Net 30 is the construction convention and fighting it costs goodwill. What you can control is everything else: invoice the day the milestone completes, state the due date as a date rather than a term, and put late-payment interest on the invoice from the first one rather than introducing it when a client is already late. See what net 30 actually means for how the clock counts.

More guides: What is a proforma invoice? · Invoice terms and conditions · What does net 30 mean? · Invoice vs. receipt: what's the difference? · The invoice email: what to write · A complete freelance invoice, annotated

Frequently asked questions

What should a contractor invoice include?
Your legal business name and tax ID, the client's PO or job number, the period or milestone covered, itemised labour and materials, any retainage shown explicitly, payment terms with a computed due date, and payment instructions.
Should I separate labour and materials on an invoice?
Yes. Many jurisdictions tax them differently, some contracts price them differently, and clients query lump sums far more often than itemised lines. It also protects you if a scope dispute arises.
How do I invoice for retainage?
Show the full amount earned, then the retainage as a named deduction with its percentage, then the net due. Track what has accumulated and invoice for its release when the contract says it becomes payable — it is not automatic.
Can I charge a late fee as a contractor?
Only if it was disclosed before the client accepted the work — in the contract and on the invoice. Commonly 1.5% per month. A fee added after the invoice is late is generally not enforceable.
How soon should I send a contractor invoice?
The day the milestone completes. Payment terms start from the invoice date, so a week's delay in invoicing is a week added to when you get paid, and the work is freshest in the client's mind on the day.