--- title: "Invoicing & billing for construction companies & contractors" description: "Invoicing & billing for construction companies & contractors: outsourced invoicing and billing: invoice creation, recurring and progress billing, credit." url: https://ledgerbpo.com/industries/construction/invoicing-and-billing/ updated: 2026-09-11 publisher: LedgerBPO (SS Support Network LLC) language: en-US --- # Invoicing & billing for construction companies & contractors Invoicing for construction companies & contractors runs on the owner's draw cycle, not on a calendar. Progress billings follow a schedule of values, carry percentage complete per line, deduct retainage and must reconcile to every prior application. Your accountant prepares AIA-style G702 and G703 pay apps, T&M invoices from approved timesheets and change-order billings, and attaches conditional lien waivers before anything is sent. - Since 2020 - US · UK · CA · AU - Named accountant plus backup - Your software, no lock-in [Get a custom quote](https://ledgerbpo.com/get-a-quote/) [Book a 20-minute call](https://ledgerbpo.com/book-a-call/) Updated September 2026 ## How it runs for construction companies and contractors Deposits, stored materials and allowances are billed under the contract terms. For UK clients, applications for payment and CIS deduction statements are prepared in the same routine, and the billing calendar is built backwards from each customer's cut-off date. ## What are outsourced invoicing services? Outsourced invoicing services mean a remote billing team prepares, checks and sends your customer invoices instead of your office staff doing it between other tasks. The team works inside your accounting or billing software, follows your rate cards and contract terms, and issues credit notes and corrections. You keep control of pricing, approvals and the customer relationship. ## What we handle for construction companies and contractors - Progress billings prepared on G702 and G703 or the owner's own template - Change orders billed only after written approval is on file - Retainage calculated per line and reconciled to cumulative billings - T&M invoices built from approved timesheets and rate schedules - Conditional lien waivers attached to every pay app before submission ## The KPI that matters here Pay apps submitted within 2 business days of each owner's billing cut-off. ## Construction compliance notes ### Sales tax on materials In most US states a contractor pays sales tax on materials at purchase and does not charge tax on the finished job. A few states, including Arizona and Washington, tax the contract itself, and many states have separate rules for repair work versus new construction. We set up tax codes per state and contract type and track exempt purchases with resale or project certificates on file. ### Retainage Retainage withheld by owners is recorded as retainage receivable, and retainage you withhold from subcontractors is recorded as retainage payable. Several states cap retainage on public work, commonly at 5%, and set release deadlines after completion. We track the release date per contract so closeout billing goes out on time. ### Job costing and WIP Bonding companies and lenders expect a work-in-progress schedule that ties to the general ledger, with contract value, costs to date, estimated cost to complete and billings to date. We maintain the schedule monthly and book over and under billing entries so the P&L reflects percentage of completion. ### CIS in the UK Under the Construction Industry Scheme, UK contractors deduct 20% from registered subcontractors and 30% from unregistered ones, and file a monthly CIS return with HMRC. We verify subcontractors, prepare the deduction statements and CIS return workings, and reconcile deductions suffered against your PAYE liability. Your accountant or the business submits the return. ## Construction software we work in - [QuickBooks Online](https://ledgerbpo.com/software/quickbooks-online/) - [QuickBooks Desktop](https://ledgerbpo.com/software/quickbooks-desktop/) - [Xero](https://ledgerbpo.com/software/xero/) - [Bill.com](https://ledgerbpo.com/software/bill-com/) - [Gusto](https://ledgerbpo.com/software/gusto/) - [Sage 50](https://ledgerbpo.com/software/sage-50/) - Buildertrend - Procore - [All 50 platforms](https://ledgerbpo.com/software/) ## More for construction companies and contractors Other services for construction - [Bookkeeping](https://ledgerbpo.com/industries/construction/bookkeeping/) - [Accounts receivable](https://ledgerbpo.com/industries/construction/accounts-receivable/) - [Accounts payable](https://ledgerbpo.com/industries/construction/accounts-payable/) - [Bank reconciliation](https://ledgerbpo.com/industries/construction/bank-reconciliation/) - [Month-end close](https://ledgerbpo.com/industries/construction/month-end-close/) - [Financial reporting](https://ledgerbpo.com/industries/construction/financial-reporting/) - [All construction services](https://ledgerbpo.com/industries/construction/) Invoicing and billing in other industries - [Marketing agencies & consultancies](https://ledgerbpo.com/industries/agencies/invoicing-and-billing/) - [Auto repair shops & dealerships](https://ledgerbpo.com/industries/auto/invoicing-and-billing/) - [Behavioral health practices](https://ledgerbpo.com/industries/behavioral-health/invoicing-and-billing/) - [Daycares, schools & education](https://ledgerbpo.com/industries/childcare-education/invoicing-and-billing/) - [The full invoicing and billing page](https://ledgerbpo.com/services/invoicing-and-billing/) ## Frequently asked questions ### What is the difference between progress billing and T&M invoicing? Progress billing invoices a fixed-price contract by percentage complete against a schedule of values, with retainage withheld. T&M invoicing bills actual labor hours and materials at agreed rates, usually with a markup and often a not-to-exceed cap. Many contractors run both, and the accountant sets up separate invoice templates and approval steps for each. ### How do you handle change orders on the invoice? Approved change orders are added as new lines on the schedule of values so cumulative billings stay accurate. Pending change orders are tracked on a separate log and never billed until the owner's written approval is on file. Work performed on unapproved changes is flagged in the monthly report so you can decide how to pursue it. ### Can you invoice stored materials and deposits? Yes, when the contract allows billing for stored materials, we include them on the pay app with supporting invoices and, where required, evidence of insurance and storage location. Deposits and mobilization billings are set up as separate lines and drawn down across later applications. This keeps the cumulative billed amount tied to the contract value. Next step ## Books closed. Invoices paid. Every month. Tell us what is going on with your books or billing. You will hear from a named person within 1 business day, with a custom quote and a plan for the first close. - Reply from a named person within 1 business day - No setup fee, month-to-month - Your software, your data, no lock-in Start with a custom quote [Get a custom quote](https://ledgerbpo.com/get-a-quote/) [Book a 20-minute call](https://ledgerbpo.com/book-a-call/) Or call [+1-657-777-0006](tel:+16577770006) during US, UK or Australian business hours. --- Source: https://ledgerbpo.com/industries/construction/invoicing-and-billing/ · Contact: https://ledgerbpo.com/contact/ · Full site map for agents: https://ledgerbpo.com/llms.txt