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By Contractors For Contractors!
  Bringing Construction Management Solutions to your fingertips!!

This page contains our free tutorial on invoicing and using releases. Bookmark this site, designed to provide you with all the construction management solutions you need, you'll want to visit again and again, to keep your paperwork in order! Be sure to subscribe to our free newsletter as it will keep you updated on happenings at our site, updates to our forms and ongoing news in the construction world.

INVOICES

Some projects will require only one invoice, some projects will require two invoices, and other projects will require more than two invoices.

Typically, if you are working on a project that you will complete in the same month that you started, you might want to do only one invoice (unless retention is required in which case you will have to do at least two invoices).

When your scope of work will span more than one month, then you may want to consider progress billing. When you progress bill, you bill only for work that is complete and material that is installed (unless the general agrees to also pay for material which is stocked at the job but not installed yet).

Sometimes general contractors will have an invoice form that they insist that you use (instead of your own invoice form). Make sure you use their form or they will probably disallow your invoice, mail it back to you and tell you to re-bill correctly. Worse than that is when they tell you that you have to re-bill correctly but you have to wait until next month to submit the corrected bill.

Always try to get your invoice paperwork right the first time and include the proper releases because many times the general will hold up everybody's invoices if even just one company has submitted their invoice incorrectly.

I have invoice forms available for instant download. You can fill in the form before you print it and it does the calculations for you.

LIEN RELEASES

When you progress invoice for a project you will be required to supply releases, one from your supplier and one from you. These releases protect the general contractor and owner of the project from having to pay twice for something.

When you submit a #1 release - Conditional Waiver and Release Upon Progress Payment, you will provide a 'release thru' date that indicates that once you have received the invoice amount, you agree that you are paid in full through that release date.

Once you have received that payment and it has cleared the bank, you will be required to submit a #2 release - Unconditional Waiver and Release Upon Progress Payment. This unconditional release is a follow up to the conditional release and it is enforceable even if you have not been paid.

Don't submit the #2 release until you have been paid and the check has cleared not only your bank but also the bank that the check is drawn upon. (Hint: Photocopy the check payment before you deposit it, and then you will have the information needed in case you have to call the bank that it is drawn upon to verify that it has cleared the general contractor's account.).

When you submit your final invoice you will submit a #3 release - Conditional Waiver and Release Upon Final Payment. This release does not have a 'release thru' date as it is, feasibly, for the final payment on the project. You will put the total dollar amount left owing, on the release (retention if retention has been held and/or final payment) and submit it with your final invoice.

Do NOT submit the #3 release until you are certain that you are finished on the project and will not be back to do any other work. If you do submit the #3 release, then go back and do additional work on the project requiring an increase in the contract amount via a change order but then receive payment for the dollar amount on the #3 release, feasibly you will not have mechanic's lien rights on the added work because you released the project with that #3 release.

Once you have received FINAL payment and it has cleared the bank, you will submit a #4 release - Unconditional Waiver and Release Upon Final Payment. When you submit this release you are indicating that you have been paid in full for all work on the project.

Do NOT submit the #4 release until you have been paid in full.

Without reservations, once you submit this #4 release you have given up all lien rights, meaning you cannot lien the property when and if the general contractor doesn't pay you (or if you're the general contractor when and if the owner doesn't pay you).

It bears repeating: Do NOT submit the #4 release until you have been paid in full.

Now, what happens if you are working on a project and it requires monthly invoicing, along with releases, you haven't been paid for last month's invoice and now it is time to prepare and submit this month's invoice? This is how I handle this scenario (keeping in mind that I am not an attorney nor have I received any formal legal training whatsoever, sorry gotta include that statement every once in a while... ) :)

When I am preparing the release for the current month's invoice, I put a notice on the release form that states the following:
Please note that we have not received payment for the time period ending .... This release only covers the time frame (enter the current month). Should you have any questions, please do not hesitate to contact me.
The only problem with the above is a concern that by adding text to the release form that the release form is no longer valid. Therefore, another way to handle this would be to include the dollar amount, from the previous month(s) that hasn't been paid yet, in the release form you're preparing for the current billing.

For example, say you're billing for February for $15,000 but you haven't yet been paid the $10,000 you billed for January. You can include January's amount on the conditional release you're prepping for February; the dollar amount on the release form would be $25,000 (Jan + Feb).

Then when you're paid for January you can issue an unconditional release for that time frame and your February payment/lien rights should still be protected.

Now keep in mind that contracting can be an ugly business and think about contacting an attorney to make sure you're doing your paperwork correctly when you find yourself in this position. Better safe than sorry...

Need lien releases?? Get an all-inclusive lien release forms package that contains all 4 release forms plus a bonus release form plus a bonus article that'll have you using release forms like a pro in no time!

RETENTION

If retention is required then you will need to read your contract and/or call the general contractor to find out how much retention is (usually 10% of the invoice). You write up the invoice for the full amount of completed work and then add a line that subtracts the retention. Typically when retention is held it is released 35 days after completion of the entire project. This allows any and all liens, stop notices, punch lists, etc. to be cleared up so that the owner does not have any liabilities outstanding after he/she has paid the construction bill in full. On projects that have retention held, your final invoice and #4 release will be for the retention.

CONTRACTOR BILLING PROGRAM

QuickBooks is one of the best programs out there for bookkeeping. I tried Peachtree first and I was pulling my hair out, it was horrendous.

So I tried QuickBooks and I've been using it for 10+ years now.

It's come a long way and it even has a contractor section so that you can set it up to work for your construction business.

And if you need any help with setting it up, Randal over at FastEasyAccounting.com can help you. He owned and operated several construction businesses from the early '70's until 2000.

They started their bookkeeping firm in 1991.

Who better to call for help than someone who has been there? QuickBooks is great but if you're not an accountant then chances are there will be something in there that you'll have a question on or need help with.

Contact Randall for that help. :)

 

 

 

Free Gift - Practical Solutions, Higher Incomes, and Less Hassles! Click here (a separate window will open) to get the free gift I have for you at InformedContractors.com. Thank you!


"This site is an obvious tool that anyone in construction should be using."
James Farmer Canoga Park, California
read more

NOW AVAILABLE!

An ALL-INCLUSIVE release forms package

Testimonial:

"Before I came to your site, all I knew was that I needed to receive these forms for contracting - now I know WHY I need them. Thanks so much for all the wonderful info!"
Kathy Kubiak
San Diego, CA

This incredible package of lien waiver forms includes:

Very easy to follow step-by-step instructions on how to fill in the forms;

An outstanding article that tells you exactly how to use which release form when;

A bonus form;

Various other bits of info we've put together, valuable to anyone saddled with the task of preliminary notices.

Shock your customer!

When you present him/her with one of these professional release forms (and the correct one no less) you're showing that you grasp the difficult-to-understand lien release process, which will score you brownie points for the next project!

Being able to fill in these release forms with your computer before you print them means you can drop-kick that typewriter and sheath your pen.

No more white out or smudged ink, you will have a perfect release form every single time you need one!

You'll know exactly what you're doing because the how-to article will show you exactly how to do it without a bunch of ridiculous hard-to-understand legal terms.

You'll never have to purchase the forms or anything in the package ever again because it all comes with unlimited free replacements!

I could go on and on but why not just click through to take a look at the California release forms package or the "Other States" release forms package. :)

 

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By Diane Dennis


Any part or portion or section of this website may be copied or reproduced in any manner as long as I am given full credit and a working link back to this site. When using forms obtained from this site, please do not remove the copyright information at the bottom, unless and until you receive explicit written permission to do so.

Disclaimer: While every attempt has been and will be made to keep the information at this website accurate and up-to-date, we do not represent ourselves as experts. Even though we have used some and/or all of the forms and methods posted here, we do not guarantee that these forms and/or methods are acceptable for your situation(s). For specific legal questions and/or expert assistance we suggest that you contact an attorney.

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