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Some projects will require only one invoice, some projects will
require two invoices, and other projects will require more than
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
for instant download. You can fill in the form before you print
it and it does the calculations for
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
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
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...
releases?? Get an all-inclusive
lien release forms package
that contains all 4 release forms plus a bonus release form plus
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in no time!
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.
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. :)