Contractor Invoice Template — Milestones
Milestone billing, materials at cost-plus, retention withheld until completion, change orders mid-project. The template handles all of it cleanly — no monthly subscription.
Open the free generator → Need a quote first?
Free forever · PDF export · Multi-currency · Runs in your browser
What belongs on a contractor invoice
●Mobilisation / site setup. Often a separate line on the first invoice.
●Labour — by stage or hours. Stage-based billing prevents 'we don't see progress' disputes.
●Materials at cost + markup %. List supplier ref and markup transparently.
●Subcontractor work. Pass-through with admin %, or wrap in your rate.
●Equipment hire. Itemise daily/weekly rate × duration.
●Change order #1, #2…. Each change order is its own line, signed off separately.
●Retention withheld (e.g., 10%). Negative line on each progress invoice, released on practical completion.
How contractor billing usually works
Most contractor work is billed in milestones: deposit, mid-project, completion.
Retention (5–10%) is withheld until practical completion or end of defects period.
Change orders should be invoiced separately, referencing the original quotation.
Mark each invoice 'Progress Invoice 1 of 3' so the client's accounts payable knows what to expect.
Tax notes
Sales tax/VAT/GST treatment varies — many jurisdictions tax materials but not labour, others tax the full contract value. Check local rules and break out the tax line so the client can see exactly what's being charged.
Frequently asked questions
How do I handle deposits on a contractor invoice?
Issue a deposit invoice (10–30% of contract) when the quote is accepted. On each progress invoice, show the deposit as a credit so the client sees what they've already paid.
Do I invoice change orders separately?
Yes. Quote each change in writing, get sign-off, then invoice it as its own line or its own invoice referencing the original contract.
How is retention shown on the invoice?
As a negative line item: 'Retention withheld (10% of progress) -$X'. State the release trigger ('on practical completion') in the notes.
Can I bill for travel and overheads?
Yes — itemise them (mileage, overnight stays, equipment hire). Lumping them into 'overheads' invites pushback.
A sample contractor invoice, line by line
Realistic, copy-and-paste-ready line items contractors typically use. The figures below are ballpark for a mid-cost US market, so adjust them to yours.
●Mobilisation — site setup, dumpster, port-a-john, fencing (first-invoice item): $1,250
●Phase 1 labour — demolition complete (signed off) (milestone billing): $4,800
●Materials — framing lumber, sheathing, fasteners (supplier invoice 4827 attached, cost + 18%): $7,650
●Subcontractor — electrical rough-in (Maverick Electric, paid by GC) (pass-through + 5% admin): $5,250
●Equipment hire — excavator, 3 days (daily rate + delivery): $1,485
●Change order #2 — relocate kitchen island 24" north (signed 04/30) (labour + reroute plumbing): $1,680
●Retention withheld — 10% of progress (released at practical completion) (negative line): -$2,210
Notes: Progress invoice 2 of 4. Phase 1 demolition complete and signed off __ / __ / __. Materials per supplier invoices attached. Subcontractor work coordinated through GC; lien waivers on file. Retention held per AIA G-702 schedule, released at practical completion + 30 days punch-list cure. Insurance certificate and W-9 on file.
When the money actually lands
General contracting on residential pays in stages: deposit on contract signing (10-25%), then progress draws aligned with stages — foundation poured, framing complete, dried-in, drywall closed, substantial completion. The contract dictates the schedule, but reality is that progress draws bill 7-14 days after the customer's lender or the homeowner receives the invoice. Commercial work is slower: AIA G-702/703 documentation, architect or owner's-rep sign-off on each draw, retention at 5-10% held to substantial completion.
Custom-home and high-end residential is where contractors get stuck on float: the architect or designer is approving change orders that hit the customer's invoice, the customer wants explanations of every line, and the lender is verifying percent-complete before each draw. Stage-bill aggressively, get change orders signed in writing within 48 hours of the change, and never start the next phase before the previous draw clears. Subcontractors get paid before you do (pay-when-paid clauses are increasingly unenforceable in many states).
Five billing mistakes that hold up your payments
●Not capturing change orders in writing on the day they happen. Verbal change requests are how contractors lose money. A 30-second signed change order ('relocate island 24 inches north — $1,680 — homeowner initial here') protects the line item three months later when the homeowner forgets they asked.
●Forgetting to itemise retention as a negative line. Show the retention explicitly on every progress invoice: 'Retention withheld (10% of progress, released at practical completion): -$X.' Customer sees what they're holding back; you see what you're owed at the end.
●Skipping pass-through markup on subcontractor work. If you're managing the sub, scheduling the sub, and warranting the sub's work, you've earned a 5-15% admin markup. Show it as a separate line ('Subcontractor coordination and warranty admin: 5%') — pass-through-at-cost gives away the management value.
●Bundling materials and labour into 'Phase 1 — $X'. Customers and lenders both want visibility. Itemise materials (with supplier invoice references) and labour separately on every progress draw. Bundled lines invite the 'why is this so much?' fight.
●Not getting lien waivers from subs on every payment. Customers pay you; you pay subs; the sub later files a mechanics lien because you 'paid late' or 'didn't pay in full.' Conditional and unconditional lien waivers on every cheque to every sub. Document them on the customer's invoice as a pass-through assurance.
US tax notes for contractors
Sales-tax treatment for general contractors is jurisdiction-dependent and varies by project type: capital improvement vs repair, lump-sum contract vs cost-plus, residential vs commercial. New York's Form ST-124 (Certificate of Capital Improvement) exempts the contractor from collecting sales tax on labour if the project qualifies. Texas treats residential remodeling labour as taxable but new construction as exempt. California exempts most construction-services labour but taxes materials at retail. Get your accountant to map your typical project types against your state's specific schedule — getting this wrong on a six-figure remodel is a six-figure mistake.
Federal: General contractors should receive 1099-NEC for every subcontractor paid over $600/year (you issue them), and may receive them from commercial clients. Deductions specific to GCs: bonding fees (project-specific, fully deductible), general-liability and workers'-comp insurance, continuing-ed for state-licensed contractor status, vehicle fleet (Section 179 across the entire fleet often hits the per-year limit), tool depreciation, and the often-overlooked line — bid-development costs (paper plans, takeoff software, estimating services) which are fully deductible whether or not you win the bid.
Not tax advice — confirm specifics with your CPA or state department of revenue.
Builder invoice notes for the UK
UK builders and construction contractors have two invoice rules that don't exist for other trades. First, the Construction Industry Scheme (CIS): when you invoice another contractor (not a homeowner), they deduct 20% from your labour line (30% if you're unregistered) and pay it to HMRC on your behalf. Split labour and materials on the invoice — CIS deductions apply to labour only, so a lumped total gets 20% taken off your materials too.
Second, the domestic reverse charge for VAT: since March 2021, VAT-registered builders invoicing other VAT-registered construction businesses within CIS don't charge VAT. Instead the invoice states "Reverse charge: customer to pay the VAT to HMRC" and shows the VAT rate that would have applied. Invoicing a homeowner directly? Normal VAT rules apply — 20% standard, or 5% on qualifying renovations of long-empty properties.
Retention clauses (typically 5% held until practical completion, half released at handover, half after the defects period) should appear as their own negative line so the maths is visible. For general UK invoice requirements, see our UK invoice template guide.
A few more things contractors ask
How do I structure progress invoices on a six-month residential remodel?
Standard schedule: 10-15% on contract sign, 15-20% at demolition complete, 20-25% at framing/rough-in complete, 20-25% at drywall close-up, 15-20% at substantial completion (occupancy possible), 10% at final punch-list + retention release. Adjust based on cash-flow risk (material-heavy phases warrant larger draws). AIA G-702/G-703 schedules are the industry-standard format for commercial; residential rarely needs that formality.
What's the right way to handle a homeowner who wants 'cost-plus' rather than fixed-price?
Cost-plus is transparent but exposes you to scope-creep margin loss. Set the markup explicitly in the contract (15-25% on materials and subs, fixed hourly on labour) and a not-to-exceed cap. Bill monthly with full receipts attached. Cost-plus works for additions and remodels with unknown conditions; it doesn't work for production builds with known scope.
How do I invoice for change orders that came mid-phase?
On the next progress invoice. Each change order gets its own line referencing the signed change-order document ('Change order #3 — added skylight in Bedroom 2 per CO-003 signed 04/15: $X'). Don't fold them into the base contract lines — the customer needs to see exactly what changed and when.
Should I show the retention release on the same invoice as the final payment?
Two lines on the final invoice: 'Final progress payment: $X' and 'Retention release (held at 10% from progress invoices 1-4): $Y.' Customer sees the full math. Some commercial contracts require a separate retention-release invoice after a punch-list cure period (30-60 days) — follow the contract.
Other professions
→ Electricians → Plumbers → Photographers → Graphic designers → Web developers → Cleaners
Ready to invoice?
Open the generator. Fill in your details. Export the PDF. Two minutes.