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Why Are Invoices So Important? | Construction Insider
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Why Are Invoices So Important? | Construction Insider

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Quotes and invoices are key to any construction business. You may feel safe taking a client’s verbal agreement on a price but it can always be very risky.

We have seen many companies lose money on a job due to the fact of the client going back on their word and we would hate this to happen again.
Quotes are the biggest safety net you can have in this industry, as some clients have agreed verbally to a price but they will wait till after the work has been fully completed to query the price and say they would never agree to that amount and you end up being the one losing money as you have no proof they agreed to it.
These are our top tips when it comes to quoting/invoicing!

Tip No.1 - Always be specific  in your descriptions and include any caveats.

This is a very important tip when it comes to quoting. As this is to cover yourself more than anything else. Specify everything you plan to do in the job and seek written approval from the client before starting any work, the main reason for this is because you will find some untrusting client’s and they will try anything to get some free work done.

Tip No.2 - Include an expiry date  and follow up before it ends.

We all know that material prices can go up and you may want to increase your labor costs, most companies do a 3-month expiry date but you can do as little or as long as you wish. This prevents people coming to you in a year or more wanting something for the same price as you quoted last year but since then you have increased your prices and can no longer do that job for that amount of money. If you follow up before the expiry date warning the client that the price may change after this date and will require a requote if they do not wish to go ahead at this time, they will appreciate that more than being left in the dark and finding out they have to pay more because your prices have gone up. People can also argue with you on this due to there being no expiry date and may expect you to do it for the quoted price since you never covered yourself.

Tip No.3 - Having a written Confirmation  from the client.

This is also super important! Make sure you always send your quotation via email and receive a confirmation or purchase order back from the client saying to go ahead with the quote and they are happy with the price. This is your safety net if a client starts to query the price halfway through or at the end of the work.

Tip No.4 - Identify your business risks.

If you are concerned about the feasibility of the job, consider the impact of a worst-case scenario and propose including a clause in the quote that protects both parties from any undesirable outcomes.

Tip No.5 - Consider using a software.

Lots of companies use a software to help keep track of the progress of the job. Most softwares also have a quote converter to easily create invoices when you have finished a job. Some people use an accounting software such as Xero or Quickbooks which is super helpful for your bookkeeper and accountant or you could use a software designed for the construction industry to help track jobs such as Service M8, Tradify, Fonn, NextMinute, SimPRO or BuilderTrend for example.

What is an invoice?

Invoices are such an important part of record-keeping, they help keep detailed information regarding any purchases and sales.

There are 11 items you should always include on your invoices:

Item No.1 - A unique identification number such as INV-12345 or 2802791

Item No.2 - Your Business name, address, and contact information

Item No.3 - Your customers business name and address

Item No.4 - A clear, in-depth description of what you’re charging for

Item No.5 - The date the service or goods were provided (Supply Date)

Item No.6 - The date of the invoice

Item No.7 - The due date of the invoice/payment terms

Item No.8 - The amount being charged (Net amount)

Item No.9 - Clear view of the amount of VAT, the VAT rate, and your VAT number (if applicable)

Item No.10 - The total amount owed

Item No.11 - Clearly state this is an invoice at the top of the document

All of these items are essential to have on an invoice, not only for record-keeping purposes but it can also help avoid duplicate payments, making sure you are paid on time and any confusion with what the payee is paying for.

If you are a sole trader you must include:

• Your Name

• Any business name you are using

• An address that documents can be delivered to

If you are a limited company you should include:

• Your business’s full name as shown on your certificate of incorporation

• If you choose to include a directors name on the invoice you need to include all the director’s names

To make your company seem more professional and memorable, the appearance of your invoice can create a big impact on your customers.

Tip: Use professional fonts that match your brand and your logo and any colours if possible.

Now we know what should be on invoice, here is why it is so important to invoice as soon as possible:

  1. It shows a level of professionalism, if you have a completed a job for a client or even when it comes to quoting, getting that invoice/quote out as early as possible can speed on the client decision/payment. The client will think you are a proper firm with procedures in place that ensure things get done and this could result in more work coming back to you.

  1. Cashflow - If you issue your invoices as soon as you have completed a job and not leaving it to a Thursday night or to the weekend then you could be receiving your money a lot earlier plus this will have a massive benefit to your cashflow

If you are using a Accounting or Construction Software, this can make it much easier to produce quotes/invoices on the go and have a electronic audit trail if you have team so you know who produced what and when. You can also integrate payment solutions with Xero that can make the end experience with your client a great experience, someone like Crezco can be of great use with instant payments and simple process.

You can use anything to design your invoice, a lot of people use their accounting software to design their invoices but you can make your own or get the media team from Saint Global to help you out.

Frequently asked questions

Construction Yellow Tag
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This article has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.

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Why Are Invoices So Important? | Construction Insider

Written by the team at:

Saint Accountants

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