Invoices go out two weeks after the work
Give billing a fixed day, a fixed owner and a simple trigger from the field.
Most subs don't have a billing problem. They have a Friday afternoon problem, where the crew finishes the work and the invoice waits for someone to find the time. Two weeks go by, the GC's cutoff passes, and your payment slides another month. Every day of delay in billing is a day you're paying for labor and material with your own money.
Three moves, in order
What CFOS does about it
CFOS gathers billing information from the field and the office in one place. Dailies hold the foreman's crew, equipment and photos, T&M tickets ride on the daily and become change order drafts, and approved time goes to QuickBooks Payroll. The PM enters progress on the pay app, which already has the schedule of values and retainage, and sends it to the GC from QuickBooks or logs it for another system. Pay app due dates come with reminders to the PM, so the date doesn't depend on memory. QuickBooks still holds the invoices and the books.
Who owns this: Office manager or bookkeeper.
At $4M, invoicing a week sooner pulls cash forward.
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Step 06: Project management
Billing dates, change orders, and notices, written as standards that work without anyone following up on them.
Other problems step 06 solves
Other things that go wrong
What owners ask
Contractor invoices sent late?
Give billing a fixed day, a fixed owner and a simple trigger from the field. Most subs don't have a billing problem. They have a Friday afternoon problem, where the crew finishes the work and the invoice waits for someone to find the time. Two weeks go by, the GC's cutoff passes, and your payment slides another month. Every day of delay in billing is a day you're paying for labor and material with your own money.
Which part of the system fixes this?
The step is number 06, project management. Billing dates, change orders, and notices, written as standards that work without anyone following up on them. It's drawn from chapter 6 of CONTROL: C.F.O.S. Construction Financial Operating System.
Is this normal for my trade?
Across the 48 trades that publish a figure, net profit at $1M to $5M averages 7% before taxes. If you're well under that and this page describes your month, the two are usually the same story. The published average tells you where the pack is, and your own job costing tells you where you are, which is the number that pays payroll.
Where do I start?
Pick one day each week or each cycle for billing, put it on the calendar, and make one person responsible for sending it.
How soon after the work should an invoice go out?
As soon as the contract lets you bill it. For progress billing that's usually the pay app date, and for T&M and extras it's as soon as the ticket is signed. The goal is no delay between when you could bill and when you do.
Whose job is it to send the invoice?
The office usually sends it and the PM or foreman supplies what's needed. Write down who does which part. When the answer is whoever has time, the invoice goes out late.
Does billing earlier hurt the relationship with the GC?
Not if you bill what the contract allows and the backup is clean. GCs get frustrated with late and messy invoices more than early clean ones. A pay app that comes in on time with the right paperwork makes their job easier.
Can I fix this without touching anything else?
You can try, and it doesn't hold. Step 06 depends on step 04, estimating system. Install it ahead of that and it produces numbers the field won't trust, which is worse than the problem you started with.
Wrote CONTROL, the 8 step system behind these figures. More about the author.