Invoicing is one way clients can delay making a payment. “Thanks for doing that work, send me an invoice, okay?” It increases your overhead and reduces the amount of profit you will make on any given job. So why do contractors agree to send an invoice? I suppose because they believe everyone does it.
Not everyone does it. The smart ones know better.
There aren’t many businesses that allow you to walk away without paying. Do you walk out of the grocery store and tell them to put it on your tab? Have you ever told your barber or hairdresser to send you an invoice?
Why is construction work different? The biggest problem with invoicing is that when people receive an invoice, they believe there is an unwritten rule that it can be paid in 3-4 weeks. If they don’t get around to it, you’ll send another invoice and they’ll pay it when it’s convenient.
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Instead of invoicing, write your payment schedule in your contract and insist that the owner follow that payment schedule. If they don’t, give them one warning and the second time shut the job down. If they tell you they can’t pay without an invoice because they need something in writing, remind them that they have the contract. Get paid on schedule.
If you’re doing handyman work, don’t leave without payment in hand. Write up their bill, hand it to them, and wait while they get the money or write the check. You are not a bank, and you should not be lending people money so you can build their job. Don’t get involved with invoicing, it’s a game where you lose.
The Bottom Line:
Better not to — invoicing is how clients stretch payment to three or four weeks and beyond, and it adds overhead. You don’t tell your barber to bill you later; construction shouldn’t be different. Put your payment schedule in the contract and hold to it, and on handyman jobs, don’t leave without the payment in hand. You’re not a bank. The article makes the case.
Related Articles:
Payment Schedules on Small Jobs
Pricing Handyman and Service Work
Let Them Know What to Expect
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses. He is the author of Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations. More here.
