General Contractor Invoicing Best Practices

General Contractor Invoicing Best Practices

General contractors have the most complex invoicing in the construction industry. You're not billing for a single trade — you're billing for an entire project with multiple phases, subcontractors, materials, permits, and overhead. A plumber sends one invoice per job. A GC might send five invoices per month on a single project.

Getting invoicing right means getting paid on time, maintaining cash flow, and keeping projects moving. Getting it wrong means chasing money, stalling projects, and damaging relationships with subs who depend on you to pay them.

Here's how to invoice like a professional GC.

The Two Invoicing Models

Progress Billing (Draw Schedule)

The most common model for residential GCs. You invoice at predetermined milestones tied to project completion.

Typical draw schedule for a $150,000 home remodel:

| Draw | Milestone | Percentage | Amount | |------|-----------|------------|--------| | 1 | Contract signing (deposit) | 10% | $15,000 | | 2 | Demo complete | 10% | $15,000 | | 3 | Framing/structural complete | 15% | $22,500 | | 4 | Rough-in (plumbing, electrical, HVAC) | 15% | $22,500 | | 5 | Insulation + drywall | 15% | $22,500 | | 6 | Cabinets + finishes started | 15% | $22,500 | | 7 | Substantial completion | 15% | $22,500 | | 8 | Final walkthrough + punch list | 5% | $7,500 |

Notice the final draw is only 5%. This is intentional — a small final payment motivates the GC to finish the punch list quickly and gives the homeowner less incentive to withhold payment over minor issues.

AIA-Style Billing (Schedule of Values)

The standard for commercial projects. Based on AIA Document G702 (Application for Payment) and G703 (Continuation Sheet).

How it works: 1. Before the project starts, you create a Schedule of Values — a line-item breakdown of every cost category in the project 2. Each month, you submit an application for payment showing the percentage complete for each line item 3. The architect or owner's rep reviews and certifies the application 4. The owner pays the certified amount (minus retainage)

Example Schedule of Values for a $500,000 commercial buildout:

| Item | Description | Value | This Period | Complete | Retainage | |------|-------------|-------|-------------|----------|-----------| | 1 | General conditions | $35,000 | 20% | $7,000 | $700 | | 2 | Demolition | $18,000 | 100% | $18,000 | $1,800 | | 3 | Framing/carpentry | $45,000 | 50% | $22,500 | $2,250 | | 4 | Electrical | $62,000 | 30% | $18,600 | $1,860 | | 5 | Plumbing | $48,000 | 30% | $14,400 | $1,440 | | 6 | HVAC | $55,000 | 0% | $0 | $0 | | 7 | Drywall/paint | $32,000 | 0% | $0 | $0 | | ... | ... | ... | ... | ... | ... | | **Total** | | **$500,000** | | **$125,000** | **$12,500** |

Payment this period: $125,000 - $12,500 retainage = $112,500

AIA billing is more complex but it's what commercial clients expect. If you can't produce a proper AIA-format application for payment, you won't get commercial work.

Essential Elements of Every GC Invoice

Project Information

• Project name and address
• Contract number
• Invoice/application number (sequential)
• Billing period (month or milestone)
• Original contract amount
• Approved change orders (running total)
• Revised contract amount

Work Completed

• Detailed description of work performed this period
• Percentage complete for each line item
• Dollar value of work completed
• Materials stored on-site (but not yet installed)

Financial Summary

• Total completed to date
• Less: retainage held
• Less: previous payments
• Amount due this period

Supporting Documents

• Lien waivers from subcontractors (conditional for current period, unconditional for prior periods)
• Proof of insurance (current certificates)
• Permit inspection records
• Change order documentation
• Progress photos

Retainage: The GC's Cash Flow Headache

Retainage is money the owner withholds from each payment as insurance against incomplete work. Standard retainage rates:

• Residential: 0-5% (often negotiable)
• Commercial: 5-10% (industry standard)
• Government: 5-10% (often mandated)

On a $500,000 project at 10% retainage, $50,000 is held back until substantial completion. That's $50,000 of earned revenue sitting in someone else's account for months.

How to Manage Retainage

**Negotiate lower retainage.** On residential projects, push for 5% or zero. On commercial, push for 5% instead of 10%. On projects over $1M, negotiate retainage reduction to 5% after 50% completion.

**Track retainage carefully.** Know exactly how much is held at any time. Include it on every invoice as a running balance.

**Invoice retainage promptly.** The moment the project hits substantial completion, submit the retainage release request. Many GCs delay this and lose weeks of cash flow.

**Retainage on subs.** You hold retainage from your subs the same way the owner holds it from you. When the owner releases your retainage, release your subs' retainage promptly. Holding sub retainage after you've been paid damages relationships and may violate your state's prompt payment laws.

Lien Waivers: Protecting Everyone

Lien waivers are legal documents that waive a contractor's or subcontractor's right to place a lien on the property for work that's been paid.

Types: - **Conditional waiver (current period):** "I waive my lien rights for this payment, on the condition that the check clears." Submit with each invoice. - **Unconditional waiver (prior periods):** "I confirm that I received payment for the prior period and unconditionally waive my lien rights for that work." Submit after receiving payment.

Owners and lenders require lien waivers from the GC and all subs before releasing payment. If your plumber won't sign a lien waiver, the owner won't pay your invoice.

Managing Sub Lien Waivers

This is one of the most time-consuming parts of GC invoicing:

1. You complete work and prepare your invoice 2. You collect conditional lien waivers from every sub who worked during the billing period 3. You submit your invoice package (invoice + all lien waivers + insurance certs) 4. Owner pays you 5. You pay your subs 6. You collect unconditional lien waivers from subs confirming receipt of payment 7. You submit unconditional waivers with your next invoice

Missing one sub's lien waiver can delay your entire payment. Build lien waiver collection into your process — don't chase them at invoice time.

Subcontractor Payment Management

As a GC, you're responsible for paying your subs. This creates a cash flow timing problem: you need to pay subs before you get paid by the owner (or at least shortly after).

Best Practices for Sub Payments

**Pay promptly.** Most states have prompt payment laws requiring GCs to pay subs within 7-30 days of receiving payment from the owner. Know your state's law.

**Match payment to draws.** When you receive Draw 4 from the owner, pay subs for the work included in Draw 4. Keep clean records of which sub payments correspond to which draws.

**Hold appropriate retainage.** Mirror the owner's retainage terms with your subs. If the owner holds 10%, you hold 10% from subs. Release when the owner releases.

**Document everything.** Keep a ledger for each sub showing: contract amount, invoices received, payments made, retainage held, lien waivers received.

Invoice Timing

Residential (Draw Schedule)

Submit the draw request within 24 hours of reaching the milestone. Don't wait for the end of the month. The faster you submit, the faster you get paid.

"Draw 4 — rough-in is complete. Inspector approved all rough-in work today. Please find the draw request attached."

Commercial (Monthly Billing)

Most commercial contracts require monthly billing. Submit by the contract-specified date (usually the 25th of the month for payment on the 1st or 15th of the following month).

Missing the billing deadline by one day can delay payment by an entire month. Mark billing deadlines on your calendar and protect them.

Change Order Integration

Change orders affect every subsequent invoice. Track them cleanly:

• Original contract: $500,000
• CO-1 (approved 3/15): +$12,000
• CO-2 (approved 4/02): +$8,500
• CO-3 (approved 4/18): -$3,000 (deleted scope)
• Revised contract: $517,500

Every invoice should show the original contract amount, each approved change order, and the revised total. This prevents end-of-project disputes about what the total should be.

Common GC Invoicing Mistakes

Billing Ahead of Work

Overbilling — invoicing for more work than you've completed — is tempting for cash flow but dangerous. Owners and architects catch it, and it destroys trust. If your plumber is 40% done, bill 40%, not 60%.

Skipping Documentation

A bare invoice with a number gets questioned. An invoice with progress photos, inspection reports, and lien waivers gets paid. Documentation is the difference.

Ignoring the Schedule of Values

The Schedule of Values is your billing blueprint. If you set it up wrong (too much value front-loaded or too vague), you'll fight it every month. Spend time getting it right before the project starts.

Not Tracking Change Orders in Real Time

If you wait until the end of the project to reconcile change orders, you'll miss things and eat costs. Track every CO as it happens and update the contract total monthly.

Forgetting to Bill for Stored Materials

Materials delivered to the job site but not yet installed are billable in most contracts. If $20,000 in cabinets are sitting in the garage waiting for installation, include "materials stored on site: $20,000" on your invoice.

Invoicing Software for GCs

GC invoicing is too complex for paper or basic spreadsheets. You need:

• Schedule of Values tracking
• Progress billing with percentage-complete calculations
• Change order integration
• Retainage tracking
• Sub payment management
• Lien waiver collection
• Document attachment (photos, inspections, insurance)

[CrewDash](https://crewdash.co/demo) handles the invoicing workflow for general contractors — draw schedules, milestone payments, change order tracking, and payment collection in one platform. Built for contractors, not accountants. See the interactive demo.

[Start your free trial](https://crewdash.co/register) and send your next draw request in minutes, not hours.