In most industries, invoices are short, simple, and to the point. But in construction, billing is rarely that straightforward. Projects stretch over months, involve multiple trades, and require careful tracking of progress and payments. That’s why contractors rely on a specialized type of invoice designed for construction work.
What’s Inside a Standard Invoice
For comparison, here’s what a standard business invoice usually includes:
- Business and client details
- Invoice date and number
- Description of goods or services
- Total cost
- Payment terms
One page, easy to read, and enough for most industries.
What Sets Construction Invoices Apart
Construction invoices have to reflect project progress, costs to date, and work left to finish. Instead of a lump sum, they track progress payments. A typical construction invoice may include:
- Project and contract details
- A breakdown of labor, materials, and subcontractor costs
- Line items tied to specific phases of work
- Change orders and adjustments
- Retainage (funds withheld until completion)
- Payment summary (previously billed, current request, and remaining balance)
This extra level of detail ensures transparency for owners, lenders, and contractors.
AIA G702 and G703 Forms
In the U.S., the American Institute of Architects (AIA) has standardized construction invoices with forms like:
- G702 (Application for Payment): Summarizes the contractor’s billing, showing total contract value, payments to date, retainage, and the current amount due.
- G703 (Continuation Sheet): Provides the detailed breakdown, listing each work item, scheduled value, percentage complete, and costs.
These forms are widely used in commercial construction because they keep the billing process consistent and professional.
Construction vs. Standard Invoices at a Glance
| Feature | Standard Invoice | Construction Invoice |
|---|---|---|
| Structure | One page | Multiple pages with detail |
| Payment | Lump sum | Progress-based |
| Industry Standard | Free-form | Often AIA G702/G703 |
| Key Detail | Goods/services | Phases, retainage, % complete |
Why It Matters
For contractors, the invoice isn’t just a bill — it’s a progress report and proof of work completed. Using the right type of invoice reduces payment disputes, improves client trust, and helps maintain healthy cash flow.
Conclusion
For larger commercial projects, an invoice often becomes part of a payment application — a more detailed billing package that includes forms like the AIA G702 and G703. If you’d like to see how those applications work in practice, check out our full guide on Payment Applications in Construction Billing