Invoicing in the construction industry
An invoice is a document issued by a vendor to a purchaser, setting out the products or services that they have purchased (or have agreed to purchase) and the amount that is payable. Invoices can be sent before or after the delivery of products or services, and typically include a payment due date. An invoice can also be sent after a purchase order has been agreed.
Once it has been agreed, an invoice is a legally-binding document, detailing a debt owed by the purchaser to the vendor.
The information set out on an invoice will typically include:
- Date that the invoice was created.
- Names and addresses of customer and supplier.
- Description of items or services purchased.
- Prices and any added VAT.
- Terms of payment (i.e. how long the purchaser has to pay the invoice).
- Payment method (such as bank account details).
Late payment of invoices is a problem for most suppliers of goods and services. In tough economic times the problem gets worse as cash retention becomes a greater priority. In the construction industry squeezing sub-contractors and suppliers is almost 'accepted practice'. A survey of 250 small construction companies in November 2012 found that 97% felt unfairly treated by main contractors, and just 5% of all work was paid for within 30 days.
However all suppliers of services have statutory rights as well as those provided by contract. These include:
- The Late Payment of Commercial Debts (Interest) Act
- The Late Payment of Commercial Debts Regulations
- The Housing Grants, Construction and Regeneration Act
- Small Business, Enterprise and Employment Bill
For more information see: Late payment.
According to data from online invoicing firm Tungsten, published in April 2016, UK construction businesses are losing more than £1.8bn from invoice fraud each year. Fraudsters use tactics such as; embedding viruses in email attachments, attaching unknown invoices to an email or via post, making false changes to bank details and sending duplicate invoices.
For more information see: Construction invoice fraud.
[edit] Related articles on Designing Buildings Wiki
- Accounting.
- Construction invoice fraud.
- Construction supply chain payment charter.
- Difference between purchase order and invoice.
- Fees.
- Late payment.
- Letter of intent.
- Purchase order.
- Record keeping.
- Regular invoicing for architects.
- Subcontractor vs supplier.
- Supply chain.
- The benefits of e-procurement in construction.
- Turnover.
Featured articles and news
The continued ISG fall out, where to go?
Support for ISG contractors, companies and employees.
New HES national centre for traditional building retrofit
Announced as HES publishes survey results which reveal strong support for retrofit.
Retrofit of Buildings, a CIOB Technical Publication
Expected to become one of the largest activities in the global construction industry.
The ECA industry focus video channel
Keeping update with the industry session by session.
Over 25 recorded informations sessions freely available.
AT Awards 2024 ceremony East London October 25th.
Revisiting the AT community at the 2023 awards evening.
The Community Housing Fund and built affordable homes
CLTN reviews the impact of the Fund and calls for extension.
The grading system of the Regulator for Social Housing
A background, an explanation and ten recent enforcements.
Construction, repair and maintenance. Book review.
Putting new life into a city with a 1900 year history.
BSRIA Briefing 2024: Sustainable Futures speakers
Redefining Retrofit for Net Zero Living 22 Nov.
Wall of support for post-Grenfell regulation of electricians
Call for a shake-up of the construction industry highlighted on radio.
Digital sustainability through future AEC tools
Bringing together industry and academia to meet challenges.
Skills gap for net zero highlighted to Minister for Industry
ECA convenes roundtable discussion at Portcullis House.
Evidencing Net Zero with the new UK buildings standard
Pilot version with detailed excel proforma out now!
Scottish Building Safety Levy, in consultation
From direct remediation and the RPDT, to the costs and alternatives.
Waves of warmer homes grants for the rental sector
Boosting energy efficiency standards for all rented homes.
A refocus of the National Planning Policy Framework
Key terms described in brief, as the consultation closes the evening of the 24th.
Fortified farmhouses of the unruly 16th-and 17th-century borders.