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.
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