Businesses often hire contractors to complete some projects for them as a way of boycotting the need to hire permanent staff. This way, they can get the work done effectively while saving costs. Sometimes, the contractors that win the job also hire subcontractors to perform some specialized services in the project. So if you work for organizations or contractors this way, you should adopt a subcontractor invoice for requesting and getting paid on time.
The subcontractor invoice will help you keep track of the work you've completed and those for which you have received payment. Your invoice should have relevant information regarding the work you've done plus the compensation to help the client settle the bill on time. Many invoices linger with clients partly due to vagueness or lack of clarity of the bill. Your subcontractor invoice should be detailed, but with just enough details for clients to respond promptly.
However, the nature of the contract often defines the structure and details of invoices. See different contract types that might influence the way you craft your subcontractor invoice template:
- One-off jobs: Subcontractors often work for clients or businesses with one-off jobs. Sometimes, clients may need you to do a quick inspection or repair, but the chances are good that it won't be a regular occurrence. In this case, you have to come up with a unique subcontractor invoice for work done.
- Retainer opportunity: Accounting services and billing of a client using a subcontractor invoice becomes easy with a standard retainer. If you perform weekly or monthly services for a client, you should create a template that you can always edit or duplicate to invoice clients weekly or monthly as the case may be.
The biggest subcontractor invoice template mistakes
Dues to accounting complications, many subcontractors, make the following mistakes in invoicing:
1. Inconsistent formatting in the subcontractor invoice
Inconsistency in formatting is one of the simplest yet most common mistakes of invoicing. Multiple root causes associated with this mistake, which are most times job-specific. Sometimes, subcontractors have to deal with physical or in-person work such as maintenance, which may force them to prefer traditional invoicing methods. In any case, inconsistency in formatting your subcontractor invoice makes the bill confusing to your clients. Besides, it makes you look unprofessional and uncoordinated, and that's not good for your business.
2. Inconsistency in fees/rate in the subcontractor invoice template
Pricing is relatively straightforward when dealing with products. They have a fixed price that you simply multiply by the quantities supplied. In contrast, subcontractors sell services rather than products, and pricing is heavily dependent on the nature and scope of the service. You must be skilled in tracking billable hours and the hours worked if that’s what the job demands.
3. Illogical line items in the subcontractor invoice template
Services must be categorized and well structured in your subcontractor invoice to help customers understand the bill. List all items and briefly explain what you have done in your invoice with the necessary information on each line item.
4. Unclear terms and conditions in the subcontractor invoice template
Your subcontractor invoice must carry your terms and conditions if you want to get prompt payment for work done. Neglecting this aspect of your invoice or leaving the terms open may give room for prolonging responses from clients. Include your preferred payment method and payment due date like net-30 or 45. Include discount terms and penalty for late payment if you wish but be flexible with your policy.
5. Unprofessional invoicing system in the subcontractor invoice template
Your subcontractor invoice should look professional if you want to maintain your brand image. This factor will inform your choice of the invoicing system to adopt to bill your client. It doesn't speak well of your business if you hastily scribbled the invoice on a cheap piece of paper you found on your desk. Instead, you may consider downloading a template online or using any affordable digital invoicing solutions like Google Docs and Sheets.