ECN Forum Forums General Topics of the Trade Business Related Discussion Itemized invoices

I was wondering when you invioce your customers, do you itemize the material used, or just give them a total amount? Does it differ from service calls to just T&M jobs. I know if you bid something, the customer doesn't need to know what the break down is. Currently I just give a total material amount. I installed a can light in an existing ceiling. T&M job, Invoice showed Labor 3hrs @ XXper hour and XX for material= Total amount owed. Then I give a desription of work done. No one has complained yet, but was just wondering how others go about this and how your invioces are structured.

LK, NJ recently changed that amount from $200 to $500 from what I understand. But I agree with you. T&M in NJ is a lot tougher these days (too many New Yorkers ;-))

LK, NJ recently changed that amount from $200 to $500 [quote]

What do you mean by that? NJ changed

Itemizing you invoice will only lead to unhappy customers when they take your invoice and start pricing each and every item out on the Internet (and of course, they'll forget how much it costs to ship heavy stuff like cable) and "conclude" you "ripped them off" royally.

You're not allowed to make any profit on materials, despite your having to make a trip to the supply house (paying $2.75 a gallon for gas, plus wear and tear on the vehicle) or putting your money up to keep a stock of supplies.

I think you're doing the right thing now, and as LK notes, if it works for you, stick with it. You might even be better off by not even separating labor and materials to avoid the "curiosity" factor, or the "$20 for parts $200 for labor" thing.

Just my 2 cents worth (not itemized).

Joe

i will check with my father. he just sat through an inspectors course last week where they went over it. it's just changed from what he said.

I never, ever itemise. There's no upside and plenty of downside. Never forget that there's a strong prejudice against tradesmen.

I no longer itemize or charge by t+m. Now I am using less ink and paper for my invoices also.

I never itemize, just a total amount due. I've had only one customer ask for an itemized invoice after paying. I never got round to doing it and they never asked again.

We use itemized bills. It seems to be a lot of needless busy work though. It's very time consuming and I don't think anyone really cares to know what each and every part costs.

I find that the less you break down the project the less hassle you get also.

That is why I switched to fixed bid upfront pricing years ago. The customers tend to be happier, they know what it will cost them, and I am much happier because I don't get the hassles.

They say, "Less is More!"

where does everyone get their invoices? do you create them yourselves or do you use a program for the computer , buy them at staples?

trevman

I've used QuickBooks, Software, MS Word Templates from the Microsoft Website and I've made my own.

Because I prefer to use the computer for all my estimating and invoicing, I prefer to use those.

However, if you are using a manual price book, you could buy premade forms from Staples or the like or NEBS forms from I believe it is www.NEBS.com (check out workorders, estimates, invoices). They have some good pre printed forms.

Glen

I haven't used T&M for over a year now. I've been contracting residential service, so there isn't any listing of materials on the invoice.

My clients get a copy of the service work order or contract. The invoice usually states "Completion of Contract". It's been easier for me & less stressful for my clients. They know the price in advance & approve the work knowing the final price.

Dave

thanks glen

My Invoices describe the tasks done - similar to the wording of a Proposal, such as:

"Labor and Materials for X Equipment"

"Total, including Taxes = $XXX,XXX.XX"

"Payment is due within XX, as described in Proposal/Contract Document; failure to comply will result in a call to "Mickey The Hook" hounding your butt"
just joking about the mafia based collection agent!

For "T&M" work, it is best to just be as brief as possible.
If a breakdown is requested, due so in "Units" (like all costs related to a new Panelboard for example), and be brief with these descriptions.

If a client wants any Contractor to produce a "Laundry List" of detailed items for an invoice, this Client has way too much time on their hands!
These (in my experience) are the ones who will call you endlessly with the "I Can Get These Parts At Home Depot For 10% Less" complaints.

Nearly all the Clients we deal with - and even when I invoice the Contractor I work for when doing Electrical Systems Design Injunearring work (intentionally mis-spelled "Engineer"), the Invoice states 'Labor and Materials to do (whatever work involved)"

This may be in several description lines, especially when some items might be furnished by the client or others, or when provisions for a circuit will be "Supply Power Only", connections by others.

Submitting a highly detailed Invoice to these Clients will get them "Slightly Ticked Off", to say the least!

Scott35

I will itemize if I feel the need to.
Example-

I just installed 480' (160'X 3) of 250kcmil for an underground residential service for a builder.
In order to avoid any questions regarding installed cost ($3,500.00), I listed the cost of the wire ($2,900.00) as a separate item.

redsy,

what was your actual cost and would the customer, if they got a hankering and called the local supply house, get a price similar to what you charged them? or would the supply house tell them $5/foot ($2,400) and suddenly they feel you cheated them out of $500?

just a thought.

mahlere:

480' of kcmil doesn't drop on the clients doorstep without related overhead expenses. A small percentage of clients will beat you up over prices. With T&M they have easier opportunity to beat you up, but that type of client might try to beat you up with a contract also.

Sometimes it's good to let your competition have the clients that you can't get along with.

Dave

tiger,

no argument here. but do you want or need the added aggrevation of dealing with it after you have supplied and installed the material?

wouldn't it be better to find out this customer is an SOB before you invest all the time and money?

What if he decides that he's only going to pay you the $2400 that the wire would cost? Are you really going to take him to court over $500? it would cost you more than that to fight for it. You'll probably write it off as bad debt and move on. but you will need to make that $500 up someplace else.

the idea is to avoid that situation.

Which is why I contract rather than work T&M.

Dave

Several times a customer has asked to supply materials. I give them generic info and 95% of the time I gewt the call... Why don't you just bring the materials with you.

This customer is a regular client who would not get the same price I paid for this wire.
It was marked up appropriately, and I seriously doubt they could call any supplier and get a quote for the price I charged them, let alone the price that I paid.
I also doubt that they would bother to try.
We all have different operating principles, and different reasons for pricing the way we do.
There are several considerations that come into play when I invoice. The desire to provide high quality work at a price that is fair to both parties is a priority when the business of an important regular customer is at stake.
It depends on what kind of business you're in, but if you want to establish long term relationships with good customers who pay promptly, you should consider the future, not just the present.

Quote:
What if he decides that he's only going to pay you the $2400 that the wire would cost?


There's that "straw man" again...


Dnk..

your right dnk. it's never happened to anyone before, so why bother trying to avoid it?

Dnk, i really don't care how you run your business.

but if my experiences and the experiences of others can help someone run a better business, than what is wrong with that?

Maybe you've never had a customer shop your prices after you did the job, but before you've gotten paid. But we have and so have a mess of contractors that I am friends with.

So, you call it "straw man", I call it a possible reality.

You say don't worry about it, never happen. I say it has and does happen, so how can you avoid it?

Run you business how you want. But why do you get so upset and angered when someone who has been through it attempts to help others avoid it?

You've already admitted that you need to run into the wall to believe that it's there. That's fine. But does everyone need to run into the wall with you?

Or is it conceivable to you, that some people can actually learn from other peoples mistakes and lessons?

Or should we be called theives and cheats in a public forum because we want a better life than you want to have?

I apologize that I am trying to help other contractors see that there is something different out there than the 'going rate' and the status quo.

You may not want to change, but maybe other contractors just don't know that they can change. Maybe once they learn that there is a different way, it opens up everything.

Good luck Dnk.

I like this forum SO much more when the posts don't get personal.

Dave

i agree tiger. i attempt to keep them generic. but sometimes specific answers are for specific questions to specific people.

$500 mightn't seem like much till you consider how much work you need to do to replace it.
The only way to make up lost money is by profits from other jobs. Even if you're pricing with a 20% profit margin you lose some of that to company tax plus not every job is going to come in on or under the price. So net profit will probably be closer to 10%. That means to cover that lost amount of $500 you need to do another $5000 worth of work.
hmmm...maybe it's worth chasing those bad debts afterall!

[This message has been edited by mahlere (edited 05-04-2006).]

Now the key question is how to avoid that situation to begin with?

Your invoice pretty much defines what you are claiming is owed to you, and why it is owed. It's pretty hard to add to it after it's presented.

You are saying that the work was agreed upon, and has been performed as promised.

Sometimes there are reasons - for example, your own internal accounting needs- to break the price apart.... for example, into sections for thise items subject to sales tax, and those that are not.

You might write the invoice in a manner that will make things easier for the customer to pay you (due to his own accounting / management quirks). For example, you might define the job as "periodic maintenance" or as "repairs," as the customer prefers.

The invoice is your opportunity to define other, additional, charges to your original quote. An example of this might be the rental of a lift or generator.... or additional charges caused by scheduling.

Finally, the invoice defines just what is covered by warranty- and when that warranty begins! A simple bill for "services rendered" is pretty much useless to everyone.