What is a contractor invoice?
A contractor invoice is a request for payment that an independent contractor sends to a client for delivered services. It records what was billed and supports both parties' accounts. Contractors can be responsible for their own tax and social contributions, while withholding, reporting, or construction-industry deductions may apply to some payments. Confirm worker classification and payment treatment instead of assuming every person who sends an invoice is legally independent or paid gross.
This guide is aimed at trades, construction, and other independent work that may use a client purchase order and hourly, day-rate, or fixed-fee billing. If you are a solo creative such as a writer or designer, the freelance invoice template is a closer fit; if you sell advisory or professional services, the consultant invoice template covers retainers, milestones, and reimbursable expenses.
Use the billing basis in the contract or purchase order. Time-based work shows quantity multiplied by rate, while fixed-fee work identifies the agreed project or milestone amount. In either case, state the supplied work, current amount due, and due date.
What should a contractor invoice include?
A contractor invoice should give the client enough information to identify the work, verify the charge, and process payment. A missing identifier, due date, or billing basis can cause a query or delay. You can build these fields in our free invoice generator; confirm any additional particulars required by the client and your jurisdiction.
- Invoice title and identifier
- Identify the document as an invoice and use the unique or sequential identifier required by your records, client process, and local rules.
- Your details
- Your trading name, address, contact email, and any business or tax registration number that applies to you.
- Client details
- The client's legal name, billing address, and a named contact or accounts-payable email where the invoice should be sent.
- Invoice and due dates
- The date you issue the invoice and the date payment is due, derived from your agreed payment terms.
- Purchase order (PO) number
- If the client issued a PO or requires a billing reference, quote it exactly. A missing required reference can delay or prevent acceptance.
- Description of work
- A clear line item for each task, project phase, or deliverable, with the period it covers if relevant.
- Hours and rate, or fixed fee
- For hourly work, show the quantity of hours and your rate per hour; for fixed-fee work, show the agreed lump sum on its own line.
- Subtotal
- The total of all line items before any tax is added.
- Tax
- Any sales tax, VAT, or GST you are required to charge, shown as a separate line with the rate applied, plus your tax number where required.
- Total amount due
- The final amount the client must pay, in the agreed currency.
- Payment terms and method
- When payment is due (for example, net 14 or net 30), your bank or payment details, and any late-payment terms.
Hourly rate vs fixed fee
With an hourly or day rate, each line shows the approved quantity multiplied by the agreed rate. Reference a timesheet when the contract or payer requires one. With a fixed fee, identify the defined project, stage, or deliverable and the amount made billable by the agreement. Record approved changes separately under either model.
| Comparison | Hourly / day rate | Fixed fee |
|---|---|---|
| Line item | Approved hours or days multiplied by the agreed rate | Agreed amount for the project, stage, or deliverable |
| Scope reference | Time record and description of the work | Contract, statement of work, or milestone |
| Changes | Extra time is billable only under the approval and cap terms | Work outside scope follows the change process |
| Supporting record | Timesheet where required | Scope, acceptance, or milestone record where required |
Agree the model before work starts and make the invoice match the contract and any purchase order. Quote the required PO or approval reference exactly; a payer may reject or hold a document that does not match its process.
How it differs from an employee payslip
A contractor invoice and an employee payslip serve different relationships. A payslip is issued by an employer and records gross pay, deductions, and net pay under payroll rules. The employee may still have other tax obligations, so a payslip does not mean nothing further can be due.
A contractor invoice is issued by the supplier to the client. The contractor is generally responsible for their own income tax and social contributions, and for charging indirect tax when required. A payer may still have reporting or withholding duties, including backup, non-resident, or construction-industry withholding. Check the rules that apply to both parties and reconcile any deduction against the invoice.
Payment terms and submission
Use the payment term and billing event in the contract or purchase order. State a calendar due date, accepted payment method, and required PO, timesheet, acceptance, or account reference. Submit the invoice through the buyer's accepted email, portal, structured network, or other channel.
Apply the numbering rules for your records and retain the issued invoice with its supporting work and approval evidence. Mention interest, collection costs, or a right to suspend work only where the agreement and governing law support it.
Contractor invoice questions
What should a contractor invoice include?
Useful fields include the invoice identifier, supplier and client details, issue and due dates, work description, hourly or fixed-fee basis, confirmed tax, total due, and payment instructions. Quote any purchase order, timesheet, acceptance, routing, or tax identifier required for the transaction.
Do I need a PO number on my invoice?
Use a PO number when the client issued one or its process requires that reference. Quote it exactly and make the supplier, scope, rate, and amount reconcile to the authorised order. The buyer may reject or hold an invoice that does not meet those controls.
How is a contractor invoice different from a payslip?
A payslip is issued by an employer and records payroll deductions and net pay. A contractor invoice is issued by the supplier, whose own tax and contribution duties depend on the classification and jurisdiction. The payer may still have reporting or withholding duties, so an invoice does not guarantee payment gross.
Should I charge by the hour or a fixed fee?
Use the model agreed for the work. An hourly or day-rate invoice shows the approved quantity multiplied by the agreed rate. A fixed-fee invoice identifies the defined project, stage, or deliverable and the amount made billable by the agreement. Record approved changes separately and match any purchase order.
Do contractors charge tax on invoices?
It depends on the place of supply, the contractor's registration or exemption status, the client, and the work. Apply a tax line or exemption or reverse-charge note only when the relevant rules require it, and verify the treatment for the transaction.
What payment terms should I use?
Use the term agreed with the client or required by the contract or purchase order. Net 14 and net 30 are examples, not universal defaults. State the due date and payment details, and mention late charges only when the agreement and governing law allow them.