There are different types of billing methods in the construction industry. One of them is time and materials billing. Some general contractors prefer this procedure, as it shifts most of the risks onto their customers. Any costs incurred come out of the customer’s pocket, not the contractor’s. T&M billing allows them to focus on their profits and concern themselves less with the unpredictable nature of contracting. While the agreements are straightforward, the act of putting together a bill can be daunting because it is necessary to collect all receipts throughout the project and any supporting documentation. Factor in time for manual data entry (and the mistakes that tend to come along with it), and the process gets even more convoluted. Thankfully, there is time and material billing software that quickly and easily generates accurate, professional invoices. Learn how to use this method below!

The time and materials billing format involves the contractor charging the customer for, quite literally, time and materials. The contractor bills for every man-hour spent on the project, as well as any materials purchased for that job. Labor rates are typically outlined in a simple format in the contract, though these rates can vary depending on the tradesperson working on the project.

On top of the labor rates and materials costs, some contracts allow the contractor to mark up the cost of the materials a bit. Again, this is something the contract will clearly outline, but it does help the contractor maintain a healthier profit margin. Should the customer decide to use high-end materials, the contractor’s profit will grow accordingly.

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