Invoicing & Billing

Contractor Estimate vs Invoice: What's the Difference?

A contractor estimate is a detailed projection of the expected costs, materials, labor, and scope for a project, provided to a client before work begins. An invoice is a formal bill sent to the client after or during the project, listing actual work completed and requesting payment. Estimates help customers understand what to expect, while invoices are used to collect payment for services rendered.

We Get It

We know how easy it is to get tripped up by paperwork—especially when clients confuse estimates with invoices. Mixing up these documents can lead to payment delays and jobsite headaches. Clear communication and documentation are critical to keep cash flow moving.

Understanding the Details

Key Differences Between Estimates and Invoices

Purpose

  • Estimate: Projects anticipated costs, timelines, and scope before work begins.
  • Invoice: Requests payment for work completed or in progress, reflecting actual costs.

Timing

  • Estimate: Sent before a contract is signed or job starts.
  • Invoice: Sent after work is finished or at pre-determined milestones.

Content

  • Estimate: Line items for labor, materials, and other projected expenses; exclusions and terms.
  • Invoice: Finalized list of services provided, actual quantities, payment terms, and due date.

Legal Weight

  • Estimate: Not a demand for payment; serves as a proposal.
  • Invoice: Legal request for payment—can be used in collections if necessary.

Practical Steps

How to Use Estimates and Invoices Effectively

  1. Always issue a detailed estimate before starting work, including clear breakdowns and exclusions.
  2. Get client approval on the estimate and document any agreed changes in writing.
  3. Track changes and additional work with signed change orders to avoid confusion at billing time.
  4. Create an invoice that matches the scope actually completed, referencing the original estimate and any change orders.
  5. Send invoices promptly upon project completion or at agreed milestones to keep cash flowing.

Pro Tip

We always recommend labeling your documents clearly as either “Estimate” or “Invoice” to prevent misunderstandings, especially when clients are juggling multiple projects.

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Frequently Asked Questions

When should a contractor send an estimate versus an invoice?
A contractor should send an estimate before any work begins, typically during the bidding or proposal phase, to outline projected costs and scope. Invoices are sent after work is completed or at agreed milestones to request payment for the actual services and materials provided.
What information should be included in a contractor estimate?
A contractor estimate should include a breakdown of projected labor and material costs, the project scope, timeline, exclusions, payment terms, and any assumptions or conditions. This helps clients understand the expected costs and sets clear expectations before work starts.
How does an invoice differ legally from an estimate in contracting?
An estimate is not a binding demand for payment; it's a proposal outlining anticipated costs. An invoice, however, is a formal request for payment and serves as a legal document that can be used for collection purposes if payment is not received.
Can a contractor invoice amount be different from the original estimate?
Yes, the final invoice can differ from the original estimate if there were changes in the project scope, unforeseen conditions, or additional work authorized through change orders. It's essential to document and communicate any changes to prevent disputes.
Why is it important to keep estimates and invoices separate in contracting?
Keeping estimates and invoices separate avoids client confusion, ensures clear communication about costs, and provides a paper trail for both projected and actual expenses. Mixing them up can lead to delayed payments, disputes, and issues during audits or collections.

Contractor Community Q&A

Real questions from contractors like you, answered by experts and peers.

Featured
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Amanda S. Handyman • Portland, OR

Is it okay to invoice for more than the estimate if materials cost more than expected?

38 found helpful 2 answers
Construction Coach Expert

Only if your contract allows for it. Many contractors include language like "material costs subject to market conditions" but you need that in writing BEFORE the job starts. Otherwise, you eat the difference or negotiate a change order.

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Tony L.

I build 10% material buffer into my estimates for exactly this reason. Clients never complain if I come in under budget.

12
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Tom B. Painter • Miami, FL

When should I send the first invoice? After signing or after starting work?

19 found helpful 1 answers
EZcontractPRO Team Official

Best practice is to collect a deposit (25-50%) upon contract signing, before any work begins. This covers your initial material costs and confirms the client is committed.

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