Construction & Contractor Invoicing: Holdbacks, Change Orders, and Progressive Billing
Contractor invoicing in Canada involves unique complexities that go well beyond listing hours and materials. Construction holdback legislation, change orders mid-project, and milestone-based billing all require careful documentation on your invoices. Understanding these requirements protects your right to payment and keeps you ready with provincial regulations.
Construction Holdback Legislation by Province
Every Canadian province requires a statutory holdback on construction projects, where the payer retains a percentage of each progress payment until the project is substantially complete. In Ontario, the Construction Act mandates a 10% holdback for 60 days after substantial completion. British Columbia requires 10% for 55 days under the Builders Lien Act. Alberta holds back 10% for 45 days under the Prompt Payment and Construction Lien Act. Saskatchewan and Manitoba follow similar 10% structures with varying release timelines. Your invoices should always show the holdback amount as a separate line item so both you and the client can track what is retained and what has been released.
Change Order Invoicing
Scope changes are inevitable on construction projects. When billing for a change order, always reference the original quote or contract number and the specific change order document number. Include a clear description of the additional work, the agreed-upon price or rate, and any impact on the project timeline. This creates an auditable trail from the original scope through each modification. For example, your invoice line might read: "Change Order #CO-003 (ref. Quote Q-2026-041): Additional electrical rough-in for basement suite — $2,400.00." This level of detail prevents disputes and supports your position if payment is contested.
Mobilization and Demobilization Charges
Transporting heavy equipment to and from a job site is a legitimate billable expense. Mobilization charges cover delivery, setup, and the cost of making equipment operational on-site. Demobilization covers the reverse. These charges should be itemized separately on your invoice with a description of the equipment involved. For large projects, mobilization fees typically range from $500 to $5,000 or more depending on the equipment. Including these as explicit line items prevents clients from questioning why the project total exceeds the quoted labour and materials.
WSIB/WCB Clearance Certificates
Many general contractors and property owners require proof of workplace safety insurance before releasing payment. In Ontario, this is a WSIB clearance certificate; other provinces use their respective Workers' Compensation Board (WCB) equivalents. Including your clearance certificate number on your invoice, or attaching a current certificate, accelerates payment processing. If your certificate lapses, clients may legally withhold payment until you provide a valid one. Keep certificates current and reference them directly on every invoice for commercial work.
Progressive Billing for Large Projects
For projects exceeding $50,000 — common in renovations, commercial fit-outs, and new construction — progressive or milestone billing is standard practice. Break the project into defined milestones (foundation, framing, mechanical, finishing) and invoice upon completion of each phase. Each progress invoice should state the milestone completed, the percentage of total project value it represents, the cumulative amount billed to date, the holdback retained, and the net amount due. This approach improves your cash flow, reduces the client's risk, and creates a clear record of project progress tied to payments.
For more on collecting overdue payments on construction projects, see our guide on handling late payments. Ensure every contractor invoice meets CRA compliance requirements, and use expense tracking to document project costs alongside your invoicing. For material purchases and subcontractor expenses, receipt tracking software keeps your records organized for CRA audit purposes.