How to Complete an HVAC Invoice: Tips and Other FAQs
If you’re running an HVAC business then your main concerns might include improving cash flow, hiring and retaining talent, or creating a more efficient workflow. However, your invoicing strategy and workflow should move to the top of your list starting now.
Without a good HVAC invoicing strategy your cash flow will suffer, your business will look unprofessional, and you’ll fall victim to paper and pen inefficiencies.
What’s the best way to structure your invoices and your invoicing strategy? We’re here to answer all your pressing questions so you can establish a more organized and efficient HVAC business.
What is an HVAC invoice?
An invoice is a very detailed bill of the amount owed after service. It outlines all labor, parts, time, and mileage included in a job. Give your client an invoice after you’ve provided service to prompt them to pay you. You can provide your client with a receipt once they’ve paid.
6 Ways to quickly improve your HVAC invoice process
- Use the best invoice format (parts and labor, flat rate, or service agreements) for your business model.
- Write the invoice properly (clean structure, clear information, include an invoice number, payment date, and more).
- Use a template to speed up your process and create consistency between jobs.
- Send your client the invoice immediately after the job is complete on site.
- Encourage your clients to send payment promptly by including a payment deadline on the invoice. Test payment deadlines to see what works best for your cash flow.
- Use software, like Jobber, to help you speed up, organize, and automate your invoice workflow.
Need to get started on more organized invoicing?
Try our free HVAC invoice template
Fully customizable, automatically calculates, and is email friendly.Download now!
What makes this invoice different?
An invoice is a bill you provide your client with after completing a job for them so they can pay you appropriately for parts and labor. Typically, you would send your customer an invoice after you complete an installation job, repair, or maintenance visit for a heating or cooling system unit. If you’ve decided to set up a service agreement with your client, then you can invoice them after each visit, monthly, semi-annually, or annually.
Keep a version of the invoice for your own records and give a copy to your client.
This specific type of invoice should document services provided, products or equipment used, amount of time spent for labor, transit mileage, system information, service date, client information, and finally your business information.
Types of HVAC invoices
- Parts and Labor
- Flat Rate
- Service Agreements
The three types of invoices
1. Parts and labor invoice
A parts and labor invoice bills the client for the cost of the parts, the cost of labor to service their system, and the time it takes to get to the job site from the previous location. This type of invoice doesn’t usually charge the client for mileage, unless the job site is outside of the normal business service radius.
For example, if you need to replace a hot surface ignitor, you could bill the client for one hour and bake the cost of parts and labor into the price of this service. It might not take one hour to install the part; however, you would include the time that also took to get there from where your last service call was, or the location of your shop.
This does mean that if you bill the client for an hour, then you only have a minimum amount of time to complete the job in. So, you should invoice for time logged once the job is fully complete.
2. Flat rate invoice
This invoice bills the client one flat price. The cost of the parts and labor are baked into the flat rate, plus tax.
If you go with a flat rate invoicing, then you don’t need to bill the client for hours, parts, or mileage unless they are located outside of your service area radius.
If you happen to take on a job outside of your service area, you need to make sure you have a policy and standard procedure you follow.
For example, you may choose to bill your client for the number of miles outside of your service radius, and also the number of miles it takes to return into it. In this case, that means that travel and diagnostics are typically included in the flat rate invoice.
3. Service agreement
Ongoing heating and cooling maintenance service agreements are extremely important. Business isn’t always going to be one-off jobs. Some clients want repeat system checkups. Plus, service agreements are a handy way to keep business up and running during low seasons.
The service agreement is billed as a flat rate in the form of a package or a plan. This will include certain services such as a seasonal checkup for all systems. The cost labor is usually included in the price, but some parts are tacked on to the invoice when they are needed.
The best strategy for service agreements is to use a customizable checklist attached to the invoice. This helps remind technicians to complete certain tasks for each service call.
Service agreements jobs can be billed after each visit (if you vault your client’s payment card), or on a monthly or annual basis depending on your business plan.
How to write a heating and cooling invoice
- Use a clean, easy to use HVAC invoice template or invoicing software as a base to help you keep your invoicing information organized.
- Choose an invoice style that is most profitable for your business model: service agreement, flat rate, or parts and labor (see the section above).
- Always include an invoice number on each record. This will help you keep track of client accounts, invoice history, and all the business that comes in and out of your business.
- Be thorough and complete. Record all the details you can, such as equipment, troubleshooting procedures, and other notes. For example, write “clean the flame rod,” or “check the heat exchanger with flashlight for flame change” directly on the invoice. You or one of your team members might need to refer to your invoice down the road. If you’re thorough and helpful enough, you’ll know what happened, what was done about it, and what you need to do next.
- Include important system efficiency details so you know about your clients’ efficiency progress. For example, check supply, return, and Delta T for each unit you service, and document it in the invoice.
- Include brand, model, and serial number for the unit you service in the invoice. This will help you know what unit you serviced if there are multiple air conditioning units in one building, for example.
- Include a due date for payment. Having this written down on the invoice and the service agreement will help you communicate payment urgency, and encourage your clients pay you within a reasonable timeline.
What is an HVACinvoice template?
An invoice template is a blank invoice that you use as an outline to create more detailed invoices for service calls. Templates can take the form of a paper print-out, word processor document, formatted spreadsheet, or software like Jobber.
The invoice template should be flexible enough to allow you to send custom, detailed, and professional-looking invoices to your clients, without forcing you to constantly create a new invoice outline for every single service call.
Invoice templates help save you time by taking care of the complicated stuff like formatting, information fields, automated calculations, and business information and branding. Once you get everything set up once and then invoicing is smooth sailing.
All you have to do is open the file and fill out all the appropriate information. If you use invoice software, then the information should be automatically updated in the invoice based on the quote you’ve made for the client’s assessment appointment.
Need to get started on more organized invoicing?
Try our free invoice template
Fully customizable, automatically calculates, and is email friendly.Download now
Why should you use invoices?
- An invoice creates an account receivable.
- It keeps your office, team, and technicians organized.
- It helps you get paid the proper amount on time.
- A proper invoice workflow will help you stay organized and efficient.
Four reasons why you should use invoices in this industry
Invoices help you keep information and services on the record, while keeping you organized. There are plenty of reasons why you should use an organized invoicing system in your heating, cooling, and refrigeration business model. Here are the top four:
- An invoice creates an account receivable. This is helpful for legalities. Invoices are considered a claim for payment for services rendered, or goods provided. They can be used as legal documents that can be helpful for auditing, or court cases.
- It keeps your office, team, and technicians organized. Invoices help your team stay in the loop and inform them about client account history. They record work completed at each job site, and tell you what system was serviced. If you use a good invoicing system, then anyone on your team will know exactly what has happened during the last service appointment. This helps improve future diagnostics.
- It helps you get paid the proper amount on time. Once the client receives the invoice, they know that the service is complete, and can send payment. If you email your clients their invoice, then you’re able to continue communication for follow-up, or review requests, which can pave the way for improvement and future business, or close out the job in a professional manner.
- A proper invoice workflow will help you stay organized and efficient. Without invoices, you’ll find it challenging to collect the correct payments from your clients. For one thing, invoices can help you keep track of deposits and money owed. For another, the price of the service call might change if you need to order in more parts than expected in the quote. Finally, without a final invoice, your clients will find it challenging to pay you the correct amount for the job.
When should you send an invoice?
You should send an invoice after the service is complete (unless, of course, there is a special maintenance agreement that requires a different invoicing strategy).
When is the right time to start invoicing within your business?
Even if you’ve been in business for years and you’ve been using pen and paper to create invoices, it’s never too late to start sending invoices through an efficient invoice workflow. Now’s the time to start experimenting with more efficient invoice solutions that can help you improve how you create and send invoices to your clients.
The right invoice process will help improve the way you send invoices to your clients. You should send an invoice after the service is complete (unless, of course, there is a special service agreement that requires a different invoicing strategy). The absolute best way to organize this is by automating your invoice workflow with your schedule.
For example, with the right software, you can schedule your invoice to automatically go out to your client when you mark a job as ‘complete’ in your work calendar. That way, you can automatically send your client an invoice once you’ve completed the service, and even charge them if you’ve vaulted their payment card.
When is the right time to create and send your client the invoice?
Always send your client the invoice as soon as possible. For example, email them the invoice right away once you’ve completed the service. If you’re able to invoice on the spot you’re able to collect payment on the spot with an ePayment system. This is obviously great for cashflow.
The longer you wait to send the invoice, the longer it’ll take to get paid. If you’re finding it difficult to create an invoice on the spot before you head out to the next job, then consider an invoice solution that will automatically create the invoice for you.
Finally, before you send off the invoice, always make sure that you are sending your client an updated version. If you had to make changes to the original quote because you had to order parts once you started the job, then that should be included in the most recent invoice.
When should your client pay their invoice?
Invoice payment deadlines are completely up to you. Standard invoice payment is usually within two weeks of the service date. However, you should test payment deadlines that range between fifteen, ten, five, and two days to see what works best for your businesses cash flow.
However, heating and cooling services can be quite expensive, and some business owners prefer to accept a deposit and a payment the day of the service, or within a week of the service call.
Alternatively, some business owners prefer to get paid for services on a specific day of the month, like the 1st or 15th of the month, for example.
Finally, you can ask your customer to pay their invoice when the services are completed to their satisfaction.
There’s no right way to structure invoice payments. It has to work for your business model.
Using invoices to organize and grow your business
Getting your invoices paid faster has as much to do with your clients being on the ball as it does with you being on the ball.
Two things are certain:
- If your invoice procedure and strategy is disorganized, then you won’t look professional to your clients; you’ll leave cash on the table by not accepting payments properly or on time; and you’ll waste valuable time trying to keep your business together when you could be growing your business.
- If you make it difficult or confusing for your clients to pay invoices, then they will take much longer to pay you for your service call then you’d like. That will be a huge barrier to your success and growth.
Speeding up and creating a more efficient invoice workflow and payment process will trickle down throughout your business. It’ll help you pay bills, cover overhead costs, pay employees, and cover your own salary.