Creating AIA Invoices: What Contractors Need to Know
Cost Construction Accounting- Apr 24
- 5 min read
As construction projects get more complicated and documentation requirements increase, contractors must comprehend the complexities of AIA invoices. The American Institute of Architects' (AIA) billing forms, notably the G702 and G703, have become industry standards in commercial and government construction. While these forms may appear onerous at first, they are effective instruments for documenting project progress, guaranteeing proper payment applications, and protecting contractors and clients.
This article outlines everything contractors need to know about producing AIA invoices, from knowing the basic components to avoiding frequent mistakes that might cause payment delays.
What Is an AIA Invoice?
An AIA invoice is a standardized payment application that is commonly used in commercial and public building projects. It typically takes two forms:
G702: Application and Certificate of Payment
G703: continuation sheet
These documents provide a full account of work accomplished to date, stored materials, retainage, and payment owed. They provide openness, consistency, and legal documentation to all parties involved.
Why Do Contractors Use AIA Invoices?
AIA invoices are often needed by project owners, general builders, or lenders because they keep a good record of billing activity that can be checked. For builders, they help:
Make payment requests all the same.
Ensure that project tracking is always done.
Clear communication with project partners is important.
Cut down on disagreements about payment terms and scope
When dealing with progress billing, the AIA format is likely to be what you'll need to use on government or big private projects.
What Are the G702 and G703 Forms?
G702: Application and Certificate for Payment
This form summarizes the financials of the pay application. It includes:
Original contract sum
Change orders
Total completed and stored to date
Retainage (withheld amount)
Previous payments
Balance to finish
Current payment due
G703: Continuation Sheet
This is an itemized breakdown of the project. It includes:
Line items by cost code
Scheduled values (the budget for each item)
Work completed to date
Materials stored
Retainage for each line
Totals that carry into the G702 form
These two documents work together to ensure payment is tied to measurable progress.
How to Fill Out an AIA Invoice
Filling out AIA forms correctly is vital. Inaccuracies can delay approvals or trigger payment disputes. Here is a step-by-step breakdown:
Step 1: Gather All Project Data
Before you begin, ensure you have:
The contract and any approved change orders
Updated project schedule
Subcontractor and material supplier invoices
Stored material documentation (e.g., warehouse receipts)
Step 2: Complete the G703 Form First
Start with the G703 form by entering:
Description of each line item (e.g., Site Work, Foundation)
Scheduled value for each item (from your estimate)
Work completed during this pay period
Total work completed to date
Materials stored onsite
Retainage (typically 5-10%)
The totals at the bottom will roll up into the G702 form.
Step 3: Fill Out the G702 Form
Using totals from G703, enter:
Line 1: Original contract amount
Line 2: Net change orders
Line 3: Total contract sum to date
Line 4: Total completed and stored to date
Line 5: Retainage
Line 6: Total earned less retainage
Line 7: Less previous payments
Line 8: Current payment due
Line 9: Balance remaining
Step 4: Double-Check All Calculations
Accuracy is everything. Make sure your formulas align, all fields are filled, and the payment due reflects actual project status. Mistakes in construction billing can lead to rejection or audit flags.
Frequently Asked Questions
Does AIA billing have to be done?
Not always, but a lot of the time it's needed by law or contract for commercial and government construction. A lot of lenders also like AIA billing forms for giving out loans.
Just what is retainage?
In building, retainage is the amount of money that is held back until the job is mostly or completely finished. Usually, 5–10% of the total amount is held back. This gives workers a reason to finish the job and take care of any items on the "punch list."
How often should invoices to AIA be sent?
Contractors usually send AIA bills once a month. The due dates for submissions should match the terms of the contract and the project's major goals.
Can I make AIA invoices with software?
Yes. A lot of tools, like Procore, QuickBooks with third-party AIA add-ons, or standalone AIA billing software, can help contractors make correct forms. Software can do calculations automatically, link job costs, and keep track of retainage.
Bookkeeping Tips for Contractors
To make AIA invoices, you need correct data, good paperwork, and good record-keeping. Making sure you have a well-organized method for sending invoices to contractors is very important. You need to:
Record in detail how much the job costs and any changes that are made.
Keep an eye on payments and funds held in trust.
Bring your project billing in line with your financial system.
If you use accounting software, make sure that your billing system is connected so that the current state of the project is shown. This makes sure that your financial reports are correct and ready for an audit.
When to Consider Professional Help
Many freelancers do their own billing, but it can get complicated very quickly, especially if they have a lot of jobs or projects that are paid for by the government. It's not enough to just fill out a form to make an AIA statement; you need to connect your project's finances, paperwork, and communication.
That's where experts can help. At Construction Cost Accounting, we help workers make AIA billing easier, keep track of retainers, and make sure that their work is turned in on time and correctly. Outsourcing this job can save you time, stress, and money if you're spending too much time on paperwork or aren't sure if you're billing correctly. We offer bookkeeping services that are specifically made for people who work in building, so you can focus on your job and not your spreadsheet.
Conclusion
To stay in compliance, get paid on time, and keep a healthy cash flow on construction jobs, you need to know how to use AIA invoices. Contractors can make sure their billing process is both professional and effective by learning about the G702 and G703 forms, following best practices, and using software or getting help with accounting when they need to.
Need help getting your building billing system up and running or cleaning it up? Get in touch with Construction Cost Accounting. We're here to help your business grow by giving you clarity, accuracy, and peace of mind.
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