A contractor invoice requests payment for completed work, supplied materials or an agreed project stage. It should identify the contract or LPO, describe the work completed and show VAT, withholding tax and retention clearly where they apply.
Do not submit a one-line invoice for “construction work”. The client needs enough detail to compare the invoice with the contract, valuation and completion evidence.
Nigerian contractor invoice sample
Contractor: AdeBuild Projects Limited
Client: Unity Property Services Limited
Invoice number: INV-2026-0072
Contract reference: UPS/REN/2026/014
LPO number: LPO/UPS/2026/0091
Valuation: Interim Certificate No. 2
| Description | Amount |
|---|---|
| Labour completed during valuation period | ₦2,400,000 |
| Cement, steel and other approved materials | ₦3,100,000 |
| Equipment hire | ₦500,000 |
| Subtotal before VAT | ₦6,000,000 |
| VAT at 7.5%, where applicable | ₦450,000 |
| Gross invoice total | ₦6,450,000 |
Potential deductions such as retention and WHT should be shown in a payment certificate or settlement breakdown using the contract and current tax rules. Do not change the gross value of completed work without explaining the deduction.
What to include on a contractor invoice
- contractor's registered name, address and Tax ID
- customer's legal name and billing address
- unique invoice number and date
- contract, LPO or purchase order reference
- project name and site location
- valuation or milestone period
- labour and material lines
- approved variations
- subtotal, VAT and gross total
- retention and WHT treatment, where applicable
- amount previously certified or paid, where relevant
- bank details and payment terms
- supporting-document list
Labour, materials and subcontractors
Separate major cost categories so the client can review them:
| Weak description | Better description |
|---|---|
| Building work | Blockwork completed for ground-floor partition, Valuation 2 |
| Materials | 200 bags of approved cement supplied to Ikeja site |
| Labour | Electrical installation labour for floors 1 and 2 |
| Extra work | Approved Variation VO-003: additional drainage channel |
Use the same measurement units and descriptions found in the bill of quantities, contract or approved variation.
How VAT appears on a contractor invoice
When VAT applies, show the taxable subtotal, 7.5% VAT amount and gross total separately.
For a ₦6,000,000 taxable subtotal:
- VAT: ₦6,000,000 × 7.5% = ₦450,000
- Gross invoice: ₦6,450,000
Do not add VAT automatically without confirming your VAT status and the treatment of the supply. Use the Nigeria VAT calculator to check the arithmetic.
Withholding tax on contractor payments
Withholding tax is an advance tax deduction made by the payer for specified transactions. It is not the same as VAT, a discount or retention.
The applicable WHT treatment can depend on the transaction, payer and recipient. Ask the client to show the deduction separately and provide the appropriate credit evidence. Do not quote a rate on the invoice unless you have confirmed the current classification.
Example settlement presentation:
| Settlement line | Amount |
|---|---|
| Gross certified amount | ₦6,450,000 |
| Less retention under contract | Shown separately |
| Less WHT under applicable rules | Shown separately |
| Net amount payable | Gross less documented deductions |
This presentation preserves the gross invoice value and provides a clear reconciliation to the bank payment.
What is retention?
Retention is a percentage held back under the construction or service contract until a stated milestone, practical completion or defects period. It is a contractual deduction, not a tax.
Before accepting the contract, confirm:
- the retention percentage
- whether it applies before or after VAT
- when the first portion is released
- the defects-liability period
- who must issue the release certificate
Track retention as an amount receivable. Do not treat it as permanently lost revenue simply because the client did not pay it with the current certificate.
Progress billing and previous payments
For phased work, show the cumulative position clearly.
| Progress summary | Amount |
|---|---|
| Work certified to date | ₦15,000,000 |
| Less previously certified | ₦9,000,000 |
| Current valuation before VAT | ₦6,000,000 |
This prevents the client from paying for the same work twice and helps the contractor reconcile certificates to invoices.
Documents to submit with the invoice
Depending on the contract, include:
- approved LPO or contract page
- interim valuation or payment certificate
- signed delivery notes
- job completion certificate
- approved variation orders
- timesheets or measurement sheets
- photographs where the client requires them
- tax and CAC information
- bank confirmation letter
Ask the quantity surveyor, project manager or accounts team for its checklist before the due date.
Common contractor deductions
| Deduction | What it means | What to request |
|---|---|---|
| Retention | Contract amount held until a later milestone | Retention calculation and release date |
| WHT | Advance tax deducted by the payer | Deduction breakdown and credit evidence |
| Mobilisation recovery | Repayment of an earlier advance | Recovery schedule |
| Materials supplied by client | Cost of agreed client-provided items | Supporting schedule |
| Damages or back charges | Claimed contract adjustment | Written basis and approval |
Challenge unexplained deductions promptly and in writing.
Reasons contractor invoices are rejected
- missing LPO or contract reference
- no valuation or completion certificate
- invoice lines do not match the approved work
- unauthorised variations are included
- VAT is hidden inside the total
- calculation does not reconcile to previous certificates
- bank details differ from the vendor record
- the invoice was sent before the milestone was approved
Contractor invoice checklist
Confirm the billing stage, use a unique invoice number, show the project and LPO reference, separate labour and materials, attach approvals, explain deductions and state the due date.
Create a contractor invoice, then review the LPO guide, invoice number examples and payment reminder templates.