The Invoicing Gap

Introduction

One of the biggest frustrations in construction and engineering is this:

You’ve done the work… but the cash still hasn’t arrived.

Jobs are completed. Engineers are on site. Customers are happy.

Yet the bank account feels tight, suppliers are chasing, and payroll pressure builds.

This is what we call the invoicing gap, the time between delivering the work and raising the invoice properly.

At Jones Financial Accounts (JFA), we see this all the time with fast-growing contractors:

• Work is being delivered at pace

• Teams are busy

• Job systems aren’t fully up to date

• Invoices slip through the cracks

And the result is simple:

Cashflow gets strangled, even though revenue has technically been earned.

This blog explains why the invoicing gap is so damaging, the threats if it continues, and how SMEs can close it quickly.

What Is the Invoicing Gap?

The invoicing gap is the delay between:

1. Work being completed

2. Work being approved

3. The invoice being raised

4. The invoice being paid

In construction, this gap can stretch from:

• Days

• To weeks

• To months

And that delay creates a serious financial chain reaction.

Why This Matters (Especially for SMEs)

Many small businesses assume invoicing issues are minor.

They aren’t.

Cashflow is the oxygen of your business.

A £1M contractor can be profitable on paper but still fail because:

• invoices are late

• applications are wrong

• approvals are missing

• disputes hold up payments

Myth:

“We’re busy, cash will catch up.”

Reality:Cash doesn’t catch up unless invoicing is disciplined.

The Construction Reality: Work Happens Faster Than Admin

Construction and engineering businesses often scale quickly.

But invoicing doesn’t scale automatically.

The common situation looks like this:

• Engineers complete jobs

• Job sheets aren’t uploaded

• Contract values aren’t updated

• Applications are delayed

• Someone raises invoices at month-end in panic

That month-end rush creates errors, rework, and missed billing.

The Real Threats If This Isn’t Fixed

If invoicing gaps persist, the business faces real operational danger:

1. Cashflow Crisis

You may be funding:

• materials

• subcontractors

• fuel

• wages

…before receiving payment.

2. VAT Shock

VAT is payable whether or not the customer pays promptly.

So you could be paying VAT to HMRC while still waiting for cash.

3. Supplier Strain

Late invoicing leads to late receipts, leading to supplier delays.

That affects delivery and job performance.

4. Lost Revenue

Unbilled work is often forgotten work.

Many SMEs lose thousands each quarter simply because jobs never get invoiced fully.

5. Reputation Damage

Customers lose confidence when invoices arrive:

• too late

• unclear

• incorrect

• disputed

  
  

Common Mistakes We See in Construction Firms

Here are the biggest invoicing traps:

Mistake 1: Waiting for “Later”

Later becomes next week.Next week becomes next month.

Mistake 2: Incorrect Project Values

If contract values are wrong in your system, invoices raised off them will be wrong too.

That creates dispute and delay.

Mistake 3: No Ownership

Everyone assumes “someone else does invoicing”.

Nobody owns it.

Mistake 4: Poor Customer Communication

Customers don’t know:

• what they’re being billed for

• what stage the project is at

• who to speak to

Mistake 5: No Weekly Billing Rhythm

If you invoice only monthly, you create unnecessary cash pressure.

Practical Steps to Close the Invoicing Gap

Here is the CFO-grade approach SMEs should apply immediately:

Step 1: Invoice Within 48 Hours

Completed job = invoice triggered within two working days.

Step 2: Keep Job Systems Updated Weekly

JobLogic (or any platform) is only useful if it reflects reality.

Step 3: Assign Clear Billing Responsibility

One person must own:

• job closure

• application stages

• invoicing accuracy

Step 4: Use Pro-Forma Where Appropriate

For large materials or upfront costs:

• raise pro-forma invoices

• secure cash before funding the job

Step 5: Review Unbilled Work Every Friday

A simple weekly report:

• jobs completed not invoiced

• contract values missing

• approvals outstanding

This alone can unlock thousands in cash.

The Opportunity: Strong Invoicing Creates Strong Growth

When invoicing is tight, SMEs gain:

✅ faster cash collection

✅ reduced borrowing

✅ fewer disputes

✅ better forecasting

✅ more capacity to scale

A business with £200k of monthly turnover that reduces invoicing delay by 15 days can unlock:

£100k+ of cashflow improvement without winning a single new contract.

That is real working capital.

Key Takeaways

• The invoicing gap is one of the biggest cashflow killers in construction

• Completed work means nothing until it is billed correctly

• Delayed invoices create VAT strain, supplier pressure, and lost revenue

• Weekly invoicing discipline unlocks growth without extra sales

If your business is delivering work but cash still feels tight, JFA can help you tighten invoicing systems, protect margins, and stabilise cashflow.

Download our free cashflow tools here:https://www.jonesfa.co.uk/resources

Wrapping up today's insights, tomorrow we simplify another accounting challenge.