Time and Materials Invoice Template
A time and materials invoice bills the actual hours worked at rates agreed in advance, plus the materials and other direct costs used, for a period of work whose size could not be fixed when the job was agreed. It suits repairs, maintenance, discovery work and software development where the scope will change. It differs from a fixed-price invoice, which bills an agreed price regardless of hours, and from a cost-plus invoice, which reimburses your actual costs (including your own labor cost) and adds a fee or percentage on top. Because the client is paying for inputs rather than an outcome, a T&M invoice has to prove those inputs: who worked, on which dates, how many hours, at which rate, and what each material cost, with receipts or timesheets behind every line. Most T&M agreements also set a not-to-exceed amount, so the invoice should show what has been billed so far against it. The download is an editable HTML file with the invoice header, a line table and these fields; fill it in your browser and print it or save it as PDF.
Preview this editable document
Download the HTML file to edit its fields, then print or save as PDF. Totals are entered manually.
What This Template Includes
- Contract, work order or purchase order reference
- Billing period covered
- Rate card: labor categories and agreed hourly rates
- Hours by date and by person or labor category
- Overtime or after-hours rate, and when it applies
- Timesheet or job record reference for the hours
- Materials: item, quantity, unit cost and supplier receipt reference
- Materials markup or handling percentage, if the contract allows one
- Equipment rental and other direct costs
- Labor subtotal and materials subtotal, shown separately
- Not-to-exceed amount, billed to date and amount remaining
- Client approver or site sign-off for the hours
How to Create Your Time and Materials Invoice
- 01
Describe your work
Type a plain English description of the services you provided, the client, and the amount.
- 02
AI generates your invoice
InvoiceQuickly's AI drafts the client, line items, dates, and totals for you to review before saving.
- 03
Review, download, and send
Check every detail, download the PDF, or use Pro to email the PDF directly to your client.
Recommended Payment Terms
T&M work is usually billed in periods, not at the end: weekly or every two weeks for busy jobs, monthly for slower ones, or at the end of a short job. State the billing cycle and the payment terms (for example net 15 or net 30) in the agreement, and send each invoice promptly after the period closes so the hours are fresh enough for the client to check. If you buy significant materials up front, agree whether the client pays for them on delivery, when you are billed, or with the next invoice. Put the not-to-exceed amount in the agreement and tell the client in writing before the next period would take billing past it; work beyond the cap is at your own risk unless the client approves an increase. Disputes on T&M invoices are usually about hours, so a short dispute window (for example, query hours within 10 days of the invoice) keeps payments moving.
Need help writing payment terms? Read our guide to invoice payment terms for best practices and templates.
Tax Information
Sales tax, VAT or GST on a T&M invoice depends on where the work happens and what it is. In some places labor and materials are taxed differently, or a repair is taxed differently from new construction, which is one more reason to show labor and materials on separate lines. Check the rules with your state revenue department or tax authority. Materials you resell to the client are generally part of your taxable sale in VAT and GST systems, not a pass-through. InvoiceQuickly applies one tax rate to the whole invoice, calculated after any discount, so it fits T&M invoices where every line is taxed at the same rate or none are. If only some lines are taxable, use this download or split the invoice.
Industry context (2026)
The most precise public definition of T&M billing is in the US Federal Acquisition Regulation, and private contracts often borrow its structure. FAR 16.601 describes a time-and-materials contract as buying services on the basis of direct labor hours at fixed hourly rates that include wages, overhead, general and administrative expenses and profit, plus materials at actual cost. It may be used only when it is not possible to estimate the extent or duration of the work accurately, and the contract must include a ceiling price that the contractor exceeds at its own risk. The payment clause, FAR 52.232-7 (November 2021), allows vouchers no more than once every two weeks (more often for small businesses), requires them to be supported by evidence such as daily timekeeping records, pays no profit on materials except in limited cases, and requires notice when billing over the next 30 days would pass 85% of the ceiling. Commercial T&M agreements are not bound by these rules, but the same pieces (a rate card, timesheets, materials at cost, a cap) are what make a T&M invoice easy for a client to approve.
Worked example
Ridgeway Mechanical repairs a burst supply line for Lakeview Property Management under work order LV-2207, a T&M agreement with a $10,000.00 not-to-exceed amount, labor rates of $95.00 per hour (senior technician) and $55.00 per hour (apprentice), Saturday hours at 1.5 times the rate, and materials at cost plus 15%. Invoice RM-1046 covers 13 to 19 October 2026 and references timesheets TS-1046-A and TS-1046-B, signed off by the site manager. Labor: senior technician, 14.5 weekday hours × $95.00 = $1,377.50; apprentice, 14.5 hours × $55.00 = $797.50; senior technician, 3 Saturday hours × $142.50 = $427.50. Labor subtotal: $2,602.50. Materials at cost: copper pipe and fittings $412.80 (receipt 88213), two ball valves $96.40 (receipt 88240) and a pressure-reducing valve $238.60 (receipt 88241), total $747.80; markup at 15% = $112.17; materials subtotal $859.97. Equipment: pipe press rental, 2 days × $65.00 = $130.00. Invoice total: $2,602.50 + $859.97 + $130.00 = $3,592.47, due net 30. Sales tax is left out of this example because whether labor or materials are taxable depends on the state. Cap tracker: previously billed $4,850.00 + this invoice $3,592.47 = $8,442.47 billed to date, leaving $1,557.53 under the $10,000.00 cap, so Ridgeway emails the client a revised estimate before starting the next week's work.
Common mistakes to avoid
Lumping all hours into one line
"Labor, 32 hours, $2,602.50" invites a query about who worked and at what rate. Break hours out by person or labor category and rate, and give the timesheet reference.
Hiding markup inside material prices
If the client later compares your materials line with the supplier receipt, a silent markup looks like overcharging. Show cost and markup separately, at the percentage the agreement allows.
Billing past the cap without approval
Once billing passes the not-to-exceed amount, the extra is at your risk unless the client has agreed in writing to raise the cap. Track billed-to-date on every invoice and ask for an increase before you reach it.
Charging overtime the agreement does not cover
Premium rates for evenings or weekends need an agreed trigger, such as client-requested out-of-hours work. If the agreement does not say the client pays a premium for hours you chose to work, bill them at the standard rate.
Billing hours long after the work
Hours sent two months later are hard for the client to verify and easy to dispute. Invoice each period promptly while the site manager or project lead still remembers the work.
Using rates that differ from the rate card
A new rate on an invoice is not an agreed rate. If your rates change, agree the new rate card in writing first and say on the invoice which version applies.
Invoicing Tips
- 1Attach or reference the timesheet for every block of hours: date, person or labor category, start and end time or total hours, and the task.
- 2Use the labor category names and rates from your rate card exactly, so the client can match each line to the agreement.
- 3Show materials at cost with a receipt or supplier invoice number, then show any markup as its own line or column, at the percentage the contract allows.
- 4Bill overtime at the agreed premium only when the agreement says when it applies, such as client-requested evenings or weekends.
- 5Print the not-to-exceed amount, the total billed to date including this invoice, and the remaining balance on every invoice.
- 6Warn the client before billing would pass the cap, not after. Under US federal T&M contracts the contractor must give notice when billing over the next 30 days would exceed 85% of the ceiling price.
- 7Keep travel time, mileage and equipment rental out of the hours. List them as separate lines at the rates the agreement sets.
Related Resources
- Hourly vs fixed-price invoicing: when each pricing model fits
- How to invoice for expenses
- Preventing scope creep: keeping a T&M job inside its cap
- Invoicing for contractors
- All invoice templates
Frequently Asked Questions
What is a time and materials invoice?
It is an invoice that charges for the hours actually worked, at agreed hourly rates, plus the materials and other direct costs used during the billing period. It is used when the full scope of work cannot be estimated accurately in advance, and it usually comes with timesheets, receipts and a running total against a not-to-exceed amount.
How do you calculate a time and materials invoice?
Multiply each person's or labor category's hours by the agreed rate and add them to get the labor subtotal. Add materials at their actual cost, then any markup the contract allows, then equipment and other direct costs. Add tax if it applies, and compare the total billed to date with the not-to-exceed amount.
What is the difference between time and materials and fixed price?
On a fixed-price job you bill an agreed price whatever the hours turn out to be, so you carry the risk of overruns. On a T&M job the client pays for the actual hours and materials, so the client carries that risk, usually limited by a not-to-exceed cap. Fixed price suits a well-defined scope; T&M suits work that is hard to estimate.
Is time and materials the same as cost plus?
No. A T&M hourly rate already includes your wages, overhead and profit, so labor is billed at a fixed rate per hour. Under cost plus, the client reimburses your actual costs, including your real labor cost, and pays a separately stated fee or percentage on top. Materials are usually close to cost in both.
Can I mark up materials on a T&M invoice?
Only if your agreement says so. Many private contracts allow a materials or handling markup, and it should appear as a separate line or column at the agreed percentage. US federal T&M contracts are stricter: FAR clause 52.232-7 says no profit or fee is paid to the prime contractor on materials, apart from limited exceptions.
What is a not-to-exceed amount in a T&M contract?
It is the most the client has agreed to pay for the work, sometimes called a ceiling price or cap. Billing stops at the cap unless the client agrees in writing to raise it. Showing billed-to-date and remaining amounts on each invoice lets both sides see how close the job is to the cap.
How often should I send a T&M invoice?
As often as the agreement allows and the work justifies: weekly or every two weeks on busy jobs, monthly on slower ones. Under US federal T&M contracts, FAR 52.232-7 limits payment requests to once every two weeks, with more frequent payment possible for small businesses.
Can I create a time and materials invoice in InvoiceQuickly?
Yes, as an ordinary invoice with up to 100 lines, each with a description, quantity and unit price, so hours × rate and materials × unit cost each get their own line. On Pro, InvoiceQuickly tracks time and billable expenses and bills selected items into one draft invoice at their recorded amounts. It has no markup field or not-to-exceed tracker, so add markup as a separate line and put the cap and billed-to-date in the notes. One tax rate applies to the whole invoice.