How to check labour and hourly-rate invoices

A labour line you can check shows the hours worked, the rate per hour and the total, and the total is the hours times the rate. Better still, it says who worked, on which days and on which job, so you can hold it against your own site records.

The ATO's list of what a tax invoice shows includes a brief description of each item, with the quantity where there is one, and the price. On a labour line the natural quantity is the hours, so asking a supplier to print hours and a rate is an ordinary request.(ATO: Tax invoices)

Say a line reads "Labour – 4hrs" and the only figure is 620.00 in the amount column. If you agreed 155.00 an hour, four hours is exactly 620.00 and the line is right. If you agreed 140.00 an hour, four hours should be 560.00. The two invoices look identical.

So divide the amount by the hours in the description and compare the rate that gives you with the one you agreed. If they match, the line checks out. If they don't, or the description gives no hours at all, ask the supplier for the hours and the rate rather than assuming either.

620.00 ÷ 4 hours = 155.00 an hour4 hours × 140.00 = 560.00

One amount can also hide more than one rate. Ordinary hours, overtime, weekend and public holiday work are often charged differently, and so are an apprentice and a qualified tradesperson. Ask for each rate on its own line.

Keep the request specific, so it is quick to answer:

Hold the timesheets against your own record of who was on site: the site diary, the sign-in sheet or the induction register. A gap is a question, not an accusation. The supplier's record may be the more complete one, for work done off site or before your crew arrived.

Many trades charge a minimum for attending at all, as a call-out fee or a minimum number of hours. That's fair if you agreed it. Check it's applied the way your agreement says: a two-hour minimum on a one-hour job is usually two hours, not two hours plus the hour worked.

Travel time varies more. Some agreements pay it at the hourly rate, some as a flat charge, some not at all. If travel is on the invoice, check it's in your agreement and billed the way the agreement describes. If your agreement says nothing about travel, ask before you pay rather than refusing it outright.

Keep the invoice with the timesheets or dockets and any emails about the hours. The ATO generally asks businesses to keep their records for five years, and some records for longer.(ATO: Overview of record-keeping rules for business)

When a labour line prints the hours and the rate as figures, CostCode checks the rate against the one you agreed with that supplier, as it does any other line. When it prints only a total, with the hours in the description and no rate, CostCode doesn't divide one by the other to invent a rate: the line shows as unverified with the reason, never as passed. The free check lists a line like that among the ones it couldn't check.

Anything CostCode finds on a labour line goes to your team first. A query goes to the supplier only when a person in your team reads it and presses send, and supplier email is off until you turn it on.