Progress Billing Explained: How to Bill a Long Project in Stages
Waiting until a months-long job ends to invoice means financing the project yourself. Progress billing bills in stages as work gets done. Here is the schedule of values, pay applications, and retainage.
On a job that runs for months, waiting until the end to send one invoice is a great way to bankroll the project out of your own pocket. Progress billing fixes that by letting you bill in stages as the work moves along. Here is how it works on a real project.
What progress billing is
Progress billing means invoicing a long project in pieces instead of all at once. Each invoice bills for the portion of work completed since the last one, so cash comes in steadily and matches the costs you are incurring. It is the standard on construction and other big, multi-month jobs, and it is very different from a one-and-done estimate or invoice.
The schedule of values
It starts with a schedule of values, which breaks the total contract into line items, like sitework, framing, electrical, finishes, each with its own dollar amount. Every progress invoice then reports how complete each line is and bills accordingly. The schedule of values keeps everyone honest about where the money is going.
Milestone versus percent-complete
There are two common ways to bill progress. Milestone billing ties each invoice to a finished phase: foundation poured, framing done. Percent- complete billing bills for the share of each line item finished this period, say 60 percent of the framing. Bigger jobs lean on percent- complete because it tracks the real pace of work more closely.
Pay applications and retainage
On formal jobs, the progress invoice takes the shape of an Application for Payment, often the AIA-style G702 and G703 forms, which summarize the schedule of values and the amount earned to date. Most contracts also hold back retainage, commonly 5 to 10 percent of each payment, until the job is finished and accepted. So your invoice for the period and the cash you actually collect are two different numbers.
Do not forget change orders
When the scope changes, the cost should not just disappear into the next invoice. Get the change order approved and add it to the schedule of values so it bills cleanly. This is also why job costing matters so much on these projects: you need to know your real cost per line to bill and price the next one right.
Bill as the work gets done
Progress billing keeps cash flowing on long jobs instead of leaving you to finance the whole project yourself.
Start freeHow Vuuv helps
For everyday work, Vuuv invoicing handles estimates, partial payments, and online card or bank payment, so you can collect a deposit and stage payments without chasing paper. Full construction-style progress invoices and formal pay applications live in Vuuv's Projects feature for contractors on the Pro and Elite plans, and not every piece of that is on the web yet. If you run long jobs, it is worth checking which pieces are available on your platform today.
Frequently asked questions
What is progress billing?
Progress billing means invoicing a long project in stages instead of all at once. Each invoice bills for the portion of work completed since the last one, so cash comes in steadily and matches the costs you are incurring. It is the standard on construction and other multi-month jobs.
What is a schedule of values?
A schedule of values breaks the total contract into line items, like sitework, framing, and finishes, each with its own dollar amount. Every progress invoice reports how complete each line is and bills accordingly, which keeps everyone clear on where the money is going.
What is retainage in progress billing?
Retainage is a portion of each payment, commonly 5 to 10 percent, that the customer holds back until the job is finished and accepted. It means the amount you invoice for a period and the cash you actually collect are two different numbers until the project wraps up.
How do change orders fit into progress billing?
When the scope changes, get the change order approved and add it to the schedule of values so it bills cleanly rather than disappearing into the next invoice. Solid job costing helps here, because you need to know your real cost per line to bill and price accurately.
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This article is general information, not tax advice. Tax rules change and every situation is different. Confirm the details against current IRS guidance or talk to a qualified tax professional before you file.