What Is Progress Billing in Construction?

Progress billing is a way to get paid throughout a job, not just at the end. You bill in steps as the work gets done, tied to how much is complete. Money comes in while your costs go out, and owners see what they're paying for.

How does progress billing work?

Progress billing splits a project into billable chunks. Each chunk ties to a line on your schedule of values. You bill for the percent done on each line, then send one invoice.

Most contractors bill once a month. Payment terms are often net 30. So you invoice in steps and get paid as the job moves.

• Invoices go out at set milestones or each month
• Each line bills by percent complete
• Owners watch costs add up as work moves
• Cash comes in before the job ends

What are the benefits of progress billing?

Progress billing spreads risk across the whole job. You stop waiting months for one big check. Owners pay for work they can see and verify.

• Keeps cash flowing during long jobs
• Lets owners check progress before they pay
• Cuts the risk of payment fights
• Rewards steady, on-time work

Progress billing vs. AIA billing: what's the difference?

Both methods bill for work as it gets done. The difference is the format. AIA billing uses set forms, the G702 and G703. Many commercial and public jobs require them.

Progress billing is more flexible and fits smaller contracts. See the full breakdown in progress billing vs. AIA billing.

• Progress billing: flexible, milestone or percent based
• AIA billing: standard G702/G703 forms, common on commercial work
• Both show owners what they are paying for

When should you use progress billing?

Use progress billing when a job runs longer than 30 days. It also fits any job with a clear schedule of values. Owners who want to pay for verified progress like it too.

Skip it on small, quick jobs. A single lump-sum invoice is simpler there. For commercial or public work that demands G702/G703, use AIA billing instead.

• The job lasts more than a month
• You have a schedule of values
• The owner wants to pay by progress
• You hold retainage on each payment

What are the common challenges?

Progress billing falls apart without clear records. Most disputes start over the percent complete. When owner and contractor disagree, payment stalls.

Retainage adds another wrinkle. Owners often hold back 5 to 10 percent of each payment until the job is nearly done. That cash adds up fast on a big job. See how to plan for it in retainage and cash flow.

• Fights over percent complete
• Math errors that delay a check
• Manual tracking that invites mistakes
• Slow approvals that choke cash flow

How does software simplify progress billing?

Contractor software like Werx makes progress billing easy. It does the math for you and syncs invoices with QuickBooks. You send clean invoices, manage retainage, and keep cash flow steady.

• Set up and track a schedule of values
• Generate milestone invoices in seconds
• Calculate retainage on every invoice
• Sync with QuickBooks Online for clean records

See how it works on the progress billing feature page.

Key takeaways

• Progress billing means you invoice as work gets done, not at the end
• It keeps cash flowing and shows owners what they pay for
• Poor records cause most disputes, so track percent complete closely
• Werx handles the math, retainage, and QuickBooks sync for you