How Progress Billing Works
Progress billing breaks large projects into smaller, billable portions. Contractors submit invoices as milestones are met, reducing financial strain and ensuring payment keeps pace with project completion.
- Invoices issued at agreed project milestones
- Payments reflect percentage of work completed
- Owners track project costs as work progresses
- Supports better cash flow management for contractors
Benefits of Progress Billing
Both contractors and clients benefit from progress billing because it balances financial risk and provides visibility into the project’s status.
- Improves contractor cash flow throughout the job
- Helps clients verify progress before paying
- Reduces risk of payment disputes
- Encourages timely work completion
Progress Billing vs. AIA Billing
While both methods track work completed, AIA billing follows a standardized format with forms like G702 and G703, while progress billing is more flexible and may vary by project. Contractors often use AIA billing for large commercial jobs and progress billing for smaller or less formal contracts.
- Progress Billing: Flexible, milestone-based invoicing
- AIA Billing: Standardized forms required on many commercial projects
- Both improve transparency and payment tracking
Challenges with Progress Billing
Despite its advantages, progress billing can be difficult to manage without clear documentation. Disputes often arise if progress percentages aren’t agreed upon or properly documented.
- Disagreements on percentage of completion
- Errors in calculations can delay payment
- Manual tracking increases the chance of disputes
- Cash flow issues if approvals are slow
How Software Simplifies Progress Billing
Construction software like Werx makes progress billing easy by automating calculations and integrating invoices with accounting systems. Contractors can create professional invoices, manage retainage, and keep cash flow predictable.
- Set up and track a Schedule of Values (SOV)
- Generate milestone-based invoices instantly
- Automatically calculate retainage
- Sync with QuickBooks Online for accurate records
Learn more about Progress Billing in Werx.
FAQs About Progress Billing
When should I use progress billing?
Progress billing is best for long-term projects where work is completed in phases. It ensures contractors are paid regularly while clients pay only for verified progress.
How is progress billing different from standard invoicing?
Standard invoicing bills for all work at once, while progress billing breaks payments into installments tied to project milestones or completion percentages.
Does progress billing include retainage?
Yes, retainage is often applied in progress billing to withhold a percentage of payment until the project is substantially complete. Software like Werx makes managing retainage much easier.
TL;DR Recap
- Progress Billing = invoice as work is completed, not at project end
- Improves contractor cash flow and owner transparency
- Can lead to disputes if not documented properly
- Werx simplifies Progress Billing with milestone invoicing, QuickBooks sync, and retainage tracking
