Progress billing

What it means in practice

Every progress invoice shows the whole picture: the contract sum, what was billed before, what is billed now, any retainage held, and what is left. That is what stops the phone call asking what the last one was for.

The stages come from the schedule of values agreed on the quote. On commercial jobs the same document is usually called a pay application.

Covered in full in the guide to progress billing.

Where it shows up on the paperwork

Each progress invoice shows the contract sum, what was billed before, what is billed now, retainage held, and what is left. On commercial jobs the same document is a pay application.

What goes wrong

• Billing a percentage nobody agreed, rather than the stages on the accepted quote.
• Leaving retainage off the invoice so the amount building up is invisible until the end.
• Adding change orders as loose lines instead of moving the revised contract sum.

The tools for this

Related terms

• Milestone billingInvoicing when a named stage of a job is finished rather than at the end.
• Schedule of valuesThe contract price broken into named stages or lines, each with its own dollar value.
• RetainageA percentage of each progress payment held back by the client until the job is accepted.
• Cash flowThe money moving in and out of your business, as opposed to the profit you have earned on paper.
• Change orderA written record of a change to the scope, price or schedule after the quote was accepted.
• Final invoiceThe last invoice on a job, billing whatever is left after deposits and progress payments.

All 57 terms