What Is Progress Billing?
By BRIX Editorial Team · Updated
Progress billing is invoicing a customer in stages as work on a job is completed, instead of sending one bill at the end. Each invoice covers the work done since the last one, based on milestones, percent complete or a schedule of values. It keeps cash coming in while labor and material costs are being paid on longer jobs.
Key takeaways
- Progress billing matches cash coming in to costs going out, so you don't carry a whole job on your own money.
- Three common methods: milestone billing, percent-complete billing and schedule-of-values billing (the AIA G702/G703 format).
- Agree on the billing schedule in the contract before work starts, including retainage and payment terms.
- QuickBooks Online can create multiple partial invoices from one accepted estimate (progress invoicing).
- Bill what you've earned. Billing far ahead of the work creates overbillings you'll owe back in labor.
How does progress billing work?
You and the customer agree up front how the job will be billed: on which milestones, or on what share of work completed each month. As each stage is done, you send an invoice for that portion. Each invoice shows the contract total, what's been billed before, what's billed now and the balance left. On commercial jobs the customer may hold back retainage from each payment.
What are the types of progress billing?
| Method | How you bill | Best for |
|---|---|---|
| Milestone billing | A set amount when each defined stage is finished | Residential remodels, roofing, new installs with clear stages |
| Percent-complete billing | Contract price × percent complete, minus what's already been billed | Jobs where progress is measured continuously |
| Schedule of values (AIA-style) | Monthly pay application by line item, showing work completed and stored materials | Commercial and GC work; see AIA billing |
| Time and materials, billed periodically | Hours and materials used each week or month | Open-ended repair or service work; see time and materials |
Progress billing example: milestone method
Progress billing example: percent-complete method
Amount due this invoice = (Contract price × Percent complete) − Previously billed − Retainage on this invoice
How do you set up progress invoicing in QuickBooks Online?
Intuit's help article (updated August 2026) describes two parts. To turn it on: open the Settings gear, choose Account and settings, go to the Sales tab, edit the Progress Invoicing section and turn on "Create multiple partial invoices from a single estimate." To bill: go to All apps, then Sales & Get Paid, then Sales transactions, open the estimate (it must be marked Accepted) and select Convert to invoice. Fill in the amount for this stage and send it. Repeat for each stage until the estimate is fully billed.
If you use QuickBooks Projects, add the estimate and invoices to the project so billing and costs show up together. See how to do job costing in QuickBooks. QuickBooks's built-in progress invoices don't produce AIA G702/G703 forms; contractors who need those usually use construction billing software or the AIA forms themselves.
Progress billing vs. percentage of completion
Progress billing is how you invoice. Percentage of completion is how you recognize revenue in your books. They often line up, but not always. If you bill $60,000 but have only earned $50,000 by percent complete, you're overbilled by $10,000. If you've earned $50,000 and billed $40,000, you're underbilled. Your WIP report tracks the difference job by job.
Progress billing by trade
| Trade | Typical stages | Watch out for |
|---|---|---|
| Remodeling and GC (residential) | Deposit, rough-in, cabinets or drywall, trim, final | Unapproved change orders creeping into stage bills |
| HVAC new installs and replacements | Equipment delivery, rough-in, startup and commissioning | Paying for equipment before the first bill is collected |
| Roofing | Materials delivered, tear-off and dry-in, completion | Insurance jobs: billing tied to claim payments, not just work stages |
| Electrical (commercial) | Monthly pay applications by schedule of values | Retainage and pay-when-paid terms |
| Plumbing (new construction) | Underground, rough-in, top-out, trim | Billing gaps when the GC's schedule slips |
| Landscaping installs | Deposit, hardscape complete, planting complete | Plant warranty conditions holding up the final payment |
Are there rules on when progress payments are due?
Your contract sets the due date, and many states have prompt payment laws that add deadlines and interest, often with different rules for public and private jobs. On federal construction contracts, the Prompt Payment clause (FAR 52.232-27) makes progress payments due 14 days after the designated billing office receives a proper payment request. Check your state's rules and your contract before you assume a deadline.
Common progress billing mistakes
- No billing schedule in the contract. Without it, every invoice becomes a negotiation.
- Front-loading too hard. Billing far ahead of the work looks good for cash but leaves the end of the job unfunded.
- Billing late. If the contract says the 25th, bill on the 25th. A late pay application can push payment a full month.
- Leaving out change orders. Bill approved change orders as their own line so they don't get lost.
- Not tracking what's been billed. Every invoice should show contract total, billed to date and balance, so nobody is surprised at the end.
- Skipping the paperwork. Lien waivers, photos and inspection sign-offs that the customer needs to approve payment should go with the invoice.
Frequently asked questions
What is the difference between progress billing and a deposit?
A deposit is paid before work starts, to secure the job and cover early costs. Progress billing charges for work as it's completed. Many jobs use both: a deposit at signing, then progress bills at each stage, with the deposit applied against the total.
How do you calculate a progress billing invoice?
Multiply the contract price by the percent complete to get earned to date, subtract what you've already billed, then subtract any retainage the contract allows the customer to hold. With milestone billing, you simply bill the amount agreed for the stage just completed.
Can QuickBooks Online do progress billing?
Yes. Turn on progress invoicing in Account and settings under Sales, then convert an accepted estimate into multiple partial invoices. It doesn't produce AIA G702/G703 pay applications, so commercial contractors who need those often use separate billing tools or the AIA forms.
Is progress billing the same as AIA billing?
AIA billing is one form of progress billing. It uses the AIA G702 application and G703 continuation sheet to bill by line item against a schedule of values, usually monthly, with retainage. Progress billing is the broader idea of invoicing in stages.
When should a contractor use progress billing?
On any job long or expensive enough that carrying all the costs to the end would strain your cash, typically jobs lasting more than a couple of weeks or with large material purchases. Single-day service calls should be invoiced and collected when the work is done.
What happens if the customer disputes a progress bill?
Pay attention to the contract's dispute process and respond quickly with photos, inspection records and the agreed schedule. Ask the customer to pay the undisputed portion while the rest is resolved. If payment stalls, know your lien deadlines.
Related
- AIA Billing Explained: How to Fill Out a G702 and G703AIA billing explained: every line of the G702 and column of the G703, a full worked pay application with retainage and stored materials, and common errors.
- What Is Retainage in Construction?Retainage explained for contractors and subs: how it's calculated, worked billing examples, retainage receivable and payable accounting, rules and release.
- What Is the Percentage of Completion Method?How the percentage of completion method works for contractors: cost-to-cost formula, a two-year worked example, IRC §460 tax rules and common mistakes.
- What Is a WIP Report (Work-in-Progress Schedule)?What a construction WIP report is, every column explained, a four-job worked example with over and under billings, how to read it, and mistakes to avoid.
- Cash Flow for Contractors: Why Profitable Shops Run Out of MoneyWhy profitable contractors run out of cash, how to forecast 13 weeks ahead, runway math with worked examples, seasonal patterns by trade, and fixes.
- What Is a Change Order?What a change order is, what it must include, how to price one with overhead and profit, and how to track change orders so extra work gets paid.
- Contractor Invoice TemplateFree contractor invoice template you can print or edit: every field explained, a filled plumbing example, trade variations and mistakes that delay pay.
- Contractor invoicing software that sends the invoice and chases the moneyTurn finished jobs into invoices the same day, send polite automatic reminders on unpaid ones, and sync invoices and payments to QuickBooks.
- QuickBooks for contractors: the right version, real job costing and a sync that keeps the books matched to the jobsQuickBooks for contractors: Online vs Desktop, job costing with projects and classes, sync pitfalls, and how BRIX keeps QuickBooks matched to your jobs.
- Bookkeeping for contractors that keeps your books tax-ready all yearContractor bookkeeping that stays current: categorized expenses, 1099 subcontractor tracking, sales tax and quarterly tax reminders, synced to QuickBooks.
Sources
- Intuit QuickBooks — Set up and send progress invoices in QuickBooks Online (checked October 12, 2026)
- Acquisition.gov — FAR 52.232-27, Prompt Payment for Construction Contracts (checked October 12, 2026)