# What Is Progress Billing?

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](https://www.brix.so/learn/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](https://www.brix.so/learn/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](https://www.brix.so/learn/time-and-materials) |

## Progress billing example: milestone method

> **Worked example: a $90,000 kitchen remodel**
>
> Illustrative numbers. A remodeler signs a $90,000 kitchen job with this billing schedule in the contract:
>
> **Deposit at signing (10%):** $9,000, where your state allows a deposit of that size. See [contractor deposit laws](https://www.brix.so/learn/contractor-deposit-laws).
>
> **Demo and rough-in inspected (30%):** $27,000.
>
> **Cabinets and countertops installed (30%):** $27,000.
>
> **Fixtures, trim and appliances in (20%):** $18,000.
>
> **Final walkthrough and punch list complete (10%):** $9,000.
>
> Total: $90,000. The remodeler collects 70% of the price by the time cabinets are set, which roughly tracks when cabinet, plumbing and electrical costs are paid. Compare that to billing $90,000 at the end and carrying every cost for eight weeks.

## Progress billing example: percent-complete method

**Percent-complete progress invoice**

```
Amount due this invoice = (Contract price × Percent complete) − Previously billed − Retainage on this invoice
```

> **Worked example: a commercial plumbing subcontract**
>
> Illustrative numbers. Contract: $240,000 with 5% retainage. Last month the plumber billed 25% ($60,000). This month the job is 45% complete.
>
> Earned to date = $240,000 × 45% = $108,000. This invoice = $108,000 − $60,000 = $48,000 of work.
>
> Retainage = $48,000 × 5% = $2,400. **Amount due: $45,600.**

## 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](https://www.brix.so/learn/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](https://www.brix.so/learn/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](https://www.brix.so/learn/wip-report) tracks the difference job by job.

## Progress billing by trade

**Common billing schedules**

| 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 |

_Examples, not standard industry schedules. Your contract defines the stages._

## 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.

> General information, not legal advice. Deposit limits, payment deadlines and retainage rules vary by state and by contract. Ask a construction attorney about your agreements.

## Common progress billing mistakes

1. **No billing schedule in the contract.** Without it, every invoice becomes a negotiation.
2. **Front-loading too hard.** Billing far ahead of the work looks good for cash but leaves the end of the job unfunded.
3. **Billing late.** If the contract says the 25th, bill on the 25th. A late pay application can push payment a full month.
4. **Leaving out change orders.** Bill approved [change orders](https://www.brix.so/learn/change-order) as their own line so they don't get lost.
5. **Not tracking what's been billed.** Every invoice should show contract total, billed to date and balance, so nobody is surprised at the end.
6. **Skipping the paperwork.** Lien waivers, photos and inspection sign-offs that the customer needs to approve payment should go with the invoice.

BRIX builds the quote on site, turns each completed stage into an invoice and chases unpaid ones until the money arrives. Invoices and payments sync to QuickBooks, so billed-to-date is always current.

- [Quotes and estimates](https://www.brix.so/features/quotes-estimates): Builds accurate quotes on site and follows up on every open estimate.
- [Invoicing and payments](https://www.brix.so/features/invoicing-payments): Turns finished jobs into invoices and politely chases unpaid ones until the money is in your account.
- [QuickBooks sync](https://www.brix.so/integrations/quickbooks): Syncs customers, invoices and payments with QuickBooks so the books match the jobs.

## 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 G703](https://www.brix.so/learn/aia-billing)
- [What Is Retainage in Construction?](https://www.brix.so/learn/retainage)
- [What Is the Percentage of Completion Method?](https://www.brix.so/learn/percentage-of-completion)
- [What Is a WIP Report (Work-in-Progress Schedule)?](https://www.brix.so/learn/wip-report)
- [Cash Flow for Contractors: Why Profitable Shops Run Out of Money](https://www.brix.so/learn/cash-flow-for-contractors)
- [What Is a Change Order?](https://www.brix.so/learn/change-order)
- [Contractor Invoice Template](https://www.brix.so/templates/invoice-template)
- [Contractor invoicing software that sends the invoice and chases the money](https://www.brix.so/features/invoicing-payments)
- [QuickBooks for contractors: the right version, real job costing and a sync that keeps the books matched to the jobs](https://www.brix.so/integrations/quickbooks)
- [Bookkeeping for contractors that keeps your books tax-ready all year](https://www.brix.so/features/bookkeeping-taxes)

## Sources

- [Intuit QuickBooks — Set up and send progress invoices in QuickBooks Online](https://quickbooks.intuit.com/learn-support/en-us/help-article/invoicing/set-send-progress-invoices-quickbooks-online/L0Ymm6WjR_US_en_US) (checked 2026-10-12)
- [Acquisition.gov — FAR 52.232-27, Prompt Payment for Construction Contracts](https://www.acquisition.gov/far/52.232-27) (checked 2026-10-12)

---
Written by BRIX Editorial Team. Last updated 2026-10-12. General information, not tax, legal or financial advice.
Canonical: https://www.brix.so/learn/progress-billing