Guide to Progress Invoicing (Percent Complete and Cash Flow)

Progress invoicing means billing a long project in parts, each time for the share of the work completed since the last invoice. You work out how much of the total contract is complete to date, subtract any amount held back as retainage and what you've already billed, and invoice the difference. It's used for construction and other projects that run for months.

Billed publishes this page. It gives general information, not legal advice. The construction form descriptions are quoted from the American Institute of Architects (AIA), and the US federal rules from the Federal Acquisition Regulation, all opened on October 29, 2026. For your own contract and the rules where your project is, ask a lawyer.

When progress invoicing fits

• Long projects where waiting until the end to bill would leave you unpaid for months.
• Work measured as it goes, such as construction, where the share completed can be checked each period.
• Contracts that require it, with a billing schedule set out in advance.

How a progress invoice is calculated

1. Break the contract sum into parts, such as trades or phases, each with its own value.
2. Each period, record the share of each part completed, and total the value of work completed to date.
3. Subtract retainage, if your contract allows the client to hold some back.
4. Subtract what you've already billed, so the invoice covers only the new work.
5. Invoice the difference, with the figures shown so the client can check them.

Construction pay applications (AIA G702 and G703)

On construction projects, progress billing can be done on standard forms. The AIA describes its G702 and G703 documents as forms "on which the contractor can apply for payment and the architect can certify that payment is due" (AIA, G702–1992 summary).

According to the AIA, "The forms require the contractor to show the status of the contract sum to date, including the total dollar amount of the work completed and stored to date, the amount of retainage (if any), the total of previous payments, a summary of change orders, and the amount of current payment requested." It also says G703 "breaks the contract sum into portions of the work in accordance with a schedule of values prepared by the contractor as required by the general conditions."

Whether you use these forms depends on your contract.

Progress payments and retainage on US federal construction

For US federal fixed-price construction contracts, FAR 52.232-5 (FAC 2026-01, effective March 13, 2026) says:

• "The Government shall make progress payments monthly as the work proceeds, or at more frequent intervals as determined by the Contracting Officer, on estimates of work accomplished which meets the standards of quality established under the contract, as approved by the Contracting Officer."
• On retainage: "If the Contracting Officer finds that satisfactory progress was achieved during any period for which a progress payment is to be made, the Contracting Officer shall authorize payment to be made in full. However, if satisfactory progress has not been made, the Contracting Officer may retain a maximum of 10 percent of the amount of the payment until satisfactory progress is achieved."

These rules apply to US federal contracts. Retainage on private, state and local projects depends on the contract and on the rules where the project is; ask a lawyer about the rules that apply.

Worked example (sample figures)

A sample contractor, invented for this example, has an $80,000.00 private contract that allows the client to hold 5% retainage, a rate set by this sample contract. Last month's invoice covered 15% of the work. By the end of this month, 40% of the work is complete.

• Work completed to date: 40% × $80,000.00 = $32,000.00
• Retainage held on work to date: 5% × $32,000.00 = $1,600.00
• Earned less retainage: $32,000.00 − $1,600.00 = $30,400.00
• Previously billed: 15% × $80,000.00 = $12,000.00, less 5% retainage of $600.00 = $11,400.00
• Current payment due: $30,400.00 − $11,400.00 = $19,000.00

The check: this month's new work is 25% × $80,000.00 = $20,000.00, less 5% retainage of $1,000.00, which is $19,000.00. The $1,600.00 held so far is billed when the contract allows it to be released.

Progress or milestone invoicing?

Progress invoicing bills for the share of work completed in each period. Milestone invoicing bills fixed amounts when defined events happen. See the guide to milestone invoicing.

Where Billed fits

Billed's features page says: "Manage your flat rate projects and create Invoice at any stage of the project."

When this guide isn't for you

If your project involves subcontractor pay applications, lien rights, prompt-payment rules, or public funding, ask a lawyer about the rules that apply where the project is. For construction billing figures, see construction billing statistics.

Related Articles

• Guide to Milestone Invoicing
• Best Invoicing Software for Contractors
• Construction Estimating Basics
• Construction Billing Statistics
• How to Handle Partial Payments

Frequently Asked Questions

What is progress invoicing?

Billing a long project in parts, each time for the share of the work completed since the last invoice, less any retainage and amounts already billed.

How do I calculate a progress invoice?

Work out the value of work completed to date, subtract retainage if your contract allows it, then subtract what you've already billed. In this page's sample, $32,000.00 of work to date less $1,600.00 retainage and $11,400.00 already billed leaves $19,000.00 due.

What is retainage?

An amount the client holds back from each payment until later in the project, if the contract allows it. For US federal fixed-price construction, FAR 52.232-5 says "if satisfactory progress has not been made, the Contracting Officer may retain a maximum of 10 percent of the amount of the payment".

What are AIA G702 and G703?

Standard construction forms from the American Institute of Architects. The AIA describes them as forms "on which the contractor can apply for payment and the architect can certify that payment is due," with G703, which "breaks the contract sum into portions of the work".

How is progress invoicing different from milestone invoicing?

Progress invoicing bills for the share of work completed in each period. Milestone invoicing bills fixed amounts when defined events happen.