Progress Billing Software

Progress billing is an invoicing method where you bill clients based on the percentage of total work completed during a given period. Instead of waiting for a specific deliverable to be finished, you measure how far the project has advanced — 30%, 55%, 80% — and invoice that proportion of the total contract value. It's the standard billing method on long-duration projects where work accumulates gradually rather than in discrete chunks.

Milestone billing, by contrast, ties each invoice to a specific deliverable: an approved design, a poured foundation, a deployed feature. You don't invoice until that defined output is inspected and accepted. Progress billing is more fluid — it accounts for work in progress even when no single deliverable is fully complete.

The distinction matters for project structure. On a $500,000 commercial build, progress billing lets the general contractor submit a draw request showing that framing is 90% done, electrical rough-in is 40% done, and plumbing is 60% done — all on the same invoice. Milestone billing would require each trade to reach a predefined checkpoint before any payment triggers.

Progress billing suits projects where multiple work streams advance simultaneously and where waiting for discrete deliverables would create unacceptable cash flow gaps. Construction, civil engineering, large-scale IT implementations, and multi-phase consulting engagements all default to progress billing because the work doesn't pause neatly at milestone boundaries.

Two primary structures govern when progress invoices go out: percentage-of-completion and fixed-interval billing. Choosing the right one depends on how work is measured and how your client expects to approve payments.

Percentage-of-completion billing ties each invoice to actual work performed. The most common measurement is the cost-to-cost method — divide costs incurred to date by total estimated project costs. If you've spent $120,000 on a $400,000 project, you're 30% complete and invoice 30% of the contract value. This method is recognized under ASC 606 and IFRS 15 for revenue recognition, making it the default for contractors and firms that need GAAP-compliant financials.

Alternative measurement approaches include units-of-delivery (square footage installed, lines of code deployed) and engineering estimates where a qualified professional assesses physical completion independent of cost data. Construction projects often combine cost-to-cost with field inspections to prevent gaming.

Fixed-interval billing sends invoices on a calendar schedule — monthly or bi-weekly — based on work completed during that period. This is simpler administratively but can misalign payments with actual progress. A slow month still triggers an invoice cycle, even if the billed amount is small.

In Billed, set up either structure at the project level. Define your total contract value, select your billing frequency, and track cumulative completion percentages. Each billing period, update the completion percentage and generate an invoice for the incremental amount — the difference between the new cumulative total and what's already been billed.

A progress invoice needs more than a dollar amount. Clients, lenders, and project owners expect documentation that substantiates the percentage claimed. Without it, approvals stall and payments delay.

In construction, the AIA G702/G703 format is the industry standard. The G702 (Application and Certificate for Payment) summarizes the total contract value, work completed to date, retainage withheld, and the net amount due. The G703 (Continuation Sheet) breaks this down by line item — each cost code or trade shows its scheduled value, previous billings, current work completed, materials presently stored, and the remaining balance. General contractors, subcontractors, and architects all work from this format, so speaking the same language speeds approvals.

Outside construction, progress invoices should still include a work summary describing what was accomplished during the billing period, a comparison of planned vs. actual completion, and any supporting artifacts — photos of installed work, time logs, deliverable drafts, or material receipts. Attach these directly to the invoice so the approver has everything in one place rather than chasing documentation across emails.

Billed lets you attach files and notes to each progress invoice line item. Reference specific cost codes, upload site photos, and include a narrative of work performed. For projects that require lender or third-party approval, generate PDF exports that match expected formats. The clearer your documentation, the faster the approval cycle — and the sooner you get paid.

Retainage is the portion of each progress payment that the client withholds until the project is substantially complete. Typical retainage rates run 5–10% of each invoice. On a $1,000,000 contract with 10% retainage, the client holds back $100,000 across all progress payments and releases it only after final inspection, punch list completion, or a contractually defined trigger.

Retainage protects the project owner against deficient work, incomplete punch lists, or contractor abandonment. But for contractors and service providers, it represents earned revenue sitting in someone else's account. On long projects, retainage can accumulate to a significant sum — five or six figures — that you've earned but can't access for months.

Managing retainage requires tracking it separately from billed and collected amounts. Each progress invoice should show three numbers: gross amount earned, retainage withheld, and net amount due. Cumulative retainage should be visible at the project level so you know exactly how much is being held and when it's contractually scheduled for release.

Some contracts allow retainage reduction at the halfway point — dropping from 10% to 5% once the project passes 50% completion. Others release retainage by trade: once the electrician's scope is 100% complete and inspected, their retainage is released even if other trades are still working. In Billed, configure retainage percentage per project, track cumulative holdbacks on every invoice, and schedule the release trigger so you don't forget to invoice for retained amounts once they're due.

Construction is the home turf of progress billing. General contractors submit monthly draw requests — also called applications for payment — showing the percentage of each line item completed. The architect or construction manager reviews the application against field observations, certifies the amount, and the owner releases payment. This cycle repeats every 30 days until substantial completion. Retainage is released after the punch list is resolved, typically 30–60 days later.

Subcontractors follow the same cycle one tier down. The electrical sub submits their schedule of values to the GC, who incorporates it into the overall draw request. Payment flows from owner to GC to sub, with each tier applying its own retainage. Managing these nested billing relationships requires clear tracking of what's been submitted, what's been approved, and what's been paid at each level.

Civil and structural engineering firms bill progress on design phases — schematic design at 15% of fees, design development at 35%, construction documents at 75%, and construction administration through 100%. Each phase maps to a percentage of the total fee, and invoices go out as those thresholds are crossed.

Large-scale consulting follows a similar pattern. A $2 million digital transformation engagement might bill monthly based on estimated effort completion, with supporting documentation showing hours logged by workstream, deliverables in progress, and costs incurred. Clients on projects of this scale expect structured progress reports alongside each invoice — they need to justify internal budget draws to their finance teams.

Progress billing only works when clients trust the numbers. That trust comes from proactive communication — not waiting for the invoice to tell the story, but providing regular progress reports that set expectations before the payment request arrives.

A strong progress report includes the overall completion percentage with a brief narrative, a comparison of planned schedule to actual progress, a breakdown of costs incurred vs. budget by category, any issues or delays affecting the timeline, and a forecast of the next billing period's expected amount. When clients receive this information before or alongside the invoice, the payment request feels like a natural conclusion — not a surprise.

For projects with multiple stakeholders — a project owner, a lender, an architect, a construction manager — each party may need a different view of the same data. The owner wants high-level progress and financials. The lender wants proof that disbursed funds match completed work. The architect wants line-item detail to certify. Billed's reporting lets you generate views at different levels of detail from the same underlying project data.

Schedule progress reports on the same cadence as your billing cycle. If you invoice monthly, send the progress report three to five business days before the invoice. This gives clients time to review the status, ask questions, and resolve any concerns before the formal payment request arrives. Projects that follow this rhythm consistently see faster approval times because the invoice never arrives without context.