Set up progress billing that protects cash flow, reduces disputes, and gets you paid on time. Practical steps, examples, and tools Canadian contractors can use.
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Progress billing keeps your cash flow steady while work moves forward. Instead of waiting for one big cheque, you bill in stages. That helps you pay crews, buy materials, and avoid stress. In this guide, you’ll learn what progress billing is, why it works, and how to set it up. We’ll cover simple schedules, clear proposal terms, holdbacks, and how to handle delays. You’ll also see a step-by-step invoicing process you can follow on every job. Use this to reduce disputes and get paid faster.
Progress billing splits a job into staged payments tied to clear milestones. You list the schedule in your proposal, get client sign-off, then invoice each stage as work is done. This protects cash flow, lowers risk, and speeds up collection with less back-and-forth.
Progress billing means you bill the client as parts of the job are completed. Each invoice matches a milestone. It’s common on renovations, additions, and multi-trade jobs.
On most jobs, you’ll tie invoices to real work, like “rough-in complete” or “drywall taped.” Avoid billing only by time. Bill for outcomes you can show.
A good schedule is simple, fair, and easy to verify on site. Most contractors use 3–5 draws.
You don’t need all five on every job. Smaller jobs might use three: start, mid, and finish.
Clear deliverables mean faster client approval. Less arguing. Fewer delays.
If you’re also looking to streamline professional proposals, our guide covers “professional proposals” structure and templates. This pairs well with understanding “invoice templates” you can reuse on every job.
Your proposal is where you win or lose payment speed. Put the rules in writing.
Many workers find that getting a signed proposal changes everything. E-signatures speed this up. Tools like Donizo help you capture job details, generate branded proposals, get digital signatures, and then convert accepted proposals into invoices in one click.
If you ever handle scope changes, this pairs well with understanding “change orders” so your payment schedule stays accurate.
Here’s a simple, repeatable process you can run on every project.
If you need help building a repeatable flow, this pairs well with “project timelines” so your team knows when to trigger each invoice.
Projects change. Your payment plan should handle it without chaos.
In general, provinces require a statutory holdback on construction projects. Commonly, it’s around 10% of the contract price or each invoice. It’s held until the legal release point, often linked to lien periods. Check your provincial rules and timelines.
Practical approach:
Most contractors skip noting holdbacks clearly. Don’t make that mistake. It avoids end-of-job disputes.
Avoid these traps. They slow payment and hurt trust.
A tight process reduces admin. Contractors often report saving 2–3 hours each week by standardizing proposals and invoices.
Most small to mid-size renovations work well with 3–5 milestones. Use a deposit, a mid-way draw, a pre-finish draw, and a final payment. Add or remove steps based on project size and risk.
Substantial completion usually means the space is usable for its intended purpose. Final touch-ups may remain, but the major systems work. Align this with inspections or client walkthroughs so it’s clear and fair.
Follow your proposal terms. Send a friendly reminder at day 5. At day 7–10, pause non-critical work if allowed by your contract. Keep communication polite and documented. Clear terms prevent most conflicts.
In many provinces, yes. Include the holdback line on each invoice and track the total. Note when it’s released, often after final completion or lien period expiry. Always confirm your local requirements.
A deposit is common and smart. It secures materials and the schedule. The amount depends on project size and risk. Make it clear in your proposal and collect it before mobilizing.
Progress billing keeps your business steady and your team paid. Set 3–5 clear milestones, define “complete” in plain language, and invoice within 24–48 hours of each stage. Get sign-off up front and track holdbacks properly. If you want to speed proposals, signatures, and invoicing in one flow, platforms such as Donizo can help. Start by updating your next proposal with a simple schedule, clear due dates, and proof requirements. Do this on one project this week, then repeat it on every job.
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