Intro

Progress billing keeps your cash flow steady while work moves forward. If you wait until the end, you carry all the risk and costs. With progress billing, you invoice as you complete parts of the job. That means materials get paid, subs get paid, and you sleep better.

This guide shows a simple system you can use on any project. We’ll build a schedule of values, track percent complete, and send clear invoices. You’ll also see how to speed up approvals and handle holdbacks and change orders.

Quick Answer

Progress billing breaks the contract into parts, then invoices those parts as they reach set milestones or percent complete. Create a simple schedule of values, measure honest progress, and send clear invoices with terms. This protects cash flow, reduces risk, and keeps projects moving.

Table of Contents

• Intro
• Quick Answer
• Why Progress Billing Protects Your Cash Flow
• Build a Simple Schedule of Values
• How to Calculate Percent Complete
• Create Clear Invoices and Payment Terms
• From Quote to Signed Approval Fast
• Handle Holdbacks and Change Orders
• FAQ
• Conclusion

Key Takeaways

• Bill as work is completed to keep cash coming in.
• Use 1 schedule of values for the whole job. Keep it simple.
• Track percent complete weekly. Invoice every 2 or 4 weeks.
• Put payment terms in writing. Follow up within 48 hours.
• Convert approved proposals into invoices fast to reduce delays.

Why Progress Billing Protects Your Cash Flow

On most jobs, costs hit early. Materials, deposits, and mobilization come first. If you wait for final payment, you fund the project yourself.

Progress billing balances that. You bill for real progress in regular cycles. This reduces debt, stress, and payment disputes.

What it looks like:

• You break the job into 6–12 parts (by trade or phase).
• Every 2 or 4 weeks, you measure progress.
• You invoice the earned amount, minus any holdback.

Clients like it too. They see steady results and steady bills. Fewer surprises.

Build a Simple Schedule of Values

A schedule of values (SOV) is your roadmap for progress billing. It lists each part of the job and its value.

Keep it clear:

1. List major phases or trades. Example: Demo, Framing, Electrical, Drywall, Paint.
2. Assign a value to each line that adds up to the contract total.
3. Add mobilization and project management lines. You do real work before the first nail.
4. Leave a line for contingency or small extras if your client allows it.

Example (short):

• Mobilization: 5% of contract
• Demolition: value for labour and disposal
• Framing: materials and labour
• Electrical rough-in: labour, materials, permits
• Drywall and taping: full scope
• Paint and finish: full scope
• Cleanup and closeout: punch list, manuals, handover

Tip: Keep it under 15 lines. Too many lines slow reviews. Too few lines cause arguments later.

This pairs well with understanding professional proposals and clear scopes. If you’re also improving invoice templates that save time, align them with your SOV.

How to Calculate Percent Complete

You can use simple percent complete or milestones. Both work. Pick one and stay consistent.

Percent complete method:

1. Walk the site weekly. Take photos.
2. For each SOV line, judge honest progress. Example: Framing is 60% complete.
3. Multiply the line value by the percent complete to get earned value.
4. Subtract any previous billings to get this period’s amount.

Quick example:

• Framing value: $20,000
• Last invoice: 30% billed ($6,000)
• Current progress: 60% complete ($12,000 earned total)
• This invoice: $12,000 - $6,000 = $6,000

Milestone method:

• Set clear checkpoints. Example: “Rough-in inspection passed”.
• When a checkpoint is done, you bill the related amount.

Choose what fits the job size and client. Many contractors find percent complete best for multi-trade projects.

Create Clear Invoices and Payment Terms

A clean invoice reduces questions and speeds payment.

Include:

1. Project name and address.
2. SOV lines with previous billed, this period, and total to date.
3. Holdback/retainage shown clearly.
4. Payment terms and due date.
5. How to pay (EFT details, cheque, card if offered).

Payment terms that work:

• Net 7 or Net 15 for small jobs.
• Net 30 for larger or public work.
• Interest on late payments if allowed by your contract.
• A clear “work pauses after X days overdue” clause.

Follow-up routine:

• Send the invoice same day as your site walk, or within 24 hours.
• Reminder at 5 days before due date.
• Phone call at 2 days past due.

This pairs well with managing project timelines so cash and schedule stay aligned.

From Quote to Signed Approval Fast

Delays often happen before work starts. Missing details, slow approvals, and back-and-forth emails eat days.

Tighten this up:

1. Capture scope details right away. Use voice notes and photos.
2. Send a clean, branded proposal the same day.
3. Get a digital signature. No printing. No scanning.
4. Convert the accepted proposal into the invoice for deposit.

Tools like Donizo help here: voice-to-proposal for fast capture, branded PDFs, client portal, e-signatures, and one-click proposal-to-invoice. Many contractors report this cuts approval time by half.

If you’re also looking to streamline professional proposals, our guide covers clear scopes and inclusions. It pairs well with setting payment schedules upfront.

Handle Holdbacks and Change Orders

Holdbacks (also called retainage) are common in many provinces and on commercial jobs. A small portion of each invoice is held until the end or lien period. Plan for it.

Simple approach:

1. Show the holdback on every invoice line. Keep it visible.
2. Track the total held amount separately.
3. Invoice the holdback release as a final step after closeout.

Change orders can wreck progress billing if they float. Fix that:

1. Price changes in writing before the work. Even small ones.
2. Assign each change to the closest SOV line or add a new line.
3. Include the change in the next progress invoice.
4. Keep photos and notes. Fewer arguments.

Pro tip: Use the same format for changes as your main SOV. Consistency speeds approvals.

FAQ

How often should I send progress invoices?

Every 2 or 4 weeks works well on most jobs. Pick a cycle, tell the client, and stick to it. Weekly can work on fast interior jobs. Monthly fits larger builds.

What if a client disputes the percent complete?

Walk the site together. Show photos, inspections, and delivery slips. Tie progress to clear milestones. Be fair and transparent. Most disputes settle with good documentation.

Do I need special software for progress billing?

You can do it with a spreadsheet and PDF. But software makes it faster and cleaner. Look for tools that link proposals, e-signatures, and invoices in one flow to reduce errors.

How do I handle deposits with progress billing?

Set a deposit on acceptance. Then begin progress billing on your set cycle. Show the deposit as a credit on the first invoice so the client sees the full picture.

What about holdback/retainage on small jobs?

If your contract has a holdback, show it clearly. If not, you can still use a small final payment tied to punch list completion. The goal is fair leverage for both sides.

Conclusion

Progress billing is simple: define the work, measure honestly, and invoice on time. A clean schedule of values, steady site walks, and clear terms protect your cash flow and reduce stress. The faster you turn a signed proposal into an invoice, the faster you get paid.

Next steps:

• Build a 10–12 line SOV for your current jobs.
• Set a 2- or 4-week billing cycle and book site walks.
• Use solutions like Donizo to capture scope, get e-signatures, and convert proposals to invoices fast.

By tightening this process, you’ll see smoother projects and stronger cash flow on every job.