Intro

Progress billing keeps cash coming in while you build. It breaks the job into payment stages. You invoice as work is completed, not only at the end. This protects your cash flow and reduces risk. In this guide, you’ll learn how to set a simple progress billing schedule, write clear payment terms, and send invoices that get paid. We’ll cover real scripts you can use with clients. We’ll also share a practical workflow you can follow on every job. Use these steps on small repairs and big renovations.

Quick Answer

Progress billing splits a project into stages and invoices each stage. Set clear milestones, due dates, and holdbacks up front. Send invoices the same day a stage is done, follow with friendly reminders at 7 and 14 days, and pause non-critical work if payments fall behind.

Table of Contents

• What Is Progress Billing?
• Set Up A Clear Payment Schedule
• Write Payment Terms Clients Understand
• How To Send And Track Progress Invoices
• Handle Delays, Holds, And Disputes
• Simple Tools That Speed Up Progress Billing

Key Takeaways

• Progress billing protects cash flow and reduces risk on longer jobs.
• Use 4–6 clear milestones with simple language and dates.
• Send invoices the day a milestone is met; follow up at 7 and 14 days.
• Document work with photos and daily notes to prevent disputes.

What Is Progress Billing?

Progress billing means you invoice as work is completed. Not just at the end. It’s common on multi-week or multi-month projects.

Why It Works

• You pay suppliers and labour on time.
• Clients see progress tied to payment.
• Less chance of big unpaid balances.

Typical Structure

Commonly, contractors use:

• 10% deposit to lock the schedule.
• 30% after demolition or rough-in.
• 30% after drywall or mid-point inspection.
• 20% after finishes or substantial completion.
• 10% final after walkthrough and punch list.

Adjust these for your trade and project size.

Set Up A Clear Payment Schedule

A clear schedule avoids arguments later. Set it before work starts.

Step 1: Define 4–6 Milestones

Keep milestones simple and visible on site. Examples:

1. Permit approved.
2. Rough-in complete and inspected.
3. Drywall hung and taped.
4. Cabinets installed.
5. Fixtures set and tested.
6. Final clean and walkthrough.

Step 2: Tie Each Milestone To A Dollar Amount

Use round numbers your client can grasp. Example: $4,000 at rough-in, $6,000 at drywall. List the tax and holdback rules if they apply in your area.

Step 3: Add Dates And Dependencies

• Target dates help everyone plan.
• Note dependencies like inspections or special orders.
• Include a line for weather delays or client-caused delays.

If you’re also looking to streamline professional proposals, our guide covers creating professional proposals that clients accept quickly. This pairs well with understanding change orders done right, so your billing stays aligned when scope changes mid-job.

Write Payment Terms Clients Understand

Many clients don’t know construction terms. Use plain language.

Terms That Work

• “Invoice sent at each milestone.”
• “Payment due in 7 days.”
• “Late fee after 14 days.”
• “Work pauses if payment is late.”
• “Final payment due after client walkthrough.”

Include Holdbacks And Retainage

In general, owners may hold 5–10% until completion. If your province uses lien holdbacks, state the percentage, due date, and release conditions. Keep it short and clear.

Put It In Writing

• Show the payment schedule in the proposal.
• Get signatures before you order materials.
• List accepted payment methods.

For contractors dealing with invoice templates that save time, we recommend using a standard layout with milestone, amount, tax, due date, and notes.

How To Send And Track Progress Invoices

A steady rhythm gets you paid faster.

A Simple Workflow

1. Finish the milestone work.
2. Take 5–10 photos as proof.
3. Send the invoice the same day.
4. Add a friendly note and next milestone date.
5. Set reminders for 7 and 14 days.

Email Scripts You Can Use

• Milestone complete (Day 0): “Hi [Client], the rough-in is complete. Photos attached. Your milestone invoice is $6,000 plus tax, due in 7 days. Next milestone is drywall on Monday. Thanks!”

• Friendly reminder (Day 7): “Hi [Client], quick reminder about the rough-in invoice sent last week. Please process today so we can keep drywall on schedule for Monday.”

• Firm reminder (Day 14): “Hi [Client], the rough-in invoice is now 14 days past due. As per our terms, we’ll pause non-critical work until payment is received. Please let me know once it’s sent.”

Track What’s Paid And What’s Left

• Keep a running balance per job.
• Match payments to milestones.
• Note holdbacks and release dates.

If you’re also managing project timelines effectively, align milestone dates with inspections and supplier lead times to avoid cash gaps.

Handle Delays, Holds, And Disputes

Problems happen. Address them fast and in writing.

Weather Or Supplier Delays

• Tell the client early.
• Send a new target date.
• Confirm the payment schedule still stands.

Client-Caused Delays

• Document the cause in your daily log.
• Issue a short change order if time or cost changes.
• Push the milestone date, not the payment terms, unless scope changed.

Disputes About Quality Or Scope

• Use photos and daily notes.
• Offer a short punch list in 24–48 hours.
• Split disputed items from the milestone. Invoice the undisputed portion now.

For contractors dealing with change orders, our article on change orders done right shows how to protect your margin and keep billing aligned.

Simple Tools That Speed Up Progress Billing

You don’t need fancy systems. You need clear steps and fast paperwork.

• Capture details fast: Tools like Donizo let you use Voice to Proposal, so your milestones and payment terms go into a branded PDF. Then you can Send Proposal by email with client portal access and get E-signature Integration for quick acceptance. Once accepted, use Invoice Management to convert the proposal to invoices in one click.
• Keep everything in one place: Store photos, notes, and signed documents together.
• Use calendar reminders: Set 7-day and 14-day follow-ups.
• Repeat the same process on every job.

Quick Checklist For Every Milestone

1. Photos taken.
2. Invoice sent.
3. Reminder set.
4. Balance updated.
5. Next milestone confirmed.

FAQ

How big should the deposit be?

In general, many contractors take 10–20% to reserve time and order materials. Choose an amount that covers initial costs and shows client commitment. State if the deposit is refundable or not, and when.

How many milestones should I use?

Most jobs work well with 4–6 milestones. Fewer milestones on small jobs. More detail on large or complex projects. Each milestone should be easy to see on site, like “drywall hung” or “fixtures installed”.

What if the client pays late?

Follow your terms. Send a friendly reminder at 7 days, a firm reminder at 14 days, and pause non-critical work if needed. Stay professional. Keep everything in writing. Resume once payment clears.

Can I use progress billing on cost-plus jobs?

Yes. Use a regular cycle, like weekly or bi-weekly. Invoice time, materials, and the agreed fee. Include photos, receipts, and clear summaries so clients trust the numbers.

Do I need lien holdbacks?

Check your local rules. Many regions require an owner to hold a percentage until completion or a set period after. If it applies, show the holdback amount, release date, and conditions in your terms.

Conclusion

Progress billing keeps your cash steady and your projects on track. Set 4–6 clear milestones, send invoices the same day work is done, and follow a simple reminder rhythm. Document with photos to avoid disputes. To speed up the admin, platforms such as Donizo help you turn approved proposals into invoices and collect signatures fast. Next steps: 1) Write your standard milestones, 2) Add plain-language terms, 3) Use the scripts above on your next job. Put this system in place now and protect your margins.