Learn a clear, practical system for progress billing. Break down your scope, set milestones, invoice on time, and keep cash flowing without disputes.
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Progress billing keeps your cash moving on longer jobs. You bill as the work progresses, not just at the end. It sounds simple. But many contractors struggle with timing, breakdowns, and client pushback. Miss one step and cash flow gets tight fast.
This guide shows you how to set up progress billing the right way. You'll learn how to break your price into clear parts, set milestones, and invoice without confusion. We keep it simple and practical. So you can focus on the work, not paperwork.
Progress billing means you invoice by percent complete against a clear schedule of values. Break the job into line items, set 3â6 milestones, and bill each stage as itâs finished. Get sign-off on the breakdown up front, include holdbacks, and send invoices fast with clear due dates.
Progress billing is simple: you bill for work completed so far. You tie each invoice to a clear part of the scope. The client sees the progress and the cost. No surprises.
Hereâs the core system:
On most jobs, 3â5 milestones work well. Too many creates admin work. Too few delays your cash.
This pairs well with understanding "professional proposals" and clear scope writing. Tight scope makes progress billing smooth.
A schedule of values (SOV) is just your price split into parts. Each part has a value. You can bill against each part.
Start with these common line items:
Practical steps:
Tip: Use round numbers where you can. It avoids cents arguments later. For example, $4,000 instead of $3,997.23.
If you're also looking to streamline "project timelines", mapping your SOV to the schedule helps a lot.
Youâve got your SOV. Now set your payment flow. Hereâs a simple structure that works on many projects:
Set clear payment terms. Net 15 is common. Net 30 can work for larger clients. Put the due date right on the invoice. Add simple late terms if you use them. Keep your wording friendly but firm.
Send invoices within 24â48 hours of hitting a milestone. Speed matters. It keeps momentum and cuts back-and-forth.
For contractors dealing with "invoice templates that save time", a standard layout with the SOV on page 2 is smart.
In many provinces, a 10% statutory holdback is common. This is to protect lien rights. Some private jobs also use retainage. Same idea: a small amount held until the end.
How to handle it:
Change orders and extras happen. Do not roll them into the next progress invoice without proof. Use a separate change order process. Get approval in writing before you do the work. This protects your margin and your schedule.
If you need help with this, see "Change Orders Done Right". It explains a clean, simple flow.
Billing stored materials? Itâs common to bill for materials on site or in secure storage. Include:
Many clients accept this when itâs clear and documented.
Most billing fights come from fuzzy details. Donât leave room for guesswork. Keep it simple and consistent.
Practical habits:
When youâre on site, take pictures before you cover work. For example, shoot plumbing and electrical rough-in before drywall. This proves progress fast. It also helps with warranty later.
This pairs well with "client management" basics. A 10-minute weekly update can prevent a 2-hour dispute.
You donât need fancy software to do progress billing. A clear SOV and steady habits work. But smart tools can save time and reduce errors.
Platforms such as Donizo help here. You can capture scope with voice, text, and photos, generate a branded proposal, get e-signatures for acceptance, and convert the accepted proposal into invoices in one click. Contractors often report this can save 2â3 hours per week.
If youâre also looking to improve "invoice templates" and "professional proposals", standardizing them will speed your progress billing.
Many contractors ask for 20â30% to cover early labour and materials. It depends on job size, lead times, and risk. Make sure the deposit is in your contract and your schedule of values. Be clear about what the deposit covers.
Stay calm and clear. Send a friendly reminder the day after the due date. Follow with a call if itâs 3â5 days late. Pause non-critical work if it reaches your contract limit. Keep all notes and emails. Clear terms and steady follow-up usually fix it.
Add a separate line in your schedule of values for stored materials. Attach photos, packing slips, and a brief note on location. Bill a reasonable portion, not the whole project. Many clients accept this when itâs documented.
Yes. Get sign-off before you start. It locks the breakdown and reduces arguments later. Without a signed SOV, percent-complete billing turns into opinion. A signed SOV turns it into numbers.
On most jobs, 3â6 milestones work best. Too many creates admin. Too few slows cash. Tie milestones to real work and inspections. For example, rough-in complete, drywall and prime, substantial completion.
Progress billing protects your cash and keeps jobs moving. Break the scope into a clear schedule of values, set 3â6 milestones, and invoice within 24â48 hours of each stage. Document with photos and brief notes, and show holdbacks on every bill.
Next steps:
If you want less admin and faster approvals, tools like Donizo can create proposals, capture signatures, and convert accepted scopes into invoices in one click. Keep it simple, stay consistent, and your cash flow will thank you.
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