Intro

Progress billing keeps your cash moving while work moves forward. Without it, you’re bankrolling the job and sweating payroll. In this guide, we’ll show simple ways to set up a clean payment schedule, write it into your proposal, and invoice on time. You’ll learn how to pick milestones, handle holdback, and avoid common disputes. The goal is simple: steady money in, steady work out. Use these steps on your next project and feel the difference.

Quick Answer

Progress billing breaks the job into clear milestones and payments. Put the schedule in your proposal, get it signed, and invoice as soon as each milestone is reached. Handle holdback properly, document work, and follow up fast. This protects cash flow and cuts payment delays.

Table of Contents

• Why Progress Billing Protects Your Cash Flow
• Set Clear Payment Terms In Your Proposal
• Build A Simple Milestone Schedule
• Invoice On Time And Track Payments
• Handle Holdback, Retainage, And Final Payment
• Prevent Disputes With Clean Documentation

Key Takeaways

• Use 3–5 clear milestones on most jobs to keep cash flowing.
• Put payment terms in the proposal and get e-signed before work starts.
• Invoice within 24–48 hours of reaching each milestone.
• Track holdback correctly and define “substantial completion” in writing.
• Document work with photos, notes, and change approvals to avoid disputes.

Why Progress Billing Protects Your Cash Flow

On most jobs, materials and labour hit you first. Payment comes later. That gap hurts.

Progress billing breaks the job into smaller cash events. Money arrives as work is done. This covers materials, keeps wages steady, and reduces risk.

It also sets clear expectations. Clients know when and why they pay. That reduces awkward calls and delays. Everyone stays on the same page.

Set Clear Payment Terms In Your Proposal

Your proposal is the place to set the rules. If it’s not in writing, it’s weak.

• Define the payment schedule. List each milestone and amount.
• Include a deposit due on acceptance. This funds early materials.
• State due dates. For example, “Due upon milestone verification.”
• Add late payment terms. Keep them reasonable and clear.
• Explain change order billing. Approved changes get billed on the next milestone.

Make this easy to accept. Tools like Donizo let you capture project details by voice or photos, generate a branded proposal, send it by email, and collect a legally binding e-signature. Clear terms, fast acceptance, less friction.

If you need help writing strong offers, this pairs well with understanding proposal scope, exclusions, and allowances. Many contractors find that tight scope language prevents payment fights later.

Build A Simple Milestone Schedule

Keep milestones simple and tied to visible work. Clients should see it, then pay it.

A Practical 5-Step Structure

1. Deposit on Acceptance: Secures the schedule and covers initial materials.
2. Rough-In/Framing Complete: Structure, rough plumbing, and electrical in place.
3. Drywall and Prime: Walls closed, first finish stage ready.
4. Fixtures and Finishes: Cabinets, tile, trim, and fixtures installed.
5. Substantial Completion: Space usable, only minor touch-ups left.

For small jobs, use 3 milestones. For complex jobs, use 5–7. Tie each milestone to a clear inspection point or walkthrough.

How To Price Each Milestone

• Align big costs with early milestones. Materials get paid when delivered or installed.
• Balance labour across middle milestones. Keep weekly cash steady.
• Leave a small amount for final touches. This motivates punch list completion.

Write each milestone like this: “Milestone 3: Drywall hung and primed; 20% due.” Short, clear, and easy to verify.

Invoice On Time And Track Payments

You finished a milestone. Don’t wait. Invoice within 24–48 hours. Momentum matters.

A Simple Rhythm That Works

• Schedule site checks every Friday. Confirm progress with photos.
• Send the invoice the same day. Faster invoice, faster payment.
• Follow up at 7 days if unpaid. Be polite, firm, and specific.
• At 14 days, call and email. Offer a short call to resolve issues.

Convert accepted proposals to invoices in one click when you can. Platforms such as Donizo streamline this. It reduces admin time and errors. Less typing, more building.

Keep records tidy. Note sent dates, due dates, and reminders. Many contractors report that firm, friendly follow-up cuts delays in half.

Handle Holdback, Retainage, And Final Payment

In Canada, lien laws matter. Handle holdback the right way.

• Commonly, provinces require a 10% statutory lien holdback on progress payments.
• The holdback is released after the lien period ends. This varies by province.
• Define “substantial completion.” This usually triggers final invoicing and lien timelines.

Practical Steps

1. Show holdback on every invoice. List the gross amount and the holdback.
2. Track the lien period for your province. Mark the date on your schedule.
3. Provide a statutory declaration if requested. This assures subs and suppliers are paid.
4. Release holdback only when legally allowed. Stay compliant and safe.

If you work across provinces, confirm local rules before the job. It saves headaches and protects your right to get paid.

Prevent Disputes With Clean Documentation

Payment fights often start with fuzzy scope and missing proof. Fix that up front.

What To Document

• Scope and drawings: The baseline of the job.
• Site photos: Before, during, and after each milestone.
• Client approvals: Emails or e-signatures on changes and selections.
• Inspections: Notes and pass reports.
• Punch lists: Dated lists with who does what by when.

Simple Habits That Help

• Name photo folders by date and milestone. Easy to find later.
• Summarize each client call by email. Short notes prevent confusion.
• Confirm changes the same day. Don’t wait until invoicing.

When your documents are clear, your invoices are clear. That means faster payment and fewer debates.

FAQ

How many milestones should I use for a typical renovation?

Most small renovations work well with 3–5 milestones. Use fewer for simple jobs, and more for complex projects with many trades. Each milestone should match visible work that a client can verify quickly.

Should I ask for a deposit before starting?

Yes. A deposit on acceptance protects your schedule and covers early materials. Make the deposit reasonable and tied to real costs. Always include the deposit terms in the proposal the client signs.

What if a client delays a payment?

Follow a firm, friendly process. Send a reminder at 7 days, then call at 14 days. Offer to walk the site to address concerns. Pause non-critical work if needed, based on your contract. Clear terms give you leverage.

How do I handle change orders with progress billing?

Price and approve changes before the work. Add them to the next milestone invoice or create a separate invoice if large. Keep the paper trail tight: description, price, and client approval.

What is “substantial completion,” and why does it matter?

It’s when the space is usable for its intended purpose, with only minor touch-ups left. This point often triggers final invoicing and starts lien timelines. Define it clearly in your proposal to avoid arguments later.

Conclusion

Progress billing is the most reliable way to protect cash flow on active jobs. Keep milestones simple, invoice on time, and document everything. Next steps: 1) Write a milestone schedule into your next proposal, 2) Set weekly site checks and a 24–48 hour invoice rule, 3) Track holdback and lien dates. Tools like Donizo can speed proposals, e-signatures, and invoicing, so you spend less time at a desk. Put this system in place now and keep your crew and cash moving forward.