Intro

Cash flow is everything on a job. Progress invoicing keeps money moving while work moves forward. It spreads payments across milestones, not just at the end. This is safer for you and clearer for clients. In this guide, you’ll learn how to set up progress invoicing the simple way. We’ll cover when to bill, how much to bill, and what to write on your proposals and invoices. We’ll also show how to manage holdbacks and extras without drama. Use these steps on your next job and get paid on time.

Quick Answer

Progress invoicing splits the total price into several payments tied to clear milestones. Use simple triggers like “after rough-in” or “after tile installed.” Add due dates, taxes, and any holdback. Send each invoice the same day you hit the milestone. Follow up at 3, 7, and 14 days if unpaid.

Table of Contents

• Why Progress Invoicing Works
• Set Up a Simple Progress Invoicing Plan
• Build Clear Proposals That Support Progress Invoicing
• Collect Approvals and Handle Changes
• Invoice Today, Get Paid Faster
• Avoid Common Mistakes
• FAQ
• Conclusion

Key Takeaways

• Progress invoicing protects cash flow and reduces risk on jobs over 2–3 weeks.
• Tie each draw to a clear milestone, not “percentage complete.”
• Show taxes, due dates, and any 10% holdback where required.
• Send invoices the same day you hit a milestone; follow up at 3, 7, and 14 days.

Why Progress Invoicing Works

Progress invoicing spreads risk. You don’t carry all the material and labour until the end. Clients like it because they pay as work gets done.

On most projects, a simple split works well. For example: 20% booking deposit, 30% after rough-in, 30% after finishes, and 20% at completion. In many provinces, there is also a statutory holdback (often around 10%). Keep the holdback separate and show it clearly on invoices.

Use progress invoicing when jobs last more than 2–3 weeks or when material costs are high. For small repairs, a 50/50 split or payment on completion is fine.

Set Up a Simple Progress Invoicing Plan

Here’s a step-by-step approach you can use today.

1. Break the scope into phases.
   • Example: Demolition, framing, rough-in, drywall, finishes, final.
2. Assign payment percentages to each phase.
   • Keep early draws lower, then increase as material and labour ramp up.
3. Set clear triggers.
   • “After rough-in inspection passed” beats “30% complete.”
4. Add terms that you can enforce.
   • Example: Due in 7 or 15 days. Work pauses if overdue.
5. Plan for extras.
   • All changes need a signed change order and a separate invoice or added draw.

Example schedule you can copy:

• 20% deposit on booking.
• 30% after rough-in completed and inspected.
• 30% after finishes installed.
• 10% at substantial completion (walkthrough done, punch list started).
• 10% holdback if required by law or contract (released at the legal deadline).

If your work is inspection-based, use those inspections as milestones. If not, use visible checks: “tile installed,” “cabinets set,” “paint final.”

This pairs well with understanding professional proposals, project timelines, and invoice templates you can reuse across jobs.

Build Clear Proposals That Support Progress Invoicing

Your proposal should make the payment plan obvious. Put the schedule near the total price. Use simple language and bold key points.

• List milestones and amounts beside each phase.
• Show GST/HST (and PST where applicable) for each invoice.
• Note any holdback separately. Don’t hide it in the totals.
• Add a pause clause: “Work pauses if payment is overdue by 7 days.”
• Include how change orders are handled.

On most jobs, site photos help. Add 2–3 photos per phase to show what “done” looks like. Clients feel safer when they can see progress.

If you want to speed up admin, tools like Donizo help. You can capture job details with Voice to Proposal, generate a clean PDF, send it with client portal access, and get an e‑signature before you start. When the client signs, you can convert the accepted proposal to invoices in one click.

If you’re also looking to streamline professional proposals, our guide covers structure, wording, and pricing strategies that win work without cutting margin.

Collect Approvals and Handle Changes

Extras happen. The key is to keep them clean.

1. Confirm the change in writing.
   • What changed, price impact, time impact.
2. Get a signature before work.
   • E‑sign or a signed photo of the paper is fine.
3. Invoice the change order separately or include it in the next draw.
   • Make it easy to track.
4. Update the milestones if the change shifts the schedule.

A short script you can use: “The client asked for X. It adds 2 days and $1,200 plus tax. I’ll send a change order now. Once signed, we’ll start the extra work.”

For deeper tactics, check our content on change orders and how to protect your margin. It pairs well with client management tips that reduce back‑and‑forth.

Invoice Today, Get Paid Faster

Speed matters. Send the progress invoice the same day you hit the milestone. Don’t wait.

• Due dates: net 7 or net 15 keeps cash moving. Net 30 is often too slow.
• Clear subject line: “Progress Invoice #103 – Rough‑In Completed – Due in 7 Days.”
• Include 2–3 photos in the email or portal to confirm the milestone.
• Reminders: send a polite reminder on day 3, a firmer one on day 7, and call on day 10.
• Consider early payment incentives.
  • In general, a 1–2% discount for payment within 5 days can help. Use this only if your margin allows it.

Platforms such as Donizo make this smoother. You send the proposal, collect an e‑signature, and then convert accepted work into invoices without re‑typing. That alone can save 1–2 hours per week.

If you want more help with consistent formatting, check our invoice templates and client management resources for clearer communication.

Avoid Common Mistakes

• Vague milestones.
  • Fix: use inspections or visible checks. “After tile installed,” not “70%.”
• No due date.
  • Fix: set net 7 or net 15. Put the date in bold.
• Missing holdback.
  • Fix: show any 10% holdback on every invoice. Track its release date.
• Forgetting taxes.
  • Fix: show GST/HST (and PST if needed) on each draw.
• Over‑billing early.
  • Fix: match draws to actual costs and work done. Stay fair.
• Not pausing when overdue.
  • Fix: write a pause clause and use it. It prevents larger problems.

FAQ

How big should my first deposit be?

In general, 20–40% works for many trades. Use the lower end when material costs are low or the schedule is short. Use the higher end when you must purchase expensive materials early. Always show taxes and any holdback separately.

What if a client refuses progress invoicing?

Explain the benefits: it protects both sides and matches payments to work. Offer a simple plan, like 30% deposit, 40% after rough‑in, 30% at completion. If they still refuse on a long job, consider walking away. Carrying all costs can crush cash flow.

How do I handle holdback in Canada?

Many provinces require a statutory holdback, commonly around 10%. Show it on every invoice and track the release date. The release timing depends on local rules and “substantial performance.” When unsure, ask a local construction lawyer or your association.

What if an inspection delays a milestone?

Plan a backup trigger. For example, “after rough‑in completed and ready for inspection.” If the inspector is delayed, you can still invoice. Keep photos and site notes. Most clients accept this if it’s clear in the proposal.

Should I charge late fees?

Many contractors add a small late fee after 15–30 days. If you do this, write it into your terms before the job starts. Keep it reasonable and follow local regulations. Often, clear follow‑ups solve the issue without fees.

Conclusion

Progress invoicing keeps your cash flow steady and your jobs stable. Tie payments to visible milestones, set clear due dates, and send each invoice the same day you hit the trigger. Tools like Donizo can cut admin by turning signed proposals into invoices instantly and collecting e‑signatures fast.

Next steps:

• Pick 3–4 milestones for your current job and assign percentages.
• Add due dates, taxes, and any holdback to your proposal template.
• Send your next progress invoice the day the milestone is reached.

Do this on your next project. You’ll feel the cash flow difference right away.