Construction money, explained
Progress billing
Progress billing is invoicing a construction project in installments as the work is completed, rather than collecting one lump sum at the end — so the contractor gets paid in step with progress and the owner pays for value actually in place.
Updated June 2026
What is progress billing?
Progress billing breaks a contract into a series of invoices tied to how much of the job is finished. Instead of waiting until the end to get paid, the contractor bills periodically — monthly, by milestone, or by phase — for the portion of work completed in that period, less retainage.
It keeps cash flowing on long jobs. Materials, labor, and subs all have to be paid as the work happens, so being able to bill for completed work each month is what keeps a contractor from financing the whole project out of pocket. For the owner, it ties payment to demonstrable progress instead of an all-or-nothing payment at the finish.
How does progress billing work?
Most progress billing rests on a schedule of values: the contract sum is divided into line items, each with a dollar value that sums to the total. Each billing period you report what percent of each line is now complete, and the app or form calculates the earned amount, subtracts what was billed before and any retainage, and lands on the current payment due.
There are a few common methods. Percent-complete billing invoices a share of each line item as it progresses. Milestone billing releases a fixed amount when a defined stage is reached (foundation poured, rough-in passed). Cost-plus and time-and-materials billing invoice actual costs plus a fee. The right method depends on the contract type.
On formal commercial jobs, progress billing is usually packaged as an AIA-style pay application — a summary cover sheet plus a continuation sheet detailing each line item, work this period, work to date, retainage, and balance to finish.
Why does progress billing matter for cash flow?
The gap between spending money on a job and collecting for it is where contractors get squeezed. Progress billing shrinks that gap by converting completed work into an invoice every period, instead of letting unbilled value pile up until closeout.
Simple Contractor CRM is built around the bid-to-paid workflow, so a line-item estimate that the customer approves becomes the contract you bill against. From there you can raise progress draws, apply retainage, and track accounts receivable on the job. Recording payments and tracking what's still owed is real today; accepting online card payments is planned at launch.
Worked example
On a $120,000 contract billed monthly with 10% retainage, suppose your schedule of values shows the job is 25% complete at the end of month one. Earned to date is $30,000. You withhold $3,000 retainage, so this period's payment due is $27,000.
Month two you reach 50% complete: earned to date is now $60,000, retainage held to date is $6,000, and you have already been paid $27,000 — so the current payment due is $60,000 minus $6,000 minus $27,000, or $27,000 again. The math always nets out to new work earned this period, less the retainage on it.
Frequently asked
- What is the difference between progress billing and a draw?
- They are closely related: a draw is a single progress payment released for completed work, and progress billing is the overall practice of invoicing in those installments across the job.
- How often do you send a progress invoice?
- Monthly is the most common cadence on construction projects, but it can be tied to milestones or phases instead, depending on the contract.
- Does progress billing always include retainage?
- Not always, but it usually does on construction work — the contract specifies whether a retainage percentage is held back from each progress payment.
- Is progress billing the same as AIA billing?
- AIA billing is a standardized, document-driven form of progress billing common on commercial jobs. All AIA billing is progress billing, but progress billing can also be simpler and non-AIA.
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