Glossary
What is progress billing?
Progress billing means invoicing in stages as a project advances. Learn how it works, how to set milestones and how to track what is left to bill.
Updated · By PayToMe Editorial
Progress billing is a way of invoicing a large project in installments as work moves forward, instead of sending one bill at the end. Each invoice covers a stage, a milestone or a percentage of the job completed.
How it works
It suits any job that takes weeks or months, such as building work, software projects or events. You and the client agree the total price and a schedule of billing points before starting.
- Agree the schedule. List the stages, what triggers each invoice and what share of the price it covers.
- Start with a deposit if the contract allows. See deposit invoices.
- Invoice at each trigger. Show the stage, the amount for this stage, what has been billed so far and the balance remaining.
- Send a final invoice for the remainder when the work is accepted.
Two common methods exist. Milestone billing ties each invoice to a defined event. Percent complete bills a share of the contract based on measured progress. Milestones are easier to dispute-proof because they are binary. Percent complete suits long jobs where the work is continuous.
Progress billing supports your cash flow because costs are covered as you go. For clients, it limits risk because they pay for work that exists. A retainer is different: it is an advance for ongoing services, not a stage payment.
Example
A $20,000 renovation is billed in four stages.
| Stage | Trigger | Share | Invoice | Billed to date | Balance |
|---|---|---|---|---|---|
| 1 | Contract signed | 25% | $5,000 | $5,000 | $15,000 |
| 2 | Demolition and framing done | 25% | $5,000 | $10,000 | $10,000 |
| 3 | Fixtures installed | 30% | $6,000 | $16,000 | $4,000 |
| 4 | Final inspection passed | 20% | $4,000 | $20,000 | $0 |
Each invoice shows its own amount and the running totals. Build these with the free invoice generator, and see the construction invoice template for a trade layout.
Related terms
- Deposit invoice: the upfront first payment.
- Retainer: an advance for ongoing work.
- Cash flow: what staged billing helps protect.