Definition
Progress billing (or progress payments) is invoicing the customer periodically as work is completed—e.g., monthly based on % complete or on a schedule of values. Each application includes work completed to date, less previous billings, plus retainage. It is standard on construction contracts and drives cash flow.
Why It Matters
Progress billing aligns cash inflow with work performed. Waiting until the end of the job to bill would strain cash flow. Accurate and timely applications (with supporting documentation) reduce payment delays. Progress billing also ties to revenue recognition (e.g., POC) and WIP reporting.
Pay applications usually move through owner or architect certification (or GC review for subs)—organized line items and backup reduce rejections and delays. Construction lenders often release draws when billings align with verified progress on site. Billing each period also limits exposure: if work stops or payment fails, you are typically fighting for the current cycle’s balance, not the whole job’s value left unbilled.
Typical application components
Common fields on G702/G703-style requests and in software:
| Component | Purpose |
|---|---|
| Application number | Sequence of pay apps on the job—tracks history and aging. |
| Period to | Cutoff date for work and costs included on this application. |
| Total earned to date | Cumulative value of work placed (and stored materials when allowed) through this period. |
| Previous billings / certificates | Amounts already billed or certified—prevents double billing and sets the balance forward. |
| Current payment due | Net amount you are requesting for this period after retainage and prior payments (per contract and form). |
| Retainage | Portion withheld per contract until milestones (e.g. substantial completion)—distinct from gross earned. |
Field Example
Monthly application: Schedule of values shows 30% of the job complete; contract value $100,000. Completed to date = $30,000; less 10% retainage = $3,000; previous billings = $18,000. This application = $30,000 − $3,000 − $18,000 = $9,000 billed. Owner pays $9,000; $1,000 retainage is held.
Stored materials + labor: A roofing sub has a $100,000 contract. Month 1: $30,000 of materials are on site and billable as stored materials under the contract; labor on the SOV for that scope is 20% complete for the period, worth $14,000. They bill $44,000 gross for the period. With 10% retainage, $4,400 is withheld; net paid $39,600—enough to cover supplier invoices and payroll while work continues.
Calculation / Formula (if applicable)
Application amount = (Completed to date × Contract value) − Retainage on completed − Previous billings. Or by SOV: Sum of (Line item complete to date − Retainage − Previously billed) for each line.
Software Application
Support progress billing by job: link to contract value and schedule of values. Calculate completed to date (by % or by SOV line), retainage, and amount due this period. Generate application form (e.g., AIA G702/G703 style). Track billing date, amount, retainage, and payment. Feed into WIP and revenue recognition.
Tooltip Version
Progress billing is invoicing the customer periodically as work is done (e.g., monthly), usually based on percent complete or schedule of values, so you get paid during the job.
Related Objects
Related: