Progress Billing

Progress billing (also called progress invoicing or application for payment) is the standard way contractors get paid on projects that span weeks or months. Instead of waiting until the entire job is done to send one massive invoice, you bill periodically — usually monthly — for the work completed and materials stored during that billing period.

In commercial construction, progress billing typically follows a formal process. You submit an Application for Payment (often using AIA Document G702/G703 or a similar schedule of values) that breaks down the contract into line items and shows the percentage complete for each. The architect or project manager reviews it, the owner approves it, and you get paid — minus any retainage.

For residential and smaller commercial work, progress billing is simpler but follows the same principle. You might bill at defined milestones: 20% at contract signing, 30% at rough-in, 30% at finish work, 20% at completion. Or you might bill monthly based on time and materials. The key is that cash flows throughout the project, not just at the end.

Without progress billing, contractors would need enough cash reserves to fund entire projects out of pocket — materials, labor, equipment, insurance — and wait until completion to get paid. That's financially impossible for most businesses.

Progress billing keeps your cash flow healthy, but it requires discipline. You need to track costs accurately, submit invoices promptly, and follow up on late payments immediately. A common contractor mistake is falling behind on invoicing — doing the work but not billing for it. That unpaid work shows up as unbilled revenue on your books, and it means you're effectively financing the project for free.