What is progress billing in construction?

Progress billing is invoicing a client in stages as a job advances rather than once at the end. Payments are tied to milestones (such as deposit, rough-in, and completion) or to a percentage of work completed, all defined in a draw schedule agreed before the work begins.

When should a contractor use progress billing?

On any job large enough that financing it to completion before getting paid would strain your cash or expose you to a meaningful loss. For most trade contractors that means jobs longer than a week or two, or with several thousand dollars in materials. Small service calls can be billed once at the end.

What is a typical draw schedule?

A common milestone structure is 30% deposit on acceptance, 40% at rough-in or the halfway point, and 30% on completion. The exact split should be sized so each payment roughly covers the costs incurred to that stage plus some profit, and it must be agreed in the contract before work starts.

Progress Billing for Contractors

What progress billing is and when you need it

Progress billing is the practice of sending several invoices over the life of a job, each one covering the work completed up to that point, instead of a single invoice at the end. On a small service call, one invoice is fine. But on a job that runs three weeks, involves significant materials, or has you carrying a crew, billing only at the end means financing the entire project out of your own pocket — and putting the whole value at risk if the client disappears.

The rough threshold is this: if a job is large enough that finishing it before any money arrives would strain your cash, or expose you to a loss you couldn't comfortably absorb, it should be progress billed. For most trade contractors that means anything beyond a week or two of work or a few thousand dollars in materials.

The two ways to structure it

Milestone billing ties each invoice to a concrete stage of the work. A typical structure for a mid-sized job:

30% deposit on acceptance, before any work starts.
40% at rough-in / materials on site / halfway point.
30% on completion and sign-off.

Milestones are easy for clients to understand because each payment is attached to something visible — they can see the rough-in is done before they pay for it.

Percentage-of-completion billing bills based on how much of the total work is finished — if you're 60% through the contracted scope, you've billed 60% of the contract value (less any deposit already collected). This is more common on larger or commercial jobs and usually requires you to estimate completion honestly each period.

For most residential trade work, milestone billing is simpler and harder to argue with. Reserve percentage-of-completion for long commercial jobs where it's expected.

Building a draw schedule the client agrees to

The payment stages — the "draw schedule" — must be written into the contract and accepted before you start. A draw schedule decided mid-job, when you're short on cash, looks like you're scrambling and invites pushback. Decided up front, it's just the terms of the deal.

Each draw should be sized so the money roughly covers the costs you've already incurred at that point, plus a slice of your profit — never so back-loaded that you're financing the bulk of the job and only get whole at the very end. Tie draws to defined, inspectable events so there's no debate about whether a milestone was reached.

Set the deposit large enough to cover your upfront materials — see how much deposit a contractor should ask for — and make sure each draw invoice carries the same clear payment terms and due date as a standalone invoice.

Why progress billing protects you

The obvious benefit is cash flow: money arrives throughout the job instead of all at the end, so you're never deep underwater financing someone else's project. The less obvious benefit is risk limitation. If a client stops paying after the rough-in draw, you stop work — and your exposure is capped at the work done since the last payment, not the entire job. A client who has already paid for completed stages is also far more committed to seeing the job through.

The practical challenge is keeping multiple invoices per job organised — what's been billed, what's been paid, what's outstanding on each draw. Fieldpaid lets you raise each draw as its own invoice with its own payment link and automatic reminders, and shows the running profit on the job as actuals come in, so you can see whether a long project is still on margin while it's in progress — not just when it's over.

Progress Billing for Contractors: How to Get Paid as the Job Moves