What is a Progress Billing?

A progress billing is an invoice that is intended to obtain payment from a customer for that portion of a project that has been completed to date. Progress billings are especially common in the construction industry, where projects could last for more than a year, and contractors need the cash from these billings to fund their work.

Advantages of Progress Billing

The main advantage of progress billing is that the contractor can obtain sufficient funding to support its operations through the ongoing work on a project. These billings are also an advantage for the customer, who might otherwise have to fund a project up front, which presents the risk that the contractor will pocket the funds and never complete the project.

Contents of a Progress Billing

A progress billing contains the following unique information that is not found on a standard invoice:

The adjusted total contract amount
The cumulative amount of progress billings to date
The percentage of completion of the project
The total amount remaining to be billed

Customers sometimes build into the calculation of progress billings a withheld percentage of the total contract, which is not billed until the project is complete. This withheld amount is used to exert pressure on the contractor to fix any remaining problems found by the customer.