Progress billing lets you invoice clients at defined stages of a construction project instead of waiting until the job is complete. This is critical for cash flow on projects that span weeks or months. You fund materials and labor throughout the build, so payments need to come in at a pace that matches your spending.

Start with your contract. Define specific billing milestones tied to project phases or completion percentages. Milestone-based billing works better than pure percentage of completion because it ties to tangible deliverables. The client can see that framing is done or the building is dried in. Percentages lead to disputes about whether the job is really 40% complete.

Build a schedule of values before work begins. This breaks the total contract into line items for site work, foundation, framing, roofing, mechanicals, and so on. Each progress bill draws from this schedule. If the total contract is $500,000 and framing is valued at $80,000, you bill $80,000 when framing is complete. The schedule of values becomes your roadmap for billing through the project.

On commercial projects, you’ll typically use AIA G702 and G703 forms. These standardized documents show the schedule of values, work completed to date, stored materials, retainage, and current amount due. General contractors expect these from subs, and owners often require them from GCs. Residential work usually doesn’t need this formality, but a clear invoice showing contract total, prior billings, current billing, and remaining balance keeps everyone aligned.

Handle retainage separately in your books. Most commercial contracts hold back 5-10% until substantial completion. That’s money you’ve earned but won’t collect until the project closes out. In your accounting software, track retainage receivable as a separate account. When you invoice $50,000 with 10% retainage, record $45,000 to accounts receivable and $5,000 to retainage receivable. At project close, you invoice for the accumulated retainage and move it over.

Record each progress bill against the specific job in your system. Construction job costing tracks not just your expenses by project but your billings too. You need to see the relationship between costs incurred and amounts billed. If you’ve spent $75,000 but only billed $60,000, you’re carrying that project with your own cash. If you’ve billed $90,000 against $75,000 in costs, you’re ahead on cash flow but need to make sure remaining work doesn’t eat into that margin.

Don’t let billings slip. Invoice the day you hit a milestone, not two weeks later. Follow up on payments before moving to the next phase. Your contract should state that work stops if prior billings aren’t paid. Enforcing this keeps cash flowing and prevents you from going deeper into a project with an owner who isn’t paying.

Review your schedule of values and billing status weekly during active projects. Know exactly where each job stands. What’s been completed, billed, collected, and what remains. This discipline prevents surprises and makes your Scottsdale bookkeeping services straightforward because everything is documented and current. A bookkeeper familiar with construction can help you set up the tracking so progress billing becomes routine rather than a scramble at each milestone.