An Introduction to Progress Invoicing

Progress Invoicing (also called progress billing, percentage of completion billing, or partial billing) involves billing from an estimate (or Schedule of Values) over the course of time and could be considered a type of installment billing.  Progress billing is commonly associated with the construction industry; however, it is common in other industries as well.

progress invoicingQuickBooks® Pro, Premier, and Enterprise editions all offer several options for invoicing and a Progress Invoicing function is also available.

Some projects or jobs will require only a single invoice, others will require two invoices, others may require three invoices (one at the start of the job, one when you are 50% done, and the other when you are finished), other projects might require that you submit monthly progress invoices over the course of months or even years.

Typically, if you take on a job that you will have finished at the end of 30 days, you might only want to create a single invoice, unless retention or retainage is held for some reason, in which case you will have to create two invoices.

When your scope of work on the project will span one or more months, then you will want to consider progress billing.  When you generate progress billings, you will bill ONLY for the work that you have completed and the materials that you have used or installed – occasionally you will also be allowed to bill for materials that you have at the jobsite but have not yet used.

If you are a subcontractor, sometimes the General Contractor will have a form that they insist you use (instead of your own invoice form), other times they may insist that you submit your progress billing on an industry standard billing form – such as the AIA G-702 & G-703 forms developed by the American Institute of Architects – or similar plain paper forms containing the same information.

Make sure that you submit your billings on the forms that they want or they will probably reject your invoice; mail it back to you and tell you to resubmit your billing CORRECTLY.  Usually having to resubmit a bill means that you have to wait until next month to submit the corrected bill.

Always try to get your invoice paperwork right the first time and include any proper releases that are required.  Sometimes the General Contractor will hold up everyone’s invoices —-even if only one contractor has submitted their billing incorrectly.

4 thoughts on “An Introduction to Progress Invoicing

  • It all depends on if your business is cash or accrual based.

    You create an Estimate for $10,000.00 in January – because the Estimate is non-posting you don’t see that $10,000.00 posted anywhere.

    In February, you create a Progress Invoice for $2,000.00 – that money then hits your A/R on your Balance Sheet and Open Invoice Reports WHEN the invoice has been created.

    IF your business is using Accrual basis (income recognized when billed) the $2,000.00 shows up in income on your Profit & Loss Reports for the month of February.

    If your business is cash based (income recognized when paid) then the $ won’t be recognized as income on your Profit & Loss Report until your customer pays it.

  • Kiri

    I would like to know the answer to Robin’s question as we do project invoicing as well, and will find this function useful.

  • Hi Robin
    The Estimate is always a non-posting item – meaning that the total contract amount doesn’t hit your Accounts Receivable when you create it.

    As you create Progress Invoices, the dollar amounts for each Progress Invoice automatically go into your A/R.

    I hope this helps – if not please comment back with additional questions.

  • Robin

    Question though – will the project income appear all against the month the project was signed? or will it appear as the additional % invoices are created and billed?

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