Progress Billing

What is Progress Billing?

Progress billing invoices clients based on the percentage of work completed at a given point in time. Unlike fixed milestone billing where payment triggers at specific deliverables, progress billing calculates payment as a proportion of total contract value based on work performed.

In construction, progress billing typically occurs monthly through draw requests. The contractor estimates percentage complete, applies it to the contract value, deducts previous billings and retainage, and submits the net amount for approval.

Progress billing creates continuous cash flow rather than lump-sum payments, but the timing gap between work performed and payment received remains. Work done in weeks one through four of a month may not generate cash until week six or seven after draw approval and payment processing. Progress billing is closely tied to draw schedules in commercial construction. Treating submitted draws as collected cash is the most common mistake in construction cash planning. Cash arrives only after approval, retainage deduction, and deposit processing are complete.

Why it matters

Progress billing spreads revenue across a project timeline but does not eliminate the cash gap between performing work and collecting payment. Understanding this gap is essential for construction and project-based businesses.

Formula

Billable Amount = (Percent Complete × Contract Value) - Previous Billings - Retainage

Example

How RunwayCal helps

Common mistakes

• 1Recording progress billing as cash when the draw is submitted, not when paid
• 2Overstating percent complete to accelerate billing
• 3Not deducting retainage from progress billing calculations