Progress billing means invoicing a job in stages as the work gets done, instead of sending one invoice at the end. You agree a payment schedule in the contract, such as a deposit, a payment at rough-in and a final payment at completion, and send a progress invoice each time a stage is finished. Each invoice shows the contract total, what has already been billed and what is left.
For a small crew, progress billing keeps cash coming in while you are paying for materials and labor. This guide works through an $18,000 bathroom remodel from deposit to final invoice, including a change order, and shows what to write on each progress invoice.
Rules last checked: October 2026. This is general information, not legal advice. Rules vary by state and country.
What is progress billing?
Progress billing is a way of splitting one contract price into several invoices, each tied to a stage of the work. The client pays for what has been done so far, so you are not funding materials and wages for the whole job out of your own account.
There are two common ways to set the stages:
| Method | How each invoice is worked out | Best for |
|---|---|---|
| Milestone billing | A fixed amount is due when a named stage is finished, such as "rough-in complete" | Remodels, repairs and most jobs a 2 to 5 person crew takes on |
| Percentage of completion | You bill the percentage of each line item finished since the last invoice | Larger commercial jobs with a detailed schedule of values |
Milestone billing is easier to explain to a homeowner and easier to check. Everyone can see whether the tile is in. The rest of this guide uses milestones.
How is progress billing different from AIA billing?
AIA billing is a formal kind of progress billing used on commercial projects. The contractor submits a pay application on the American Institute of Architects' G702 and G703 forms, listing every line of the schedule of values with its percent complete, the amount held back and the amount due. General contractors, owners and lenders on commercial jobs often require it.
Most residential clients never ask for a pay application. A clear progress invoice with the stage, the amount and a running contract balance does the same job for a homeowner. If a lender or a general contractor sends you their own pay application form, fill in theirs.
What does a progress billing schedule look like?
Here is a payment schedule for an $18,000 bathroom remodel, written into the contract before work starts:
| Payment | Due when | Share | Amount |
|---|---|---|---|
| Deposit | Contract signed, before materials are ordered | 10% | $1,800 |
| Draw 1: rough-in | Demo done, rough plumbing and electrical passed inspection | 45% | $8,100 |
| Draw 2: completion | Tile, fixtures and trim installed, final walkthrough done | 45% | $8,100 |
| Total | 100% | $18,000 |
Three things make a schedule like this work:
- Each stage is something the client can see. "Rough-in passed inspection" is easy to confirm. "Week 3" is not.
- The payment matches the work done. A draw that runs far ahead of the work leaves the client exposed, and in some states it is against the law.
- The amounts are written in dollars. Percentages alone leave room for arguments about what they were a percentage of.
Are there limits on deposits and progress payments?
Some states set them for home improvement work. In California, the Contractors State License Board says the down payment on a home improvement contract may not exceed $1,000 or 10 percent of the contract price, whichever is less. The contract has to list each progress payment with the work it covers, and the board states that it is against the law to collect payment for work not yet completed or materials not yet delivered.
On the $18,000 job above, a California contractor could take a deposit of $1,000 at most. The other $800 would move into draw 1. Check your own state's contractor licensing board before you set a schedule, because rules and exemptions differ.
How do you send a progress invoice?
Send one invoice per stage, on the day the stage is finished. Each progress invoice should show:
- The stage. Put it in the first line, such as "Draw 1 of 2: rough-in complete."
- The contract reference. The contract or quote number and the job address.
- The amount for this stage only. Bill the draw from the schedule, not the remaining balance.
- A running contract balance. The contract total, what has been billed before, this invoice and what is left after it.
- A due date. Short terms suit draws, because the work they pay for is already done. Our guide to due upon receipt and net 7 and net 10 covers the common choices.
Here is draw 1 from the bathroom remodel, sent once the inspection has passed:
Invoice INV-0142 · Job: bathroom remodel, 14 Elm Street · Contract Q-0038
Draw 1 of 2: rough-in complete (demo, rough plumbing and electrical, inspection passed June 18): $8,100
Contract total: $18,000 · Previously billed: $1,800 (deposit, paid May 30) · This invoice: $8,100 · Remaining after this invoice: $8,100
Payment due: June 25
The running balance answers the client's first question before they ask it. It also gives you and the client the same record if anyone disputes a payment later. The rest of the invoice follows the usual layout, which our guide on how to write an invoice walks through field by field.
How do you handle a change order?
Treat a change order as its own small quote that the client approves before you do the extra work. Halfway through the remodel, the homeowner asks for a heated floor. You price it at $1,450 for the mat, thermostat and electrician time, send it as quote Q-0041, and wait for a yes in writing.
Once it is approved, you have two ways to bill it:
| Option | How it works | When to use it |
|---|---|---|
| Add it to the next draw | The approved change order becomes its own line on the next progress invoice | Small changes finished in the same stage |
| Invoice it separately | The change order gets its own invoice, due when that work is done | Larger changes, or when the client pays for extras from a different budget |
Either way, the line should name the change order and the date it was approved, such as "CO-01: heated floor (approved July 2)." Never fold it into an existing draw amount. A draw that suddenly reads $9,550 instead of $8,100, with no explanation, is the invoice that gets queried.
Our guide to the difference between a quote, an invoice and a receipt covers why the approval belongs on a quote, before the work starts.
What does the final invoice look like?
The final progress invoice bills the last stage, adds any approved change orders, and brings the remaining balance to zero:
| Line | Amount |
|---|---|
| Draw 2 of 2: completion (tile, fixtures, final walkthrough July 20) | $8,100 |
| CO-01: heated floor (approved July 2) | $1,450 |
| This invoice | $9,550 |
| Contract summary | Amount |
|---|---|
| Original contract | $18,000 |
| Approved change orders | $1,450 |
| Revised contract total | $19,450 |
| Previously billed (deposit and draw 1) | $9,900 |
| This invoice | $9,550 |
| Remaining after this invoice | $0 |
When the summary reaches $0, the client can see the job is fully billed. If it does not, something was missed, and it is better to find that before the client does. For a job with only a deposit and one final payment, our guide on how to invoice a deposit works through both invoices.
What is retainage, and how do you bill it?
Retainage, also called retention, is a share of each progress payment that the client holds back until the job is finished. It gives the client security that punch-list work gets done. The contract sets the amount and when it is released. It is common on commercial work and rare on residential remodels.
If your contract includes it, bill each draw minus the retained amount, and keep a running total of what has been held back. When the retainage is released, send it as its own invoice that names the contract and the draws it came from.
How does SolidInvoice handle progress billing?
SolidInvoice handles the invoices, and you set the schedule. Price the job as a quote. When the client approves it, mark it accepted, and SolidInvoice creates a draft invoice with every line from the quote. For the draws, send one invoice per stage so each has its own amount, due date and pay link. Clients pay each draw by card or PayPal from the emailed invoice, and on Pro and Business plans, automated reminders follow up on any draw that goes overdue.
A deposit can also be recorded as a partial payment against an invoice, including a check or ACH transfer. The invoice's pay link then charges only the remaining balance. That suits a job with one invoice and a deposit. For three or more stages, separate invoices keep each draw's amount and due date clear.
SolidInvoice does not produce AIA pay applications, track job costs or calculate retainage. See how it fits a crew on the invoicing for contractors and invoicing for electricians pages, or how quotes work on the estimate software page.
Progress billing FAQ
What is progress billing?
Progress billing is invoicing a job in stages as the work gets done, instead of one invoice at the end. The contract sets a payment schedule, such as a deposit, a payment at rough-in and a final payment at completion. You send a progress invoice as each stage is finished.
What is the difference between a progress invoice and a final invoice?
A progress invoice bills one stage of a job and leaves a balance on the contract. The final invoice bills the last stage plus any approved change orders and brings the remaining contract balance to zero. Both should show the contract total, what was billed before and what is left.
How much of a deposit can a contractor ask for?
It depends on your contract and your state. Some states cap deposits on home improvement work. In California, the down payment may not exceed $1,000 or 10 percent of the contract price, whichever is less. Check your state's contractor licensing board before you set a deposit.
How do you invoice a change order?
Send the change order as its own quote and get the client's written approval before doing the work. Then bill it as a separate line on the next progress invoice, or as its own invoice. Name the change order and the approval date on the line so the client can match it.
Is progress billing the same as AIA billing?
No. AIA billing is a formal type of progress billing used on commercial projects, with pay applications on the G702 and G703 forms. Most residential jobs use plain progress invoices that show the stage, the amount and a running contract balance.
What is retainage in progress billing?
Retainage is a share of each progress payment that the client holds back until the job is finished, as security for punch-list work. The contract sets the amount and the release date. When it is released, bill the total held back as its own invoice.
Bill each stage the day it is done, with a pay link on every draw. Start a free 14-day trial of SolidInvoice.