A $20,000 renovation can mean weeks of paying for materials, labor, and equipment before the final invoice goes out.
For small contractors, covering those costs while waiting for the customer to pay can put serious pressure on cash flow.
That’s where progress invoicing comes in.
Instead of waiting until the job is finished, you bill customers in stages as work progresses. This helps keep money coming in over the course of a project rather than relying on one large payment at the end.
Here’s how to set up a progress payment schedule, calculate each invoice, and track what customers still owe.
How Does Progress Invoicing Work?
The process starts with an agreed project price and a payment schedule.
Before work begins, you and the customer decide which stages will trigger an invoice and how much will be due at each one.
As the job progresses, you document the work, send the appropriate invoice, and record payment.
The main advantage is that you don’t have to wait until the end of a long project to start collecting what you’re owed.
And payment delays are a real concern in construction.
According to Billd’s 2026 National Subcontractor Market Report, 83% of surveyed commercial subcontractor owners were worried about cash flow. Subcontractors also reported waiting an average of 51 days to receive payment after submitting a pay application.
The problem is that job expenses can come due long before customer payments arrive.
Progress invoicing helps reduce that gap, provided customers pay in accordance with the agreed terms.
Three Types of Progress Invoicing
Not every project needs the same billing schedule.
| Billing method | How it works | Best for |
| Milestone billing | Invoice after specific phases of work are completed | Bathroom remodels, kitchen renovations, roofing |
| Percentage-of-completion billing | Invoice based on the value or percentage of work completed | Larger renovations and construction projects. |
| Scheduled billing | Invoice weekly or monthly for work completed during that period | Longer projects with ongoing labor. |
Milestone billing is often the simplest option for smaller contractors because customers can connect each payment to visible progress.
For example, a flooring contractor might invoice after subfloor preparation, flooring installation, and final finishing.
Percentage-of-completion billing can work better when several trades are working simultaneously, and progress doesn’t fall neatly into separate phases.
Scheduled billing can help with ongoing labor, but an invoice date alone doesn’t necessarily justify payment. The work billed must match the agreement and any applicable legal restrictions.
Related: Retainers, Deposits, and Draw Schedules: Choosing the Right Payment Setup
How to Create a Progress Invoicing Schedule
A good payment schedule answers three questions:
- What work needs to be completed?
- How much will the customer owe at that stage?
- When is the payment due?
Let’s work through an example.
Example: $20,000 Bathroom Renovation
Suppose you’ve agreed to renovate a customer’s bathroom for $20,000.
The job includes demolition, plumbing and electrical rough-ins, waterproofing, tile, fixture installation, and finishing.
Instead of requesting the full amount at the end, you agree on four payments.
| Payment stage | Percentage | Amount |
| Initial deposit before work begins | 5% | $1,000 |
| After demolition and rough-ins are completed | 25% | $5,000 |
| After waterproofing, tile, and fixtures are installed | 35% | $7,000 |
| After completion and agreed punch-list work | 35% | $7,000 |
| Total | 100% | $20,000 |
By the time you’ve completed the third stage, you could have collected $13,000, assuming the customer has paid each installment.
That money can help cover labor and materials while you’re finishing the project.
The important part is making each stage specific enough that both you and the customer understand when payment becomes due.
How to Calculate Each Progress Invoice
Calculating a progress invoice depends on how you’ve agreed to bill the customer.
For milestone payments, multiply the total project price by the percentage due at that stage.
For example, if you’re charging 25% of a $20,000 bathroom renovation:
$20,000 × 25% = $5,000.
Once that milestone is complete, you send an invoice for $5,000.
For percentage-of-completion billing, you calculate the percentage of work completed and subtract what you’ve already invoiced.
Let’s say you’re working on the same $20,000 project. You’ve completed 60% of the work, worth $12,000, and have already invoiced $5,000.
Your next invoice would be:
$12,000 − $5,000 = $7,000.
Invoiced doesn’t mean paid. If a customer hasn’t paid an earlier invoice, track that outstanding balance separately rather than charging them for the same work twice.
How to Create a Progress Invoice in 5 Steps
Once you’ve agreed on the payment schedule, follow this process each time a milestone is reached.
1. Review the Contract and Payment Schedule
Before billing, check which stage has been completed and what amount was agreed.
For the bathroom renovation, the second progress invoice is due after the waterproofing, tiling, and the installation of specified fixtures are finished.
Confirm the work matches the contract before requesting payment.
2. Document the Completed Work
Keep a record of what you’ve finished.
Depending on the project, that might include job photos, inspection records, material deliveries, or notes about completed tasks.
This is particularly useful when work will be concealed later, such as plumbing behind a wall or electrical wiring before drywall installation.
Supporting records make it easier to answer questions about the invoice.
3. Calculate the Amount Due
Use the payment schedule to determine the current invoice amount.
Check:
- What has already been invoiced
- What the customer has actually paid
- Whether any approved changes affect the amount due
- Whether retainage or other contractual deductions apply.
This helps prevent duplicate charges and unexpected final balances.
4. Create and Send the Invoice
Your progress invoice should include the normal billing information, along with details about the project stage.
Include:
- Business and customer information
- Invoice number, date, and payment due date
- Project name and address
- Original contract amount
- Description of completed work
- Current milestone payment
- Previously invoiced and paid amounts
- Remaining contract balance
- Applicable taxes and accepted payment methods.
Don’t just label the charge “Progress Payment 3” without explaining what the customer is paying for.
5. Record Payment and Update the Remaining Balance
Once the customer pays, update your records.
Keep track of the difference between what’s been billed and what’s been collected.
Sending a $7,000 invoice doesn’t mean you have $7,000 available to pay suppliers or employees.
Related: How to Write a Construction Invoice (With Free Template)
Progress Invoice Example: What Should It Look Like?
Let’s return to the $20,000 bathroom renovation.
The customer has already paid:
- Initial deposit: $1,000
- First progress invoice after demolition and rough-ins: $5,000.
You’ve now completed the tile and fixture installation milestone, so it’s time to send the next invoice for $7,000.
Here’s how the billing summary could look.
Sample Progress Invoice
Invoice: #1003
Project: Bathroom Renovation
Customer: [Customer Name]
Invoice date: [Date]
Payment due: [Date]
| Description | Amount |
| Original contract value | $20,000 |
| Initial deposit received | $1,000 |
| First progress invoice paid | $5,000 |
| Current milestone: Waterproofing, tile, and fixture installation completed | $7,000 |
| Amount due on this invoice | $7,000 |
| Total invoiced to date, including this invoice | $13,000 |
| Remaining contract amount not yet invoiced | $7,000 |
The customer can see that you’ve already received $6,000, the current payment is $7,000, and $7,000 remains to be invoiced after this stage.
If they pay the current invoice in full, the total collected becomes $13,000.
That makes the remaining $7,000 final payment easy to understand.
What Happens When the Project Price Changes?
Construction jobs rarely go exactly as planned.
Suppose you discover damaged subflooring during the bathroom renovation. The customer approves another $1,500 for its replacement.
Your original $20,000 agreement is now worth $21,500.
Before doing the extra work, document the new scope, price, and any change to the completion date or payment schedule.
Updated Progress Payment Example
Assume the customer has paid the first three installments totaling $13,000, and you’ve agreed to include the extra work in the final payment.
| Description | Amount |
| Original contract | $20,000 |
| Approved subfloor repair change order | +$1,500 |
| Revised contract value | $21,500 |
| Previous payments received | -$13,000 |
| Remaining balance | $8,500 |
The final invoice becomes $8,500 once all work covered by that payment has been completed.
This avoids leaving the additional work off the bill or charging it twice.
If the approved change needs to be billed at an earlier milestone, update the schedule accordingly and obtain the necessary agreement before proceeding.
Related: How to Charge for Extra Work Without the Argument
How Do Deposits and Retainage Affect Progress Billing?
Deposits, progress payments, and retainage all affect the project balance, but they serve different purposes.
Deposits are generally collected before work begins and credited toward the agreed project price. The amount you can collect may be restricted by state law.
Progress payments are installments billed during the project according to the agreed contract schedule and work performed.
Retainage is a portion of payment withheld until a later stage of the contract, often at substantial completion or final closeout. It’s more common in larger commercial projects and subcontracting arrangements.
For example, if a contract permits 10% retainage on a $5,000 progress payment, $500 may be withheld and $4,500 payable for that stage. The withheld $500 must be tracked for later release under the contract and applicable law.
Check Your State’s Progress Payment Rules
Progress billing requirements vary by location and contract type.
For example, the California Contractors State License Board says that for covered home improvement contracts:
- The standard down payment limit is $1,000 or 10% of the contract price, whichever is less.
- Contracts must include a detailed written progress payment schedule.
- Progress payments cannot exceed the value of work performed, apart from the permitted down payment.
- Changes to the contract must be documented through signed written change orders.
That’s why you shouldn’t copy a deposit percentage or billing schedule from another contractor without checking local requirements.
Common Progress Invoicing Mistakes to Avoid
Progress invoicing can make payments easier to manage, but only if your records stay accurate.
Watch for these common mistakes:
| Mistake | Better approach |
| Vague payment milestones | Describe the specific work that triggers payment. |
| Billing twice for completed work | Track the cumulative amounts invoiced. |
| Treating an unpaid invoice as collected cash | Record invoice status and actual payment separately. |
| Forgetting approved extra work | Update the contract value and remaining schedule. |
| Requesting payments before the agreed work is completed | Match billing to the contract and legal requirements. |
| Waiting weeks to invoice after a milestone | Send the invoice when the agreed billing condition is met. |
Make Progress Invoicing Easier with Joist
You’ve got enough to manage a long job without rebuilding invoices, chasing payment details, and trying to remember which installments have been paid.
Joist helps keep your estimates, invoices, and payments connected.
With Joist’s estimating tools, you can build a detailed estimate and get customer approval before work begins.
You can also use Joist Payments to set up a payment schedule using fixed amounts or percentages, collect deposits, and track payments.
And you can send professional invoices from your phone, see which invoices are outstanding, and give customers convenient ways to pay.
That means less time managing paperwork and more time keeping the job moving.
Ready to simplify payments on your next project?
Create your estimate, agree on the payment schedule, and collect payments as the work progresses.
FAQs About Progress Invoicing for Contractors
What is the difference between progress invoicing and a regular invoice?
How do you calculate a progress invoice?
Always check the contract and account for approved changes, deposits, and retainage where applicable.
Can you send progress invoices every month?
Does a deposit count toward progress payments?
Article Sources
- Billd, 2026 National Subcontractor Market Report, 2026.
- California Contractors State License Board (CSLB), Home Improvement Contract Requirements, accessed October 20, 2026.
