What is progress billing?
By Diljit Ramachandran, founder of The Invoice Generator. Published Oct 26, 2026.
Progress billing means invoicing a project in instalments as work is completed, by agreed stage or by the share of work finished, instead of one bill at the end. Each invoice covers the work done since the last one, and the terms are agreed in the contract beforehand.
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How does progress billing work?
It follows the milestones in the contract or statement of work (see the example):
- Agree the stages and the amount for each.
- Finish a stage and tell the client.
- Send an invoice for that stage.
- The client pays under the payment terms.
- Repeat until the project is complete.
What does an example look like?
A 12,000 building job in three stages:
| Stage | Invoice | Running total |
|---|---|---|
| Foundations | 4,000 | 4,000 |
| Frame and roof | 5,000 | 9,000 |
| Finish | 3,000 | 12,000 |
What is retention?
Retention is a part of each payment that the client holds back until the work is finished. Some contracts use it; rules vary by place, so put it in the contract.
Why use it?
It keeps cash coming in during long projects and gives the client a clear point to check the work. A construction invoice shows the stage on each bill, and a billing cycle can replace stages for ongoing work.
Questions
- What is the difference between progress billing and milestone billing?
- Milestone billing invoices at set stages. Progress billing can also bill the share of work finished since the last invoice.
- Is progress billing the same as a deposit?
- Not the same. A deposit is paid before work starts, and progress invoices follow completed work, though a contract can use both.
Keep every document in one place
- A free account saves a copy of each invoice, remembers your clients and items, and shows what is paid and overdue.
- Pro numbers your invoices for you, emails payment reminders, and repeats the ones you send every month.
Drafted with AI assistance from public sources and our own tool, and published by Diljit Ramachandran. It has not been checked by an accountant. It is general information, not tax or legal advice. Rules differ by place; check with an accountant or your local tax office.