When, How, and Why to Use a Progress Invoice

1. Set payment terms

Progress invoicing requires some initial discussion with your client. You both need to agree on: 

• When the client will be billed: For example, every 30 days, a fixed percentage like 25%, or after certain project milestones are reached, like when you finish drywalling a client’s basement before painting or installing baseboards. 
• How much the payments will be for: Will you invoice for a set amount each month or a total due based on the work completed since the last bill? 
• Whether an initial deposit is required: Like an upfront fee to cover material and supply costs. 
• When payments are due: Does the client need to pay you immediately upon receipt of the invoice, and will work be paused until they do? 
• Whether big costs have to be covered upfront: For large purchases, like appliances or luxury building materials, you may not have the means to cover costs out of pocket before a client reimburses you through an invoice. In this case, you may want them to pay for these items themselves before continuing the work. 

If you choose to implement progress invoicing based on completed milestones, you’ll also need to discuss what defines “completion” for each stage. For example, would a plumbing installation be considered finished when it’s roughed in or only after it’s been inspected and approved? 

Being on the same page about payment terms is what ensures progress invoicing goes smoothly.

2. Track progress

Next, you need to pay close attention to progress so you know when a milestone has been met or how many billable hours to include on your invoice. 

Progress invoices need to include a detailed list of the materials, labor, and supplies a client is being charged for, as well as their associated costs. 

That makes it essential to keep an eye on what your team—including any subcontractors—does during the pre-determined intervals you and your client agree to. Especially since costs for big jobs can fluctuate based on a variety of factors, like unexpected expenses, delays, or changes in the scope of work. 

Keeping an eye on progress also ensures you can let your client know about any unanticipated price increases beforehand, so they have an opportunity to approve them or look for a more affordable option. For example, if the countertop they wanted is more than they budgeted for and you have suggestions for alternatives.

3. Create an invoice

Once you know how much to bill a client for and you’ve met a milestone or reached the end of a work period, it’s time to create a progress bill. 

Progress invoices include the same elements as standards invoices, such as: 

• An invoice date
• An invoice number
• An itemized list of each product or service and how much it costs
• The total amount due, including taxes, fees, deposits, or discounts
• A payment due date
• Your accepted payment methods
• Client details, like their name, number, and job site address
• Your business name and contact information

Some progress invoices also include the remaining balance due for the entire project. 

For example, if a client paid $5000 to date and the initial estimate was $20,000, the latest progress invoice would show a total of $15,000 due by the project’s completion. But only the amount of the current invoice, say $2500, would need to be paid by the invoice’s due date. 

READ MORE: What to include on an invoice

You can either create progress invoices manually or use invoicing software like Jobber. 

If you decide to make them by hand, you’ll need to file records of each invoice you send so you know exactly what you billed for and how much the client has paid. You’ll also have to track payments on your own, potentially stalling work and extending job timelines. 

Because progress invoicing is more complicated than invoicing for a simple, one-off job, software is usually the best option. 

That way, you can automatically record job progress, create and send detailed invoices, and facilitate online payments, keeping the job on track, preventing delays, and boosting cash flow.

4. Get paid

After you send your invoice, you need to collect payment from your customer. With progress invoicing, saving a client’s credit card information on file and charging them in pre-determined intervals is an effective option to save you both time and admin work. 

That way, you get paid on time and in full, and they don’t have to worry about a delayed payment slowing the work. 

You can also use other online payment methods, like payment platforms or customer financing to get paid faster and provide multiple options to clients so they can choose what works best for the project and their budget.

Pro Tip: Payment processing software, like Jobber, makes it easy for clients to conveniently pay their invoices as soon as they receive them so you don’t have to pause the job.

5. Send a receipt

Since progress invoicing involves multiple invoices and payments, it’s good practice to provide a receipt to the client every time they pay you. That way, they can keep track of how much they’ve paid towards the initial amount you outlined in your quote.

6. Repeat

After you’ve received a payment and are ready to start the next work period, start again from step 2 until the entire job is complete and you send a final invoice. 

READ MORE: 16 types of invoices for service businesses

1. Improve cash flow

It’s hard to cover material and supply costs upfront, especially for big jobs. Progress invoicing improves cash flow by providing the funds you need to keep the project on track while still being able to cover business costs like overhead.

2. Reduce financial risk

Asking clients to pay at intervals during ongoing jobs is much less risky than providing a single bill at the end. If that happens, and the client refuses to pay, you may have to wait a long time to recuperate any costs, if you’re able to at all. 

Progress invoices keep you from having to cover costs all on your own and make sure the client is financially invested throughout each stage of the project. And if a client doesn’t pay, you can pause the work until they do without paying for the next work period’s expenses out of pocket.

3. Make it easy for clients to budget

When a client needs a big job done, like a renovation, they may not be able to pay for it all upfront or in one lump sum at the end. Progress billing offers them a predictable and affordable budget to follow for the duration of the project, allowing them to anticipate and plan for payment amounts and due dates in advance.

4. Build trust and transparency 

A progress bill shows clients what they’re paying for at each stage of a job, keeping them informed and up-to-date about costs. This builds trust through transparency, improving your relationship and keeping you on the same page.

5. Keep better records

Because progress invoicing documents multiple invoices and payments throughout a project, it offers better records for you to refer back to. For example, if a client has a question down the road about when a specific task was completed or when a manufacturer’s warranty expires on certain materials. 

Progress invoices are also handy when disputes arise, providing you with detailed records about each phase of a job.

6. Get more clients

Progress invoicing is kind of like offering financing to customers without having to give them a loan or charge interest. Customers who can’t pay for big jobs upfront are more likely to work with contractors with flexible payment options over those who don’t. 

Making it available for costly jobs is a way to not only attract more clients but also sign bigger contracts. When you make it easy for clients to afford large projects, you gain a competitive edge that helps you stand out.

7. Boost professionalism

Providing different invoicing options based on the client and job in question positions you as an experienced and professional business owner. It demonstrates your ability to adjust your billing strategy to reflect your customer’s needs and shows you know how to handle different projects and situations. 

You can take your professionalism even further by using a CRM like Jobber to create detailed quotes, send timely invoices, and process multiple payment methods. Not only will you benefit from automations that reduce your workload, but your customers will also have a seamless experience from when they first reach out to the end of a job.