Progress billing is a billing method used in construction projects where payments are made incrementally based on the completion of specific milestones or stages of the project. Instead of billing for the entire project at the end, the contractor invoices the client for the work completed up to a certain point. Any changes to the project are done through Change Orders that are added to the contract and billed by completions percentage the same as other contract items.
Once you have created the Schedule of Values for your Contract Project, you are now ready to create your first Pay Application
Create a Pay Application (Progress Bill)
While in a Contract Project, click the + Add To Project buttons and select Add Pay Application.
Completed the fields in the top section.
- Add an invoice number (Unless auto-generated)
- The Pay Application number is automatically assigned to indicate the billing sequence of each application. If it’s the first one, it will be labeled as #1 and added to the end of your Invoice number. For instance, if your Invoice number is 78234, the final invoice number will be 78234-01. All subsequent Pay Applications in the same series will use the same prefix followed by the assigned Pay Application number.
- Retainage: This field will automatically populate with the retainage amount set in the project setup. This amount can be edited in this field. For more about Retainage, see below.
- Select the period ending date
- Input Invoice Date and Payment Terms / Due Date.
Invoice Details
You will see that the project’s Schedule of Values and any Change Orders are displayed. Each item will display the following:
- Schedule Value: This is the total amount for this item.
- Previous Application: this shows the percentage and dollar amount that has already been billed through previous payment applications
- Completion %: This is where you will enter the new TOTAL percentage completed for this item. Note that you will be billing this percentage minus the previous applications. For example, if you have already billed for 30% through previous pay applications, and enter 50% in the completion percentage, you will be invoicing for 20% of the scheduled value.
- This Period: This field is the dollar amount being billed during this period. This will automatically calculate when the Completion % is entered. However, you can enter a specific dollar amount in this field and the Completion % will be adjusted.
- Stored Material: Enter any stored material cost for this item. For more information on stored material, see below.
- Balance to Finish: This is the new remaining balance of the original the items Scheduled Value.
- Retainage: The total amount that has been retained for this item through all pay applications. You may select the “Bill” check box to add the retainage amount to this invoice. For more about Retainage, see below.
The retained amount is usually released to the contractor once the project is completed and all of the required milestones have been met, such as the completion of certain stages of construction or the satisfactory completion of any necessary inspections. The purpose of the retention is to provide an incentive for the contractor to complete the project on time and to the required standard, as the final payment is only made once all of the work has been completed satisfactorily.
The percentage of the progress bill retention can vary depending on the contract and the parties involved, but it is typically between 5% and 10% of the total contract value. The retained amount is held in an escrow account by the owner or client, and it is typically released to the contractor after a specified period of time following the completion of the project.
In the context of a Progress Invoice, stored materials may be listed as a separate line item in the schedule of values or as a part of the total cost of the project. The purpose of including stored materials on a Progress Invoice is to allow the contractor to be reimbursed for the cost of these materials as they are purchased and delivered, even though they have not yet been incorporated into the project.
The contractor may request payment for stored materials by submitting a pay application that includes documentation of the cost of the materials and proof of their delivery to the site. Once the owner or client has approved the pay application, the contractor will receive payment for the stored materials, which can help to alleviate cash flow issues and ensure that the project can proceed smoothly.
Send Invoice
After finishing your details, you may send the Progress Invoice to your client, which will be in either a standard Progress Invoice format or an AIA Invoice format, depending on the specifications you set up for the project setup screen.
Option 1: Send Email
- To send an invoice to the customer, select Save & Send in the bottom right corner
- Select from the list of customer contacts associated with this project, to whom you want to send this invoice. You can also add additional email addresses if desired.
- Include a message that will show in the customer’s invoice email.
- Click Send
From the Save and Send pop-up, you may also click the Preview button to view the customer-side invoice portal.
Option 2: Get Link
- To send an invoice to the customer, select Save & Link in the bottom right corner
- A pop-up will appear with a URL directly to the customer-side invoice portal. Click Copy Link to copy the URL to your clipboard
- You can now past the link in any communication to your clients.
Sync Invoice to QuickBooks
For accounts connected to QuickBooks Online
Once you have completed your invoice and are ready to sync to QuickBooks, click the QB Sync button on the top right of the invoice screen.
