What Is a Progress Invoice?
The kitchen remodel is priced at $120,000. The cabinets go in on week 9, and the contractor's crew needs paying in week 9, not in week 16 when the job wraps. That gap, between when the costs land and when a final invoice would pay, is what a progress invoice exists to close.
What is a progress invoice, exactly?
A progress invoice bills for work completed so far on an unfinished job. Instead of one invoice at the end, the contractor invoices in stages as the work gets done, and each invoice is cumulative: it shows the contract amount, what has been billed to date, the current amount due, retainage held back, and the balance remaining. The client pays for verified progress, not promises.
Here is the same $120,000 remodel on a typical milestone schedule:
| Milestone | Share | Invoice amount |
|---|---|---|
| Deposit, before work starts | 20% | $24,000 |
| Demolition and framing complete | 25% | $30,000 |
| Plumbing, electrical, insulation done | 25% | $30,000 |
| Drywall and finishes | 20% | $24,000 |
| Final walkthrough and punch list | 10% | $12,000 |
Now add retainage, the percentage the client holds back from each payment until the job is substantially complete. Say the contract holds 10 percent. Invoice 2 bills $30,000 for the framing milestone. The client keeps $3,000 as retainage and pays $27,000. Invoice 3 arrives later and shows the running totals: contract $120,000, previously billed $54,000, current amount $30,000, cumulative billed $84,000, retainage held $6,000, balance remaining $36,000. Every number is checkable. That is the whole point of the format.
The three ways contractors bill progress
Milestone billing is what the table above shows: agreed payment points tied to visible stages. It is the most common method for residential and small commercial work, and industry write-ups put typical jobs at 4 to 6 milestones. The client knows exactly what each payment buys, and you know when money arrives.
Percentage of completion bills an agreed share of the contract as the overall job advances: 45 percent complete means 45 percent of the contract value, minus retainage and minus what was already billed. It is the standard on larger commercial jobs, often on formal AIA G702/G703 pay applications. The catch is documentation. When a task sits at 70 versus 75 percent complete, someone has to prove it, which is why this method needs photos, logs, and sign-offs.
Unit pricing works for repetitive work: $150 per square foot of flooring, $200 per window installed. You bill per unit completed. It is transparent and hard to argue about, because 15 installed windows at $200 each is $3,000 and there is nothing to interpret.
The mistake that costs contractors the final 10 percent
Retainage is the line item contractors lose track of. It sits on the invoice, small and quiet, and then the job ends, everyone moves on, and the held-back money never gets collected. On a $120,000 job at 10 percent, that is $12,000 left on the table. The fix is boring: a retainage column on every invoice and a final invoice that bills the retainage release explicitly. The contractor invoice generator on this site builds that column in automatically, so the final draw does not depend on your memory.
Frequently asked questions
What is the difference between a progress invoice and a regular invoice?
A regular invoice bills a finished sale: work done, amount due. A progress invoice bills a slice of unfinished work, and every one after the first is cumulative, showing contract amount, billed to date, current amount, retainage, and balance remaining.
How do you calculate a progress invoice?
Take the percentage complete (or the milestone value) times the contract value, subtract retainage, then subtract what was already billed. Each invoice bills only the new work since the last one.
What is retainage on a progress invoice?
Retainage is a percentage, usually 5 to 10 percent, that the client holds back from each progress payment until the job is substantially complete. It protects the owner; tracking it properly means you actually collect it at the end.
Should a progress invoice show previous payments?
Yes. Every progress invoice should show the original contract amount, approved change orders, amount billed to date, the current invoice amount, retainage held, and the balance remaining. Without the cumulative numbers the client cannot verify what they are paying for.
Can you use progress billing on small residential jobs?
Yes. Milestone billing is the common residential version: 4 to 6 payment points tied to visible stages like demolition, framing, rough-ins, finishes, and final walkthrough. It keeps the job funding itself instead of draining your account.
Related reading: How to Invoice for Change Orders Without Starting a Fight · How Much Deposit Can a Contractor Ask For? · What Payment Terms Should a Contractor Put on an Invoice? · Contractor Invoice vs Estimate vs Quote