Do you run a small business or work on projects that span numerous phases or have a long timeline? Setting up a proper invoicing system will enable you to complete the project while maintaining a sufficient cash flow to pay overhead expenses.

Cash is essential for the functioning of any business. But, getting paid by consumers might be challenging, particularly if you’re working on long-term projects with lengthy billing cycles.

Cash flow problems account for most company bankruptcies, and they are a typical problem in many small to medium-sized firms across a wide range of industries, including construction, aerospace, and defense.

In these situations, progress invoicing and receiving multiple partial payments could be advantageous to both the business and the client. Let us take a deep dive into the details of progress invoicing below:

What is Progress Invoicing?

Progress invoicing is the practice of billing a client gradually for the fraction of work completed compared to the overall amount owed and receiving multiple partial payments instead of a single one. Customers are sent incremental invoices throughout a project.

Some clients may agree to delay a portion of the total sum payable until the project is completed, usually based on the quantity of work previously completed. Progress invoicing can be used to replace both upfront payments and contract-end billing.

The full amount payable under a project’s contract is broken into smaller payments and invoiced regularly when progress invoicing is used, allowing clients to “pay as they go.” Because payment schedules and keeping track of completed work may quickly become tedious, the success of a construction company is dependent on employing the proper billing practices.

How Does Progress Invoicing Work?

Some clients may agree to postpone payment of a portion of the total sum owed until the project is completed; this arrangement is frequently based on the percentage of work performed. Because payment arrangements and tracking finished work can quickly become convoluted, precise billing strategies are critical to a construction company’s success.

To compute payments, multiply the total cost of the project by its completion of the project. When objectives are met, the contractor submits a progress invoice for the completed job.

Benefits of Using Progress Invoicing

Progress billing clients are not required to pay the total project cost upfront. Furthermore, because your organization will not be able to take their money and leave without completing the job, your customers may be assured that work on the project will continue.

In addition, using progress invoices has other benefits. Let’s take a look at them below:

1. Long-Term Projects are Monitored

This payment mechanism is useful for keeping track of long-term projects since progress invoicing allows all parties to fulfill their financial and budgetary obligations over a lengthy period. If there are any difficulties or problems with the job, the contractor can use this information to execute a safety measure.

2. Industry-Wide Usage

Because of its ease of use and accessibility, the progress billing payment system is available to practically everyone. Progress invoicing applies to almost every industry, including business, construction, and financial services, as well as lone freelancers with a consistent flow of work and clients.

3. A Consistent Flow of Cash

Regularly billing your customers ensures that money is coming into your bank account. This could assist with personnel shortages, getting more materials for a project, or paying people. Progress invoicing reduces cash flow issues.

4. Prevents Advance Payments

Depending on the nature of the project, some projects may require considerable up-front payments from clients, making organizational goals more difficult to attain. Customers who use process billing can begin using the service they require right away without having to make a large upfront payment. It also deletes the need to calculate accurate overhead costs.

5. Helps Pay for Expenses

If there was only one payment at the start, it may be more difficult for the corporation to meet unforeseen overhead costs. The contractor may be better able to address any immediate needs, such as the need to refill resources, supplies, and tools, as a result of progress billing, which allows for incremental payments throughout the project.

6. Establishes Expectations

Progress billings might benefit both parties by indicating the financial expectations for the customer’s payment amounts and due dates. As a result, there will be less confusion in the future because everyone is aware of and agrees with the original contract.

7. Progress Invoices Estimates Changes

Progress billing is a useful strategy that enables the contractor to account for project changes and other factors that may affect the overall cost of the project according to the original contract. As a result, you can quickly assess the additional costs of any project adjustments and present them to the client for compliance and financial evaluation.

8. Divides Huge Payments

Huge payments are usually stored in large accounts, but progress invoicing allows clients to better plan for this significant expense. The contractor or firm also benefits because they have more financial flexibility. After all, payments from these accounts are not delayed for as long. It lets you manage the basic elements of design projects like the balance paid, cost changes, etc. after specific milestones are achieved under an office building.

4 Important Steps to Use Progress Invoicing

Here are four steps to help you get started with progress invoice examples for easy project management:


1. Create a Value Schedule

On the original contract, the value schedule lists the project tasks and the costs associated with them. A value schedule provides a consistent approach to organizing project tasks and phases for consumers and suppliers. Clients and contractors can also agree on the scope of the project, key milestones, and payment arrangements more easily with progress invoicing. Set up a meeting with the client to go over the initial contract terms and negotiate a price. This is the total invoiced amount for the entire project. At this stage, the payment frequency, mode of transmission, and other fundamental billing criteria can all be defined.

2. Define Progress and Payment Timeline

From conception to completion, divide your project into percentage-based phases. List any additional time, supplies, knowledge, or resources needed to complete each level. Following that, the payment schedule considers these factors. The contract should specify the project milestones that will trigger payments, the percentage for each milestone, and the total of each progress invoicing payment.

3. Commence the Project

Now that the project’s scope, milestones, and cost have been established, the contractor and customer can work together to draught the agreement. As the agreement’s foundation, these components must be well-considered and accurate. The Contractor completes the specified work by the deadline to meet the contract’s milestones. When you’ve identified each project milestone, assign it a percentage of progress.

4. Issue the Progress Billing Invoices

Progress bills can be sent as soon as the project begins. When a milestone is reached, the contractor applies the completed project activities and prepares a progress invoice for the amount of project completion. The consumer sends the money, less any retainage amounts. This must be completed by the invoice’s due date to avoid termination due to late payments.

What is Included in a Progress Invoice?

After you’ve agreed on a strategy, you can create and accept a project timeline. This entails segmenting the activity into manageable chunks and calculating the people, materials, skills, and time required for each phase.

Progress invoicing generally provides the clearest evidence when features that the contractor and the customer agree on before any type of work begins are included. This will vary depending on the nature of the project and the available budget.

The following are some often-mentioned items:

  • This is the expected final cost of the project. There may be built-in incentives, such as completing the assignment on time or under budget.
  • The total sum paid to date reflects the full payment made by the client for the project.
  • The percentage of the project that had finished and billed is represented by the project completed percentage.
  • This section details any authorized changes and price adjustments, as well as any approved change orders that have an impact on the project’s cost.
  • The remaining balance is the amount owed by the client to the project. Any outstanding work, the current invoice balance, and any past-due or unpaid invoices are all included.

Example of Progressive Invoicing

Many businesses use progress invoices because of their lengthy completion times. Consider how a construction company might make use of progress invoicing for this progress invoice example.

Prices, contract milestones, and other parameters are mutually agreed upon, and work begins following the establishment of payment terms.

After the foundation is laid, the building company approaches the client for the initial billing session. This procedure is performed for each set level of advancement.

This example depicts how a progress billing invoice appears to businesses. However, keep in mind that, to handle the project’s specific conditions, each template or sample must be customized to the needs of a specific organization.

Manage Progress Invoicing With Moon Invoice

Businesses utilize progress invoicing to bill clients for project components that have been completed. Moon Invoice, the powerful invoicing software allows you to invoice consumers for partial payments rather than seeking full pay at the start of a project. Add things from the initial estimate to the progress invoices after completed work. It ensures that project payments are coordinated and connected seamlessly.

Here is how you can create the progress invoice with Moon Invoice:

Step 1: Log into your Moon Invoice account.
Step 2: Click on the sales module and select Invoices.
Step 3: Fill in all the details required along with service and products and add the notes for progress invoice details.
Step 4: Mention the terms and conditions of the sales while creating a progress invoice.
Step 5: Add the partial payments to be made and Pay Now option, and save the invoice.


Many organizations, like construction, web development, aerospace and defense industries, etc, utilize flexible billing software coupled with accounting systems to streamline progress invoicing due to the complexity and time involved in this process. Projects typically take a long time to complete, and hence the invoicing software can help maintain cash flow as the project continues for the long-term project and avoid cost overruns.