A progress billing is an invoice that is intended to obtain payment from a customer for that portion of a project that has been completed to date. These billings are commonly issued when a project has a long duration, so that the contractor can obtain sufficient funding to support its operations in the interim. Progress billings are especially common in the construction industry, where projects could last for more than a year.
A progress billing contains the following unique information that is not found on a standard invoice:
- The adjusted total contract amount
- The cumulative amount of progress billings to date
- The percentage of completion of the project
- The total amount remaining to be billed
Customers sometimes build into the calculation of progress billings a withheld percentage of the total contract, which is not billed until the project is complete. This withheld amount is used to exert pressure on the contractor to fix any remaining problems found by the customer.