Why Progress Billing Matters
Without progress billing, you’d need to finance the entire job from your own pocket. On a $120,000 kitchen extension that runs 12 weeks, that’s potentially $80,000+ in materials and labor that you’re fronting. Progress billing transfers that cash flow burden back to the project.
It also protects both parties — clients see proof of completion before paying, and contractors don’t perform work without compensation.
The Schedule of Values (SOV)
Before any billing occurs, you and the client agree on a Schedule of Values — a breakdown of how the total contract price is allocated across each major scope of work.
Example SOV for a $180,000 kitchen renovation:
| Line Item | Contract Value | % of Total |
|---|---|---|
| Demolition | $12,000 | 6.7% |
| Rough Framing | $18,000 | 10.0% |
| MEP Rough-In | $28,000 | 15.6% |
| Insulation & Drywall | $14,000 | 7.8% |
| Cabinets & Millwork | $38,000 | 21.1% |
| Countertops | $12,000 | 6.7% |
| Flooring | $16,000 | 8.9% |
| Fixtures & Trim | $20,000 | 11.1% |
| Punch List & Closeout | $22,000 | 12.2% |
| Total | $180,000 | 100% |
Calculating a Progress Invoice
For each billing period, document percentage complete for each SOV line item. Your draw amount is based on what’s completed.
Draw Amount = (% Complete × Line Item Value) − Previous Billings − Retainage WithheldExample — Month 2 Application for Payment:
- Demolition: 100% × $12,000 = $12,000 (billed last month, not due again)
- Rough Framing: 100% × $18,000 = $18,000
- MEP Rough-In: 75% × $28,000 = $21,000
- All other items: 0%
- Gross this period: $39,000
- Less 10% retainage: -$3,900
- Net Draw: $35,100
Retainage
Retainage is a percentage (typically 5–10%) of each draw that the client withholds until final completion. On a $180,000 project at 10% retainage, the owner holds back $18,000 until the punch list is signed off.
Track your retainage receivable separately from your regular AR — it’s real money owed to you after closeout.