How to Bill a Construction Job With Progress Billing

You signed a 240,000 dollar contract to renovate a commercial space. The job runs four months. Nobody is paying you 240,000 up front, and you cannot float four months of labor and materials on your own cash. So you bill in draws, each one covering the work actually completed since the last one, with a slice held back as retainage until the end. Here is how that runs, start to finish.

Build the schedule of values before you invoice anything

The schedule of values (SOV) is the backbone of every draw. It breaks the total contract into line items with a dollar value assigned to each, and those values must add up to the full contract amount. A commercial renovation might list demolition at 18,000, framing at 32,000, electrical rough-in at 24,000, plumbing at 21,000, drywall at 19,000, and so on down to final cleanup.

Get the general contractor or owner to approve this SOV before the first invoice. It becomes the reference both sides check every draw against. If you are still pricing the job, a construction estimate template gives you a structure that converts cleanly into an SOV once the contract is signed.

Split each line into something billable in stages. "Electrical" as one 24,000 dollar block is hard to bill partially. "Electrical rough-in" and "electrical trim" as separate lines lets you invoice the rough-in when it passes inspection and the trim later.

Calculate draw one from percent complete

At the end of the first billing period, walk the site and mark each SOV line with a percent complete. Demolition done, 100 percent. Framing half up, 50 percent. Electrical rough-in barely started, 10 percent. Multiply each line's contract value by its percent to get the work completed to date.

Say your completed-to-date total is 54,000. Your contract holds 10 percent retainage. The math on draw one:

That last block matters. Every draw restates the running totals so the AP team can trace the number back to the contract. A construction invoice template built for progress billing already carries these fields, so you are filling in percentages rather than rebuilding the arithmetic each month.

Issue the draw and get it approved without a PDF war

Create the invoice with your full payment details, the SOV lines, the completed-to-date and retainage math, and the contract number in the reference field. Most GCs and owners will not release a draw without a purchase order or contract number on it, so put it where AP can see it. If the number changes or shows up late, adding it after issue is a tracked amendment rather than a reissue.

Send the draw as a link, not a static file. The GC's project manager reviews your percentages against their own site observations. Sometimes they disagree: they see framing at 40 percent, you billed 50. With a shared invoice they can request a change to that line instead of emailing you a redlined PDF and waiting for a corrected copy. You approve or decline, and the correction becomes a clean new version. When you and the reviewer agree, they approve the invoice and it locks. Then it moves to AP for payment on your agreed terms.

You can create the invoice in a few minutes, and because the recipient works on the link directly, there is no account for the project manager to set up.

Roll each subsequent draw off the last

Draw two repeats the process, but now the "less previous billings" line carries weight. Suppose your completed-to-date total climbs to 132,000. Retainage at 10 percent is 13,200, leaving 118,800 earned. Subtract the 48,600 you already billed, and draw two bills 70,200. Keep going the same way each period. The completed-to-date figure only rises, retainage accumulates against it, and each draw nets out what you have already invoiced.

Watch the retainage total grow as you go. By the time the job is substantially complete, roughly 24,000 of that 240,000 contract is sitting unpaid in retainage. That is money you earned and are still waiting on, which is why the final steps deserve attention.

Bill the retainage release at the end

When the work is done, inspections pass, and the punch list is closed, you bill the held retainage. This is usually its own final invoice: the full accumulated retainage as a single line, referencing the original contract and noting that all prior draws were paid. Some contracts release retainage in two parts, half at substantial completion and the rest after a warranty or lien-waiver window, so read yours before you assume one clean payment.

Retainage releases stall more than regular draws because the pressure of active work is gone. Track whether the final invoice was even opened before you start chasing. If it has been sitting unviewed for a week, that tells you where the holdup is, and a calm follow-up on an unopened invoice is the right move before you escalate.

Keep the paper trail tight across the whole job

Across four months and five or six draws, the thing that gets you paid on the last one is a clean, consistent record: same SOV line names every draw, invoice numbers that run in order, and a version history showing every corrected percentage. If a dispute lands on the final retainage, you want to point at the approved history, not reconstruct it from your inbox. Progress billing is not complicated once the SOV is right. It is bookkeeping discipline applied every 30 days, and the draw that funds your next payroll depends on the one before it being clean.