Contractor Finance Glossary
What is Progress Billing (AIA Billing)?
Also called: AIA billing, progress payments, schedule of values billing
Progress billing is invoicing a long project in stages as work is completed, rather than in one bill at the end, usually against a schedule of values on commercial jobs (the AIA format).
Waiting until a job finishes to invoice it means financing the entire project out of your own cash. Progress billing fixes that by tying invoices to milestones or percent complete, so cash comes in roughly in step with the money going out on labor and materials.
On commercial work the mechanics run through a schedule of values and the AIA billing format, which is where retainage and approval delays enter. Done well, progress billing keeps the cash cycle tight. Done loosely, underbilling piles up and the job quietly funds the customer.
How it is calculated
Progress billing amount for a period = (percent complete times the schedule-of-values line total) minus amounts already billed, less any retainage withheld. Percent complete is usually cost to date divided by total estimated cost.
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