Remote Highly Experience Construction, Part-time Bookkeeper (San Ramon)


What is Progress Billing Model? How to Implement and Why You Should Use It.
Many construction businesses undertake long-lasting projects with substantial budgets but struggle to find an effective way to invoice customers. Many clients hesitate to make significant payments before the work is completed, so how can your business handle the expenses for labor and raw materials before getting paid? The answer should be progress billing.

Let’s discover the progress billing definition and how it benefits customers and your business for large-scale and lengthy projects in this guide.

What is progress billing?
Progress billing is a method of invoice that bills customers/clients at each stage of the project along the way, with the invoice reflecting the amount of work that has been completed. Billings on construction in progress refer to the incremental invoicing process used in the construction industry. Rather than billing clients at project completion, contractors invoice them gradually as the construction project advances. This method enhances cash flow, transparency, and efficiency for both contractors and clients throughout the payment process.
Billings on construction in progress refer to the incremental invoicing process used in the construction industry. Rather than billing clients at project completion, contractors invoice them gradually as the construction project advances. This method enhances cash flow, transparency, and efficiency for both contractors and clients throughout the payment process.

Why progress billing is good for you.
Progress billings can remove a huge amount of strain from your cash flow problems. Getting paid at regular intervals makes financial management simpler for you. You can pay for expenses such as raw materials and payroll during the project by invoicing at various stages. Adopt progress billing and payment for arrears in a few weeks allowing you to have working capital to invest in the phase of the project.

Why progress billings are good for your clients.
Progress billing prevents the client from having to fund the project upon completion. If the total budget is hundreds of thousands of dollars, the deposit can be huge, and many clients can be reluctant to pay it. Progress billing also reduces the potential risks of trading fraudulently since it’s that even well-run businesses can go bust if their market conditions suddenly worsen.
With process billing, your clients can make payments in bite-size chunks for work already completed which gives them a greater degree of confidence. Additionally, progress billing is a strong initiative for your business to push up the process of implementing the project as you don’t get paid until you reach the next milestone.

How to implement progress billings.
Project billings are beneficial to protect both the customer and the contractor, it’s important to ensure the progress invoicing workflow is clear and solid from the outset. This will help prevent potential issues before they arise.

In the construction industry, I have helped a dozen construction companies to set up and improve their bookkeeping/ accounting infrastructure. Typically, there are FIVE Progress Billing Models below that help construction companies to improve their bottom-line/profit margin. Builders often employ various billing models to invoice clients for their services. These billing models can vary based on the type of project, client preferences, and industry standards. I customize Quickbooks, excel and Google’s applications to their full potential to streamline billing process. Below each type of billing model and how it works with QuickBooks has further explanations.

1. Fixed Price Billing Model:
Under this model, home builders agree upon a fixed price for the entire project before construction begins. The total cost is determined based on the scope of work, materials, labor, overhead, and profit margin. This provides clients with cost certainty but requires accurate cost estimation by the builder to avoid losses.
QuickBooks Setup: QuickBooks desktop works great for Fixed Price Billing Model due to greater flexibility for setting up billing codes and mapping to chart of account, customer invoice, estimate, vendor billing with its full description.

BILLING INVOICE: QB desktop can use group items for subtotal and grand subtotal for certain and/ or same line items on the invoice such as labor for various tasks can be group with subtotal. Similarly, material for difference construction tasks (construction codes) can be subgroup. This makes more sense for the overhead and profit margins auto computed with accuracy.

TRACKING ESTIMATE VS ACTUAL: Estimated revenue can be compared with actual revenue and actual cost can be tracked using estimates in QuickBooks. This helps stay on top of progress invoicing.

2. Cost-Plus Billing Model:
In a cost-plus or cost-reimbursable billing model, the client pays for the actual costs of construction (materials, labor, subcontractors) plus an agreed-upon percentage or fee for the builder's overhead and profit. This model provides transparency to clients regarding actual project costs but may result in uncertainty regarding the final project cost.

This billing model requires greater transparency with clients. The billing process has a few layers of detail that can be shared with clients as required. Custom QuickBooks setup has all the capabilities to track all the billing details required for Cost Plus Billing Model. Service code whether it is labor, material, subcontractors, equipment rental can be set up separately for efficiency and tracking purposes. This process provides 100% control and clarification of each type of cost involved in each phase of construction. Again, all the reports such as estimates vs actual, job profitability, and all labor time reports can be collapsed to summary or drilled down to full detail for managerial reports or sharing with clients.

Through various custom reporting, identify areas where you overperformed or underperformed while comparing with your initial estimate. Perhaps it requires adjustment based on your analysis, you may need to revise your budgets for future periods. QuickBooks allow you to adjust your budgeted amount easily to reflect changes in your business operation.

3. Time and Materials Billing Model:
Time and materials billing involves charging clients based on the actual hours worked by the construction team and the materials used during the project. Hourly rates for labor and markups on materials are typically agreed upon in advance. This billing model offers flexibility for clients but requires accurate tracking of hours and materials to avoid disputes.

Straight Time and materials billing Quickbooks online (QBO) has edge over QB desktop since this very simple method and QBO is sufficient for this type of billing. This billing model usually uses loaded labor rate that and there is no overhead and profit margins charge separately. This makes more sense for the overhead and profit margins automatic computed with accuracy.

4. Milestone Billing:
With milestone billing, payments are tied to specific project milestones or stages of completion. For example, the builder may invoice the client upon completion of site preparation, foundation work, framing, etc. This model aligns payments with project progress and provides clients with clear payment expectations.

QB online is very suitable for Milestones Billing. The description on the invoice can have full scope of the job on every single invoice or it can be only specific. It really depends on the owner of the business how they want this to be.

5. Hybrid Billing Models:
Builders may also combine elements of multiple billing models to meet the specific needs of clients or projects. For example, a builder may use a fixed price model for the core construction work and a cost-plus model for any additional changes or upgrades requested by the client.

Since this is the most complex billing model that has QB desktop requirements only as discussed in previous billing models. When selecting a billing model, builders should consider factors such as project complexity, client preferences, industry standards, and their own financial management capabilities. Clear communication and transparent invoicing practices are essential to maintaining positive client relationships and ensuring payment accuracy.


Advanced QuickBooks Certified (online and desktop)
ADP, advance in Excel (formulas, pivot tables, v-look-ups, macros), Google applications, Amazon sales, etc.


Enrolled Agent, (inactive)
Associate of Science in Accounting: Graduated Year 1999
Heald College of Business and Technology, Hayward, California
Advanced Certified Quickbooks ProAdvisor all editions– Intuit
Certified Public Bookkeeper (CPB), 2008
National Association of Certified Public Bookkeepers (NACPB)
Accounting Major Course Requirements Completed
Cal State East Bay
Foreign Bachelor in Accounting
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post id: 7753369828


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