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Construction billing · QuickBooks Online

Progress billing in construction (and how to do it in QuickBooks Online)

Progress billing is invoicing for work as it is completed — usually monthly, by percentage of each schedule-of-values line — instead of one invoice at the end of the job. Each bill equals the value earned to date, minus earlier billings, minus retainage. In QuickBooks Online you do it by turning on progress invoicing and creating partial invoices from an accepted estimate.

Last updated · Aequo AP editorial team

How progress billing works

The contract is split into a schedule of values; each period the contractor reports how much of each line is complete, bills the increase since last time, and the owner withholds retainage until the job is finished.

Example: $400,000 subcontract, 10% retainage, period 3
StepCalculationAmount
Earned to date45% complete × $400,000$180,000
Less billed on periods 1–225% × $400,000−$100,000
Gross billing this periodEarned to date − billed before$80,000
Less retainage (10%)10% × $80,000−$8,000
Net amount dueGross − retainage$72,000
Simplified to one line. Real billings repeat this per schedule-of-values line, and many contracts also allow billing for stored materials.

Types of progress billing

Most construction progress billing is percent-complete against a schedule of values; milestone and unit-price billing are the main alternatives.

MethodHow each bill is calculatedTypical use
Percent complete (SOV)Percent complete per line × scheduled value, less prior billingsCommercial GC and subcontracts; AIA-style pay applications
MilestoneA fixed amount when a defined milestone is reachedResidential and design-build; payment schedules in the contract
Unit priceQuantity installed × contract unit priceCivil, paving, utilities
Time and materialsHours × rates plus materials and markupService work, change-order work without a fixed price

How to do progress billing in QuickBooks Online

Turn on progress invoicing in Account and settings › Sales, create and accept an estimate, then convert it to partial invoices by percentage or by line until the estimate is fully billed.

  1. 1

    Step 1

    Turn on progress invoicing: Settings ⚙ › Account and settings › Sales › Progress Invoicing › Edit, then turn on “Create multiple partial invoices from a single estimate” and save.
  2. 2

    Step 2

    Create an estimate for the customer (and project, if you use Projects) with the contract line items, and mark it Accepted.
  3. 3

    Step 3

    Open the accepted estimate and select Convert to invoice (or start an invoice and add the estimate from the Suggested transactions panel).
  4. 4

    Step 4

    Choose how much to bill: a percentage of the whole estimate, a percentage or amount per line item, or the remaining total.
  5. 5

    Step 5

    If your contract withholds retainage, add it to the invoice your company’s way (see the retainage section below), then review and send.
  6. 6

    Step 6

    Track what is billed and remaining with the Estimates & Progress Invoicing Summary by Customer report.

QuickBooks Online will not let you bill more than the estimate’s remaining balance, and when 100% is invoiced the estimate status changes to Converted. Intuit lists progress invoicing on QuickBooks Online Plus and Advanced, and Projects (which group estimates, invoices and costs by job) on Plus, Advanced and Intuit Enterprise Suite.

Retainage on progress invoices in QuickBooks Online

Intuit’s US progress-invoicing article does not cover retainage, so most contractors either add a negative “Retainage” line mapped to a Retainage Receivable account or manage retainage in a construction billing tool that posts to QuickBooks.

  • Manual line. Create a Retainage Receivable (other current asset) account and a “Retainage” service item mapped to it, then add the item as a negative line on each progress invoice. You calculate the percentage yourself.
  • Construction add-ons. Intuit describes phase-based, AIA-style invoicing for QuickBooks Online Advanced with the Construction add-on; check what your subscription includes before you build a workaround.
  • Separate billing system. Many contractors produce pay applications in a construction tool and post the resulting invoice and retainage to QuickBooks.

The other side: approving progress bills from subcontractors

If you are a general contractor, your subcontractors progress-bill you, and each of those bills has to be checked against the subcontract, held for lien waivers and recorded with retainage before it is paid.

That is accounts payable work. Aequo Build handles it for contractors on QuickBooks Online: capture the sub’s bill, code it to the job and cost code, match it to the purchase order where there is one, route it for approval, calculate retainage from the subcontract’s retention percentage when it is approved, hold payment until the required lien waivers are in, and post the approved bill to QuickBooks. For billing your own owners, its AIA billing register creates G702/G703-style pay applications from the job’s schedule of values.

Frequently asked questions

What is progress billing?

Progress billing is invoicing a customer in installments as work is completed, rather than one invoice at the end. In construction, each progress bill is usually a percentage of each schedule-of-values line completed during the period, less retainage and amounts already billed.

What is the difference between progress billing and an AIA pay application?

An AIA G702/G703 pay application is one standardized format for progress billing. Progress billing is the method; a pay application is the document many commercial contracts require to request each progress payment.

Does QuickBooks Online support progress invoicing?

Yes. Intuit’s help article explains how to turn on progress invoicing and create multiple partial invoices from one accepted estimate, by percentage or by line. Intuit’s invoicing page lists progress invoicing on QuickBooks Online Plus and Advanced; check your plan before relying on it.

Can QuickBooks Online calculate retainage on progress invoices?

Intuit’s US progress-invoicing help article does not cover retainage. A common approach is a Retainage Receivable account and a “Retainage” service item added as a negative line on each invoice, calculated by hand. Some QuickBooks editions and add-ons offer more construction billing; confirm in your own subscription.

How do you calculate a progress billing amount?

For each line: scheduled value × percent complete to date = earned to date. Subtract what was billed before to get this period’s amount. Add the lines, subtract retainage at the contract rate, and the result is the amount due.

Run subcontractor invoices, pay apps and retainage in one place

Aequo Build is construction accounts payable for contractors on QuickBooks Online: invoice capture, approvals, lien-waiver payment holds, invoice-linked retainage and an AIA-style billing register.

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Related guides and tools

Sources

Checked on October 21, 2026. Vendor capabilities and prices change; confirm current details with each vendor.

  1. Intuit QuickBooks Support — Set up and send progress invoices in QuickBooks Online — setting path, accepted estimate, convert to invoice, report name
  2. Intuit QuickBooks — Invoicing — progress invoicing listed for Plus and Advanced
  3. Intuit QuickBooks Support — Set up and create projects in QuickBooks Online — Projects on Plus, Advanced and Intuit Enterprise Suite
  4. Intuit QuickBooks Support — Learn about project phases — phases and phase-based (AIA-style) invoicing with the Construction add-on on Advanced
  5. Intuit QuickBooks — Job costing — job costing on Plus and Advanced
  6. Intuit QuickBooks Support — Set up and send progress invoices in QuickBooks Desktop — Desktop preference path
  7. AIA Contract Documents (learn) — What is a schedule of values? — SOV required before the first application for payment under A201–2017