The Complete Guide to Invoicing for Small Businesses
Contractor Progress Billing, Retainage, and Change Orders
General contractors and remodelers get paid in draws, not one giant bill at the end of the job. Progress billing follows a schedule of values, shows percent complete, holds retainage, and credits prior payments so the owner always sees what is left to pay. Lien waivers travel with each draw so title and lenders can clear the file. Change orders need their own paper so they do not freeze the whole application during review. This guide keeps residential and light commercial jobs funded without full AIA stationery on every kitchen remodel or bath package.
Schedule of values in plain language
A schedule of values breaks the contract into phases with dollar amounts, such as demo, rough-in, finishes, and final punch. Each progress invoice names the period, the percent complete or milestone hit, the amount earned this period, less retainage, less prior bills, and the amount due now. You do not need formal G702 forms for a kitchen remodel, but you do need the same math on one page. Put the project name, address, and invoice number on every draw. How to invoice clients still applies: confirm the approver email and any purchase order before you submit the packet so AP does not bounce it for missing fields. Number draws in sequence so AP can sort the project file without guessing.
Percent complete draws that owners can audit
Bill when a milestone is real, not when cash is tight. State percent complete by line or name the milestone, such as rough-in complete and ready for inspection. Credit all prior draws on the face of the new invoice so AP can reconcile without a phone call. Stored materials only go on the bill if the contract allows them and you can document delivery to the site. Keep photos or delivery tickets in the job file. Clear period language stops most underpayment fights before they start with the owner or lender. Attach a short photo set of the milestone when the owner is remote and cannot walk the site that day.
Retainage held and released
Retainage is the slice of each progress payment held until punch list or final completion under the contract. Contracts often hold a percentage on every draw and release it only at closeout. Plan materials and labor as if that held money does not exist until release day. Show retainage withheld this period and retainage held to date on each invoice so the running total is obvious. When you bill final, show retainage release as its own line so the owner and lender see the closeout math without a side spreadsheet. State rules vary. Read the contract and any public project statute before you assume a number on the draw application.
Progress billing FAQ
Do I need AIA G702 forms for a residential remodel?+
No. You need the same math on paper: schedule of values, this period, retainage, prior payments, and amount due now. Formal AIA stationery helps on larger commercial jobs. Small remodels can use a clear progress invoice with those same fields listed for AP.
How much retainage should I show on each draw?+
Use the percentage written in the signed contract. Show retainage withheld this period and the total held to date on each draw. Plan cash as if held funds are unavailable until release at punch list or final completion under that contract.
When should lien waivers be exchanged?+
With each draw, not weeks later. Conditional waivers often accompany the pay application when you submit. Unconditional waivers follow when payment clears the bank. Match amounts to the invoice so owners, lenders, and title teams can process the packet without delay or missing paperwork.