Progress Billing
A payment structure where the contractor invoices the property owner or insurance carrier at predetermined milestones during the project rather than requesting full payment at completion. Common on large restoration and reconstruction projects.
What Is Progress Billing
Progress billing is a payment structure in which the contractor invoices the property owner or insurance carrier at predetermined project milestones rather than waiting for full payment upon project completion, ensuring that the contractor is not financing the entire job out of pocket. On large restoration and reconstruction projects that span weeks or months, progress billing protects both parties: the contractor receives cash flow to cover labor and materials, and the property owner pays only for work that has been completed.
Typical Progress Billing Schedule
A standard progress billing schedule for a residential restoration project might include 30% upon material delivery and project start, 30% upon completion of structural work and dry-in, 30% upon substantial completion, and 10% held as retainage until final punch list items are resolved. The exact milestones and percentages are negotiated in the contract. On insurance claims, the schedule often aligns with when claim payments are released.
Progress Billing and Insurance Claims
Insurance-funded projects have a natural payment cadence tied to the claim process. The ACV check arrives first. The recoverable depreciation is released upon completion. Supplements are paid after approval. A well-structured progress billing schedule maps to these milestones so the contractor receives payment as the carrier releases funds. Document each progress billing milestone with photographs showing the completed work, and submit the invoice with supporting documentation. Clear records at each stage prevent disputes at completion.
Frequently asked questions
Progress billing is a payment arrangement where the contractor submits invoices at defined project milestones, such as 30% at material delivery, 60% at dry-in, and 100% at completion. This structure ensures the contractor is not financing the entire project out of pocket while the homeowner or carrier waits until the end to pay.
On insurance-funded projects, progress billing typically aligns with the claim payment schedule. The first draw corresponds to the ACV payment, with subsequent draws tied to project milestones. The final payment, including any recoverable depreciation, is released upon completion and final inspection. The contractor and homeowner should agree on the draw schedule before work begins.
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