Progress billing lets you invoice customers for a portion of an estimate instead of billing the full amount at project completion. Contractors, builders, and anyone working on projects that span weeks or months typically use this approach.

In QuickBooks Online, you need to turn on progress invoicing first. Go to Settings, then Account and Settings, then Sales. Under the Products and Services section, enable progress invoicing. Once it’s on, you can create an invoice from any estimate and choose what percentage or dollar amount to bill for each line item.

When you create an invoice from an estimate, QuickBooks asks whether you want to bill for the full amount or a portion. Choose the portion option, then enter either a percentage or specific dollar amount for each line item. QuickBooks tracks what’s been billed and what remains so you can see your outstanding balance at any time.

The feature only works well if your estimates are accurate. Your estimate becomes the foundation for every progress invoice you create. If the estimate is wrong or incomplete, your billing will be off. Change orders need to update the original estimate before you bill for the additional work.

Decide what triggers each invoice. Some contractors bill at completion percentages like 25%, 50%, 75%, and final. Others tie invoices to phases like foundation, framing, and trim complete. Document your billing schedule in the estimate notes so there’s no confusion about when payment is due.

Watch your unbilled amounts closely. It’s easy to complete work and forget to send an invoice, especially when you’re busy on the job site. Run the unbilled charges report regularly to catch any missed billings before they slip through the cracks.

Retainage adds complexity. If your contracts hold back 5% or 10% until final completion, QuickBooks doesn’t handle this natively within progress invoicing. Most contractors either create a separate retainage line item on each invoice or track it outside the estimate entirely.

Progress billing only tells half the story without project cost tracking running alongside it. You might bill 50% of a project but have already spent 70% of your budget. Knowing you collected money doesn’t mean you’re making money. Job costing shows whether each billing milestone is actually profitable.

QuickBooks Desktop handles progress invoicing similarly, though the interface looks different. The concepts and workflow are the same once you find the settings.

Most problems with progress billing come from sloppy estimates or inconsistent billing habits rather than the software itself. Small business bookkeepers who understand construction can set up estimate templates and billing processes that make this routine instead of something that falls behind when projects get busy.