Definition
Progress tracking and Billing follow the actual work done at the construction or project site. The system links on-site work updates to financial entries, ensuring that billing accurately reflects the actual progress.
Progress tracking refers to monitoring the actual work completed on-site. This is typically captured in a document called a progress report, which reflects the percentage of completion for different tasks.
Based on this recorded progress, the team generates billing documents such as:
- Payment Applications
- Payment Certificates
- Progressive Invoices
Progressive Invoice
It is a bill for the portion of work completed in a project so farBilling is a payment method in contracting and construction where the client pays the contractor in stages, based on the actual progress of work, rather than making a single final payment.
The process typically includes:
Dividing the project into measurable phases or percentages of completion.
Submit Payment Applications based on Progress Reports at regular intervals (e.g., monthly) to document completed work.
Registration of Payment Certificates Received from client to record certified value of work done.
Generating Progressive Invoices, adjusted for any advances received and retentions withheld.
This approach ensures that payments are directly tied to certified project progress, supporting contractor cash flow while protecting the client’s financial interests.
In FirstBit
A progressive invoice is generated through a series of linked documents, reflecting the portion of work completed, after adjusting for advance payments and retention.
In FirstBit, a progressive invoice is built through a series of linked documents-
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- Advance Invoice - Issued to request upfront payment before work begins.
- Payment Received - Records client payment and marks it for offsetting.
- Project Progress Report - captures the percentage of work completed on-site.
- Payment Application Issued -Drafts the billing claim based on reported progress.
- Payment Certificate Received - Approves and certifies the amount to be invoiced.
- Progressive Invoice - Final An invoice issued , linked to based on the certified amount with advances deducted., with any applicable advance deductions
- Credit Note - Used to adjust or correct previous invoices.
- Advance Invoice- Issued to request upfront payment before work begins.
- Payment Received- Records client payment and marks it for offsetting.
Noted: The system automatically or manually deducts advance payments from progressive invoices to bill only the net payable amount.
Explain about retention, VAT, advance tracking included in it.
Retention
It is a percentage (e.g., 10%) of each invoice amount that is temporarily withheld to ensure project completion and defect resolution. In FirstBit, the retention is automatically applied on every invoice linked to a contract with retention enabled. The retained portion is posted separately to Retention Receivables. Once the retention period ends (e.g., after project completion or the defects liability period), the contractor can issue an Invoice (Retention Claim) to release and collect the withheld amount.
Details on how VAT is treated on retention are specified in the contract attributes.
At project completion and after the retention period ends (e.g., 12 months), the system automatically retrieves original retention and VAT details. A Tax Invoice is generated to finalize the retention release and ensure VAT compliance.
Advance Tracking
The system allows advances paid by the client to be tracked and offset automatically or manually against future progressive invoices. This ensures that only the remaining balance (net payable) is invoiced. The link between the advance invoice and the progressive invoice is maintained, and users can review how much of the advance has been used or is still available.