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-
- 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.
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Retention
It is a percentage (e.g., 10%) of the invoiced each invoice amount that is temporarily withheld to ensure the contractor completes the project properly and resolves any defects that may arisecompletion and defect resolution. In FirstBit, the retention can be applied per invoice or only at the project end, based on contract settingsis automatically applied on every invoice linked to a contract with retention enabled. The retained amount portion is not lost; it is posted separately to Retention Receivables and can be claimed later.
VAT on Retention can be treated in two ways:
Before Retention – VAT is calculated on the full invoice amount, including the retained portion. This means the client pays VAT upfront, even if part of the payment is held back.
After Retention – VAT is calculated on the net amount (after retention deduction). Later, when the retention is claimed, VAT is again calculated on the retained amount through a separate document. This method aligns VAT with actual payments.
Once the project is complete and the retention period . 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) ends, the retained amount is returned. The system automatically fetches the retrieves original retention and VAT details. A Tax Invoice can then be 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.