Progress billing is a payment method in contracting and construction where the client pays in stages as the work progresses, rather than in a single final payment.
The process involves:
Agreeing on the total contract value and work schedule.
Dividing the project into phases or percentages of completion.
Submitting progress reports at agreed intervals (e.g., monthly) to confirm completed work.
Receiving payment for the portion completed, not the entire project, upfront.
Billing is directly linked to the actual work completed on-site, ensuring that payments accurately reflect the project's progress.
In FirstBit Contracting, a progressive invoice is generated through a series of linked documents, reflecting the portion of work completed, after adjusting for advance payments and retention.
Retention is a percentage (e.g., 10%) of the invoiced amount temporarily withheld to ensure proper project completion and defect resolution. In FirstBit, retention can be applied per invoice or only at the project’s end, depending on contract settings. The retained amount is posted separately to Retention Receivables and can be claimed later.
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.
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.