Progressive billing is a method of billing used in the construction industry that allows contractors and subcontractors to bill for work performed as the project progresses.
In this blog, we’ll explore how to set up progressive billing, how it works, how it is stated in the construction contract, and how it benefits both the contractor, subcontractor, and client.
How to Set Up Progressive Billing
To set up progressive billing, the contractor or subcontractor must first determine the scope of work to be performed and the timeline for completion. They will then divide the project into specific phases or milestones and determine the percentage of the work that will be completed at each stage.
Once the stages are defined, the contractor or subcontractor can establish a billing schedule that corresponds with the completion of each stage. This schedule should be agreed upon by all parties and included in the construction contract.
How Progressive Billing Works
Progressive billing works by allowing the contractor or subcontractor to bill for work performed as it is completed. As each phase or milestone is achieved, the contractor or subcontractor will submit an invoice for the work completed up to that point.
The client or owner will then review the invoice and approve it for payment. This process continues until the project is complete, at which point a final invoice will be submitted for any remaining work.
Stating Progressive Billing in the Construction Contract
To ensure that progressive billing is included in the construction contract, the contractor or subcontractor should clearly state the billing schedule and milestones in the contract. This will help avoid any misunderstandings or disputes later on.
The contract should also specify the payment terms, including when payments are due and the consequences for late payments or non-payment.
Benefits of Progressive Billing
Progressive billing offers several benefits for both the contractor or subcontractor and the client or owner. For the contractor or subcontractor, progressive billing helps to ensure a steady cash flow throughout the project and reduces the risk of non-payment for work performed.
For the client or owner, progressive billing provides greater transparency and accountability in the payment process. It also allows the owner to manage their cash flow more effectively and reduces the risk of overpaying for work that has not been completed.
In conclusion, progressive billing is an effective billing method for construction projects that benefits both the contractor or subcontractor and the client or owner. By setting up a clear billing schedule and milestones and including it in the construction contract, all parties can ensure a smooth and transparent payment process. If you are a contractor or subcontractor working on a construction project, consider using progressive billing to help ensure a steady cash flow and reduce the risk of non-payment.
At Black Dragon Technologies, we understand the importance of cash flow and timely payments for contractors and subcontractors in the construction industry. That’s why we offer expert consulting services to help you set up progressive billing for your construction projects.
By choosing Black Dragon Technologies, you’ll benefit from our years of experience in the construction industry and our commitment to providing exceptional customer service. We understand the challenges that contractors and subcontractors face in managing cash flow and ensuring timely payments, and we’re here to help.
Don’t let cash flow issues hold you back from pursuing your construction projects. Contact Black Dragon Technologies today to learn how our contractor consulting services can help you set up progressive billing and ensure a smooth and transparent payment process.
Written by Bernadette Merrill
