Last editedFeb 20233 min read
For short-term or one-off projects, it’s often easiest to simply send an invoice at completion. What happens when your business takes on a more complex project? Whether it’s building a new block of flats or developing customised software, progress billing helps facilitate a steady cash flow over time. This comes with its own set of accounting challenges, which is where progress billing software can help. Here’s what to look for as you get started.
What is progress billing?
The progress billing meaning describes a specific invoicing method. Businesses bill their customers over time at regular intervals according to a project timeline or by milestone completion. It’s useful for any project likely to stretch out over several months or longer. Progress billing is also useful for sectors where the project is particularly costly, such as manufacturing or engineering design.
Companies that work in progress billing will usually set out a list of predetermined milestones with the customer before the project begins. Invoices are then sent according to this timeline and list of milestones. In many cases, the customer’s billed a percentage of the project total according to the time that has passed. This ensures regular funding for the contractor, while helping spread the cost out over time for the customer.
What’s included on a progress billing invoice?
A progress billing invoice contains many of the same details that you’d find on any other invoice. This includes contact details for the business and customer, as well as a breakdown of what’s owed. However, this breakdown looks a little different. With a progress billing invoice, you’ll see items such as the following:
Total project amount: This shows how much the project will cost once completed, which is discussed before work begins.
Total paid to date: This shows the percentage and amount that the customer has paid so far.
Project completion percentage: This shows the progress that has been made in terms of percentage of the project completed.
Price adjustments: If the project changes in scope or costs, these changes must be approved and noted.
Remaining balance: This shows how much is left for the customer to pay.
The costs involved will depend on the project type and sector, typically including the cost of labour and material as well as any adjustments needed.
Who uses progress billing?
Progress billing is used in many different industries. Construction is the most obvious example, as it involves long-term projects and a variety of different third-party specialists. A construction company needs to pay its own contractors and purchase necessary materials. Progress billing ensures a steady cash flow to fund each stage of the construction project.
Aerospace, engineering, and technology companies also use progress billing to cover the cost of expensive machinery and high-value specialists. It’s a useful practice for any business that needs to track costs over time and pay subcontractors.
Key features of progress billing software
As you start to compare progress billing software, you’ll see a few key features included with most programs.
Handles partial payments and deposits
Automated invoice creation and tracking
A progress billing accounting feature to calculate percentages
Tools to create and manage contracts
Accounts receivable structure for payment processing
Accepts multiple payment methods
6 best progress billing software
Businesses have a choice between regular accounting and invoicing software as well as industry-specific software. This roundup includes a mix of the two to give you plenty of choice.
Choose the Xero Practice Manager tool to create and send progress invoices within this popular accounting software. This lets you create a new invoice and perform percentage calculations. It applies to one-off jobs, but there’s also a tool to combine multiple jobs for the same client in a single invoice. Xero also lets you record deposits, generate financial reports, and track outstanding payments.
This professional system includes everything you need for accurate, timely progress billing accounting. Budget for your projects, track expenses, and issue invoices based on work completed. In addition to billing and invoicing, features including project management, financial reporting, and user-friendly workflows.
3. Sage 50
Sage’s accounting software can handle progress billing and invoicing. Its tools include industry-specific templates for construction, manufacturing, and distribution companies. Look for the Quantum Manufacturing Edition to access inventory tracking and project management features as well as business intelligence.
4. Quantum Project Manager
Another good project management tool is Quantum progress billing software. Its Contractor Billing tool automates the process to save time and money on manual data entry. This software also integrates with several other accounting tools including QuickBooks and more.
5. BQE Core
Designed by industry experts, BQE Core takes all the guesswork out of your project management and billing. Track time and expenses, manage projects from a central dashboard, and issue progress invoices by percentage owed. This software is cloud-based so you can access it on the go.
GoCardless offers a user-friendly system for recurring billing. Businesses can collect recurring and one-off invoice payments directly from customer bank accounts. This puts the business in control over payment collection while reducing the chance of human error through automation. Eliminate late payments to save time and money, all while improving cash flow to keep your project moving forward. It also integrates with over 300 partners, including accounting, billing, and invoicing software for better visibility over payments.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.