Getting paid in construction isn’t as easy as swiping a credit card at a coffee shop. Each project is unique. And they tend to be long, complex, and packed with moving parts. While you’re juggling compliance, staffing, materials, and deadlines, your cash flow is at the mercy of a slow and unpredictable payment cycle.
On top of that, these days, you face additional headwinds like shortages of goods and labor, rising energy costs, and fluctuating interest rates that can push payments further down the road.
And it’s not just a mild inconvenience. Construction companies deal with some of the longest payment delays of any industry. In the U.S., it takes around 60 days, sometimes more than 90, to get paid, depending on the project.
Meanwhile, your expenses don’t wait.
And then there’s retainage, that 5% to 10% of every payment that clients hold back until the job is done. It’s meant as a safety net for the owner, but for contractors, it can create cash flow challenges. If you don’t account for retainage properly, it can impact your ability to buy materials and pay workers. Learn more about retainage in our recent blog post. [link to retainage post]
Progress billings help you keep your cash flowing in the midst of these challenges.
A blueprint for better billing
Simply put progress billings provide for a regular payment cadence throughout a large-scale, long-term project. Instead of waiting until the job is done to collect, you’re invoicing based on agreed-upon terms, typically a flat fee or based upon time and materials. That means your revenue keeps pace with your expenses, so you’re not fronting costs for materials and labor without incoming cash.
Plus, progress billings can actually help you win better contracts. Customers like it because it reduces their upfront costs and gives them confidence that work will be completed on time and up to standard.
Progress billings create a foundation for healthy cash flow in many ways, including:
Limiting disputes. Clear terms upfront help reduce disagreements from customers about when and how much they’ll pay – and how much of the work is actually complete at invoicing intervals.
Reducing debt. With a steady flow of funds across the project, you can borrow less and save on high-interest payments that cut into your profits.
Enhancing visibility. When payments are scheduled and expected, it’s easier to spot missed payments and discrepancies – and correct them before they become an issue.
Staying in control. When a customer doesn’t pay, you can pause work instead of completing additional work that you may or may not get paid for.
A project plan you can count on: schedule of values
Every successful construction project starts with a plan. But it’s not just about blueprints and timelines. It’s about finance, too. The schedule of values (SOV) is a planning tool that breaks down each phase of the project into assigned costs and outlines a clear payment schedule.
Here’s why that matters for your AR. Since progress billings are based on the SOV, it directly impacts how and when you get paid. As work moves forward, completion percentages determine what’s invoiced.
Your SOV shows exactly where money is going, helps identify cost overruns early, and keeps financial surprises to a minimum. Plus, when payment terms are clearly outlined from the start, customers are happier and there’s less friction getting invoices approved and paid on time.
AR automation is the right tool for the job
While progress billings are a win-win for you and your customers, they come with challenges. Because they’re unique to each client and project, they can get complicated and cumbersome. Manual tracking and documentation delays timelines, overloads AR teams, and impacts accuracy.
That’s where AR automation comes in.
AR automation streamlines progress billings processes. It’s proven to reduce time to pay, accelerate cash flow, and provide visibility into AR operations, while improving accuracy and reducing manual work. It’s also great for customer relationships, keeping disputes low and payments simple.
Quadient AR Automation is built for progress billings. It separates invoices and recognizes revenue at the right time. Tracking amounts as payables until released, then as standard receivables. In other words, once the full amount is paid, the invoice is considered settled.
This protects you from unnecessary hits to your financial records and ensures that payment scores reflect actual outstanding balances. You can maintain steady cash flow as you hit milestones and complete projects — and you can see what’s due when and how it impacts your bottom line.
Innovation takes automated progress billings to new heights
Where would the empire state building be without innovation? By leveraging the modern assembly line, advanced logistics, and cutting-edge equipment like massive cranes and pre-marked steel beams, builders were able to construct a 102-story skyscraper in just 13 months.
Similarly, innovations in automated progress billings can help you reach new heights. Here are a few examples:
Business intelligence for smarter cash flow management
Built-in analytics and reflective reporting let you see the impact of progress payments, address disruptions before they become business critical, and get a tighter grip on your cash position.
Advanced credit assessment protects your bottom line
Every construction project involves extending credit, but manual credit checks slow things down. With Quadient AR’s intelligent, built-in scoring system, there’s no need for external credit checks. And the integrated real-time financial data from Creditsafe and Dun & Bradstreet means you can make better and more robust decisions. Faster.
Invoicing that fits your needs
Generate invoices in a format that aligns with your business and customer preferences—whether that’s a single invoice with multiple retainage invoices attached or multiple original invoices. Automated multi-channel invoice delivery cuts costs, streamlines operations, and improves invoice presentment for both you and your customers.
Stay close to payers by reaching them where they are
Stay connected and get paid faster with SMS messaging in Quadient AR. Send real-time invoice reminders and payment updates directly to your customers’ mobile devices—ensuring project managers and decision-makers see them, no matter where they are. Keep payments on track and eliminate delays with instant, on-the-go communication.
Get the whole picture
Align collection efforts with project milestones to reduce inefficiencies and disputes. Seamless ERP integration in Quadient AR tracks retained costs, automates invoicing, and recognizes revenue across multiple projects—all while keeping cash flow stable.
Bill smarter, build smarter with progress billings and AR automation
Improve visibility, reduce payment delays and defaults, and drive steady cash flow for your business. Book a demo today to learn how to automate progress billings.
Jill brings over 15 years of industry experience in financial services marketing. She is a passionate and motivated digital marketing professional with extensive experience in multi-channel marketing with a proven record of driving results for growing and established financial services brands like American Express, Billtrust, Heartland Payments Systems, and CAN Capital. Jill is experienced in planning and executing integrated marketing campaigns across channels: web, content, paid media, email, influencer marketing, social, SEO, and events.