Progress payments require a different approach than simple invoicing because the work happens over time and payment comes in stages. Getting this right means you’ll always know where each job stands financially.

Start by setting up each project as a separate job in your accounting system. In QuickBooks, this means creating a project or customer sub-job for each contract. Every invoice you send, every material purchase, every labor hour, and every subcontractor bill should be coded to that specific job. Without this separation, you have no way to know if a project is making or losing money until it’s too late.

When you submit a draw request or payment application, record it as an invoice to the customer for that specific job. If you’re billing $45,000 for completed foundation work, create an invoice for $45,000 coded to the foundation phase of that project. When the payment arrives, apply it against that invoice. This keeps your receivables accurate and shows what’s been billed versus what’s been collected.

Retainage needs its own tracking. Most commercial and larger residential jobs hold back 5 to 10 percent until final completion. When you invoice $45,000 but only receive $40,500 because of 10% retainage, you need to record that $4,500 somewhere. Create a retainage receivable account and track it by job. At project closeout when you receive the holdback, you’ll apply that payment and clear the retainage balance.

Match your costs to the same job and phase. If you’re invoicing for foundation work, your books should show the concrete, rebar, labor, and forming subcontractor costs against that same job. This is where most construction contractors struggle. The invoicing happens, but costs end up in generic expense accounts with no job assignment. You think you’re making money, but you can’t prove it.

Review your work in progress regularly. Compare what you’ve billed to what you’ve spent plus what’s committed. A job that looks profitable based on billings received might actually be underwater once you factor in the invoices sitting on your desk and the work remaining to complete the scope.

The goal is knowing your true position on each project at any moment. A bookkeeper near Gentry who understands construction can help you set up job costing correctly from the start. The structure matters as much as the data entry. Get it right and your books become a management tool, not just a tax compliance exercise.