If you’ve ever finished a big job and then waited weeks—or even months—for payment, you already know how important a billing schedule is. A construction billing schedule sets clear expectations for when and how you’ll get paid during a project.
Think of it as your roadmap to steady cash flow. Instead of chasing payments or guessing when money will come in, you have a structured plan that keeps everyone on the same page.
Here’s how to create one, step by step.
Step 1: Review the Contract
Before you draft a billing schedule, go back to the contract. Many agreements already outline payment terms—like progress billing, retainage, or milestones. You don’t want to create a schedule that conflicts with what’s been signed.
👉 Pro tip: If the contract terms don’t work for you (like a long Net 60 payment cycle), negotiate before the project starts.
Step 2: Break Down the Project into Work Items
You can’t bill effectively without knowing what you’re billing for. Use a Schedule of Values (SOV) to break the project into chunks—foundation, framing, roofing, electrical, etc.—and assign a dollar value to each.
This makes it easy to track progress and bill fairly as the project moves along.
Step 3: Choose a Billing Method
Different projects call for different approaches. The most common are:
- Progress Billing – Bill as percentages of each work item are completed.
- Milestone Billing – Bill when specific phases are finished (e.g., “roof complete”).
- Time and Materials (T&M) – Bill based on actual hours worked and materials used.
👉 Pick the one that matches the project size and client’s expectations.
Step 4: Set a Billing Frequency
Decide how often you’ll send invoices. Options include:
- Monthly – Common for long projects.
- Biweekly – Keeps cash flow more regular.
- Per milestone – Tied to completed phases.
Consistency is key here—make sure the client knows when to expect invoices so there are no surprises.
Step 5: Factor in Retention
Most clients will hold back 5–10% of each payment until the project reaches substantial completion. Your billing schedule should clearly show:
- How much retention will be withheld.
- When it will be released (e.g., at substantial completion or final completion).
This prevents awkward conversations later.
Step 6: Include Change Orders
Projects almost always change. Build in a process for handling change orders so extra work doesn’t throw off your entire billing schedule.
👉 Rule of thumb: Never start additional work until a change order is signed and added to the schedule.
Step 7: Put It in Writing and Share It
Once you’ve got your billing schedule drafted, put it in writing and share it with the client (and subcontractors if needed). Everyone should know:
- What will be billed.
- When invoices will be sent.
- What documentation is required (pay apps, receipts, lien waivers).
The clearer it is upfront, the smoother payments will be later.
Final Thoughts
Creating a construction billing schedule may feel like extra paperwork, but it’s really about protecting yourself. With a solid schedule in place, you avoid misunderstandings, keep your cash flow steady, and spend less time chasing payments.
At the end of the day, the best billing schedule is one that works for both you and your client—fair, clear, and consistent.