Progress billing is how construction pays for itself while it's being built. A residential contractor usually bills against milestones (deposit, rough-in, finishes, completion) or against a fixed draw schedule; a commercial one bills monthly against a schedule of values on a pay application. Either way each invoice shows the total earned to date, the amount billed before, and the amount due now, less retainage if the contract holds it.
A worked number
A $24,000 bathroom on a 30/40/30 schedule: $7,200 at signing, $9,600 when rough inspections pass, $7,200 at completion. With 10% retainage on the last two draws, the client holds $1,680 until the punch list closes. The contractor's outlay peaks between the second and third draw, when the tile and fixtures are paid for and not yet billed.
The mistake it hides
A schedule that doesn't follow the cost curve. Milestones set for convenience rather than for when money leaves the business turn a profitable job into a cash-flow problem. Bill within a day or two of hitting each milestone, reference the schedule from the contract, and treat change orders as their own billable lines.
In Obra
Record each progress payment as income on the project when it's received; the project shows what's been collected and what's left to collect against the contract plus change orders, so the next draw is a number, not a guess. The retainage and progress billing calculator lays out a schedule with the held amounts.