A remodel pays for itself as it's built, or it pays for itself out of your savings. The difference is the draw schedule: the list of payments in the contract, each tied to a milestone, that decides whether the client's money arrives before the cabinets are paid for or after. Most small contractors inherit a schedule from their first boss and never check it against where the money actually leaves the business. This guide checks it.
The two ways residential jobs bill
A fixed draw schedule. Percentages tied to milestones, written into the contract: 30% at signing, 40% at rough-in inspection, 30% at completion. Simple, predictable, and the form most homeowners expect. The percentages are yours to propose.
Progress billing against a schedule of values. Each month you state what share of each line (demolition, framing, electrical) is complete and bill the earned amount, less what was billed before, less retainage. This is how commercial work and lender-financed builds pay, on an AIA G702/G703 pay application or the bank's own form. It's more work and more honest, and on a job over a few months it's worth learning.
Either way, the invoice has the same job: to be a number the client can verify against something they already agreed to, so the payment isn't a negotiation.
Build the schedule from the cost curve
Draw the job's costs week by week. On a $49,500 bathroom: demolition and rough plumbing in weeks one and two ($7,500), tile and fixtures ordered in week two and paid on delivery in week four ($12,300), the tile setter through weeks four to six ($7,400), trim and paint in week seven ($2,700), crew labor spread across all of it ($5,200). The costs peak in week four, when the fixtures and tile land.
Now place the draws so the cumulative collected stays above the cumulative spent:
| Draw | When | Share | Amount | Cumulative collected | Cumulative cost |
|---|---|---|---|---|---|
| 1 | Signing | 30% | $14,850 | $14,850 | $0 |
| 2 | Rough-in passed, week 3 | 40% | $19,800 | $34,650 | $9,600 |
| 3 | Completion, week 8 | 30% | $14,850 | $49,500 | $34,800 |
Draw 2 lands the week before the $12,300 tile and fixture bill. If the rough-in inspection slips a week, the contractor floats that bill for five days. Add a draw for the tile and fixtures when they're delivered to the site ("materials delivered, week 4") and the float disappears. The retainage and progress billing calculator runs this table for any schedule you type in.
Two constraints on the front end. Several states cap the deposit on residential work; California limits a home improvement deposit to 10% of the price or $1,000, whichever is less, so a 30% first draw isn't legal there. California limits progress payments to the value of work completed or materials delivered to the site (CSLB guidance), so the schedule there leans on frequent draws for work done and materials on site, never on orders placed. And a schedule that's front-loaded far beyond the cost curve is overbilling, which reads as a loan from the client and, on a work-in-progress report, as a liability.
What the milestone invoice must show
An invoice that gets paid in three days and one that gets argued for three weeks differ in what they let the client check. Put on every draw invoice:
- The contract value and the adjusted contract value with change orders listed by number.
- The schedule from the contract, with this draw's milestone named as it was written.
- Total earned to date, previously billed, retainage held if any, and the amount due now.
- Approved change orders due with this draw, each on its own line.
- Due date and the payment methods you accept.
- For a lender draw, the lien waivers and photos the bank asks for, attached.
Send it within a day of the milestone. The client's willingness to pay is highest the week the tile is finished and lowest the month after they've been living with it.
Change orders bill on their own terms
A change order signed in week five should say when it's paid: on approval, with the next draw, or with the final payment. "With the final" is the common default and the wrong one; it puts every extra on the invoice the client is least happy to receive. On approval, or at the next draw, keeps the extras small and current. The change order guide has the five-minute writeup, and the change order's amount should raise the adjusted contract value the schedule is measured against.
Retainage, if the contract holds it
Retainage is common on commercial work and on subs working under a general contractor; it's rare on a homeowner remodel unless the homeowner's lender requires it. If it's in the contract, each draw pays less the held percentage, and the held total is released at substantial completion or after the punch list, whichever the contract says. Show the held amount on every invoice and the release terms on the final one; the retainage guide covers the cash-flow arithmetic.
Keep the collected side as honest as the cost side
Job costing usually means costs. The collected side matters as much: contract plus change orders, minus what's been paid, is what's left to collect, and on a draw-based job that number is the cash flow of the business. Obra records each draw as income on the project when it clears, keeps the adjusted contract value current as change orders are logged, and shows what's left to collect next to what the job has cost and where it's going to land. The next draw stops being a guess.
Questions people ask
What is a typical draw schedule for a remodel? Three or four draws are common: a deposit at signing, a draw at rough-in or when major materials are ordered, a draw at finishes, and a final payment at completion. Percentages vary; the honest test is whether collected money stays ahead of spent money at every point.
Can I ask for 50% up front? In some states, yes; in California, no, and in several others a deposit that large is legal but a red flag to clients. A draw when materials are delivered to the site is the better tool for early cash, and the only lawful one in California.
What if the client won't pay a draw? Stop work under the contract's terms, send written notice, and know your state's lien deadlines. A draw invoice that references the signed schedule and a signed change order log is the strongest position you can be in.
Get the template
The free progress invoice template below is the schedule of values from this guide with the arithmetic wired up: percent complete per line, retainage held, previous payments, and the amount due this period. Enter your email and the download starts right away.