Progress invoice QB refers to the QuickBooks feature that lets you bill a customer in stages for a large project, rather than waiting for full completion. In QuickBooks Online and QuickBooks Desktop, you create a progress invoice by either using the built-in progress invoicing tool (which tracks estimates and invoices against them) or by manually creating multiple invoices against a single estimate. This article explains the two methods, when to use each, and how to avoid common mistakes.
What Is a Progress Invoice?
A progress invoice is a billing document that requests payment for a portion of work completed on a project. It is common in construction, consulting, software development, and any industry where a job spans weeks or months. Instead of sending one large invoice at the end, you send several smaller ones as milestones are reached. QuickBooks supports this in two distinct ways:
- Progress invoicing (Online only): A feature that lets you create an estimate, then create invoices that draw from that estimate line by line. You can choose which items to bill and how much of each.
- Manual progress billing (Desktop and Online): You create separate invoices for each phase, and optionally link them to a single estimate using the “Create invoice” button on the estimate. This method gives you full control but requires manual tracking.
Both methods produce the same result: the customer sees a series of invoices that, when combined, equal the total project cost. The difference is in how much automation you want.
How Progress Invoicing Works in QuickBooks Online
QuickBooks Online’s progress invoicing is tied to estimates. Here is the step-by-step process:
- Create an estimate for the full project (List > Estimates or + New > Estimate).
- When a milestone is reached, go to the estimate and click Create invoice.
- In the window that opens, you see the estimate lines. Select the items you want to bill, and adjust the quantity or rate if needed.
- Choose Progress invoice from the dropdown (if you want to bill only a percentage of each line) or Invoice for a standard partial bill.
- QuickBooks automatically calculates the percentage of each line you are billing and tracks the remaining amount on the estimate.
The key advantage is that QuickBooks remembers what you have already billed. When you create the next progress invoice, it shows the original estimate and deducts the previously billed amounts, so you never double-bill or lose track of the balance.
Progress Invoicing in QuickBooks Desktop
QuickBooks Desktop does not have a dedicated “progress invoice” button, but it has a similar workflow using estimates and invoices. Here is how to do it:
- Create an estimate for the total project.
- When a milestone is done, go to the estimate and click Create invoice.
- In the invoice window, QuickBooks asks if you want to invoice all or part of the estimate. Choose Customize to select specific items or quantities.
- Save the invoice. QuickBooks marks the estimate as partially invoiced, and you can see the remaining balance.
Desktop also allows you to create progress invoices based on a percentage of the entire estimate. When you click Create invoice, you can enter a percentage (e.g., 30%) and QuickBooks will populate the invoice with that proportion of each line item. This is handy for projects where billing is based on percent complete.
Key Differences Between Online and Desktop
While the core idea is the same, there are important differences that affect which version you might prefer:
- Automation: Online automatically tracks remaining amounts and shows a progress bar on the estimate. Desktop requires you to manually review the estimate’s “Invoiced” field.
- Line-item control: Online lets you bill specific lines with a few clicks. Desktop’s customization is more basic, but you can still choose lines and quantities.
- Percentage billing: Online offers a “Progress invoice” option that lets you bill a percentage of each line. Desktop has a similar feature but it applies the percentage uniformly to all lines.
- Reports: Both versions have an “Estimates vs. Invoices” report that shows how much has been billed against each estimate. Online also has a “Progress Invoices” report.
If you need complex progress billing (e.g., different percentages per line), Online is easier. If you use Desktop and have a simple 50/50 or 30/30/40 split, the built-in percentage method works fine.
Common Problems and How to Avoid Them
Even with built-in tools, users run into issues. Here are the most frequent problems and their fixes:
- Double billing: If you create an invoice manually without linking it to the estimate, QuickBooks won’t deduct the amount from the estimate. Always use the Create invoice button on the estimate.
- Wrong tax handling: Progress invoices calculate tax on each partial amount. If your project is tax-exempt, make sure the estimate and invoices are marked as such. Otherwise, you may overcharge tax.
- Retainage: QuickBooks does not have a built-in retainage feature (a percentage held back until final completion). You must manually adjust the invoice amount or use a separate line item. Many users create a discount line or subtract the retainage from the final invoice.
- Estimates not updating: If you edit the estimate after creating a progress invoice, QuickBooks may not recalculate the remaining balance correctly. Always review the estimate before creating the next invoice.
Choosing the Right Method for Your Business
Which method you use depends on your industry and how you bill. Here are some guidelines:
- Construction and contracting: Use the built-in progress invoicing in QuickBooks Online. It handles change orders and partial billing well. For retainage, you may need a third-party app.
- Professional services (consulting, design): Manual invoices against an estimate are often sufficient. You can bill by milestone or by hours worked.
- Long-term projects with many lines: Online’s line-item selection is a huge time-saver. Desktop’s uniform percentage may not be flexible enough.
- If you need advanced features: Consider apps like Procore, TSheets (now QuickBooks Time), or Buildertrend that integrate with QuickBooks and offer retainage, lien waivers, and AIA billing.
Costs and Subscriptions
Progress invoicing is included in all QuickBooks Online plans (Simple Start, Essentials, Plus, and Advanced) and in QuickBooks Desktop Pro, Premier, and Enterprise. There is no extra fee for the feature itself. However, if you need to use a third-party app for advanced progress billing (like retainage or complex schedules), those apps typically charge a monthly subscription ranging from $10 to $100 per month, depending on features and number of users. QuickBooks Online plans range from $30 to $200 per month, and Desktop licenses are one-time purchases (around $300–$1,000) with optional annual support.
Frequently Asked Questions
Can I create a progress invoice without an estimate?
Yes, you can create a regular invoice and manually type the partial amount. However, you lose the ability to track the remaining balance against the total project. It is better to create an estimate first, even if it is a rough total, so QuickBooks can track your progress.
How do I handle retainage in QuickBooks?
QuickBooks does not have a built-in retainage feature. To handle it, you can create a line item on your invoice called “Retainage (10%)” with a negative amount, or you can simply invoice for 90% of the total and then invoice the remaining 10% at the end. Some third-party apps add retainage tracking, but they require a subscription.
Why does my progress invoice show the full amount instead of a partial?
This usually happens when you create the invoice from the estimate and select “Invoice all” instead of “Progress invoice” or “Customize.” Make sure you choose the progress option and select the items or percentage you want to bill.
Can I change a progress invoice after it’s been sent?
Yes, you can edit or void a progress invoice as long as it hasn’t been paid or reconciled. If you void it, the estimate’s remaining balance will be restored, and you can create a new invoice. However, if the invoice has been paid, you need to issue a credit memo or refund instead.
Does progress invoicing work with QuickBooks Payments?
Yes, you can accept credit card or bank payments on progress invoices just like any other invoice. The customer receives a payment link, and the payment is recorded against that specific invoice.
Template for Progress Invoice Tracking
Below is a simple template you can use to track progress invoices manually, especially if you are using QuickBooks Desktop or need a paper record.
| Project Name | Customer | Estimate Total | Invoice # | Date | Amount Billed | Remaining Balance | Status |
|---|---|---|---|---|---|---|---|
Sample (fictional): Project: Office Renovation | Customer: Smith & Co. | Estimate Total: $50,000 | Invoice #: 1001 | Date: 01/15/2025 | Amount Billed: $15,000 | Remaining: $35,000 | Status: Paid
For complex projects, always consult with your accountant or a QuickBooks ProAdvisor to ensure your progress billing method complies with tax regulations and contract terms.