A Xero progress claim invoice is an invoice created in Xero that bills a customer in stages or installments for work completed over time, rather than as one lump sum at the end. You can create one manually by entering the claim amount as a line item, or you can use Xero’s built-in repeating invoices or project tracking features to automate the process. This article explains the practical steps, common pitfalls, and real-world usage so you can handle progress claims confidently.
What Is a Progress Claim in Accounting?
A progress claim (also called a progress billing, stage payment, or draw request) is a formal request for payment that reflects the value of work done up to a certain date. It is common in construction, renovation, consulting, and any long-term project where cash flow matters. Unlike a standard invoice that says “pay this full amount,” a progress claim breaks the total contract value into chunks tied to milestones, percentages, or time periods.
For example, a kitchen renovation might have a $30,000 contract with three claims: $10,000 at start, $10,000 when cabinets arrive, and $10,000 on completion. Each claim is a separate invoice. The customer pays each one, and the final invoice should reconcile to the original contract total.
How to Create a Progress Claim Invoice in Xero
Xero does not have a button labeled “progress claim,” but you have several ways to achieve the same result. The method you choose depends on whether you need a simple bill or a more detailed tracking system.
- Manual invoice: Go to Business > Sales > New Invoice. Select the customer, add a line item describing the stage (e.g., “Progress claim #2 – framing complete”), enter the amount, and set the due date. This is the fastest method for occasional claims.
- Repeating invoice: If you have a fixed monthly or weekly retainer, create a repeating invoice template. Set the frequency and the end date. Each time it generates, it becomes a separate invoice. This works well for ongoing service contracts.
- Project tracking: If you use Xero Projects (paid add-on), you can track time and costs against a project, then create an invoice from the project’s progress. Xero will pull in the actual hours and expenses, and you can choose to invoice a percentage of the total.
- Copy previous invoice: For irregular claims, duplicate the last invoice and edit the amount and description. This saves time on repetitive line items.
Whichever method you choose, ensure each invoice has a clear reference like “Progress claim 1 of 3” so the customer knows where they are in the sequence.
Using Milestones and Percentages Correctly
Most progress claims are based on a percentage of the total contract. The key is to make sure the percentages add up to 100% by the end. A common mistake is to invoice 30% at start, 30% at midpoint, and 30% at completion – that only totals 90%. Always leave a final retention or completion claim that brings the total to 100%.
For example, a $50,000 project might have:
- 10% deposit on signing = $5,000
- 30% after foundation = $15,000
- 30% after framing = $15,000
- 25% after finishing = $12,500
- 5% final on handover = $2,500
That totals $50,000. If you are using Xero Projects, you can set a budget and then invoice against that budget. The system will show the remaining amount, helping you avoid over- or under-billing.
Common Problems and How to Avoid Them
Progress claim invoices often cause confusion because they are not a single, final bill. Here are the most frequent issues and their fixes:
- Overbilling: You invoice more than the work completed. Solution: track actual costs and time in Xero Projects, and only claim for work certified or approved.
- Underbilling: You delay claims and run out of cash. Solution: set a schedule at contract signing and stick to it, even if it feels awkward.
- Customer disputes: They say the work isn’t at the claimed stage. Solution: attach photos, timesheets, or a signed progress report to the invoice as a PDF.
- Tax miscalculation: You forget that progress claims are subject to GST/VAT depending on your country. Xero calculates tax automatically if your line items have the correct tax rate, but double-check the total before sending.
- Duplicate payments: Customer pays the same claim twice. Solution: use Xero’s invoice numbers and clearly state “Progress claim #2” in the reference field.
Progress Claims vs. Deposit Invoices vs. Final Invoices
Many users confuse these three. A deposit invoice is a single upfront payment, often non-refundable, and it may be the first progress claim. A progress claim is any interim invoice that is not the final one. The final invoice is the last one, and it should bring the total paid to the contract amount.
For example, if you charge a $1,000 deposit and then a $4,000 progress claim, the final invoice might be $0 if the total was $5,000. Or you might have a $500 final invoice to cover extras. The important thing is that the sum of all invoices equals the agreed total. In Xero, you can run a sales report by customer to see the total invoiced versus the contract value.
Progress Claim Invoice Template
Below is a blank template you can copy into Xero’s custom invoice settings or use as a paper form. It is generic and works for most industries.
| Invoice # | ______ | Date | ______ |
|---|---|---|---|
| Customer | ______ | ||
| Project/Contract # | ______ | ||
| Claim # | ______ | Total Contract | ______ |
| Description of Work Completed | ______ | ||
| Amount Claimed | ______ | ||
| Less Previous Payments | ______ | ||
| Balance Due | ______ | ||
Sample (fictional): Invoice #1042, Date 2025-03-15, Customer ABC Builders, Project #P-221, Claim #2, Total Contract $50,000, Description “Framing completed per signed plan”, Amount Claimed $15,000, Previous Payments $5,000, Balance Due $10,000.
Frequently Asked Questions
Can I create a progress claim invoice without Xero Projects?
Yes. You can simply create a new invoice and type the claim details. Xero Projects is not required; it only adds convenience for tracking costs and time. For a small business with a few claims a month, manual invoices work fine.
How do I show the remaining balance on a progress claim?
Xero does not automatically show a running balance on an invoice. You can add a line item with a negative amount for previous payments, or add a note in the description field. Alternatively, use Xero’s statement feature to show the customer’s full invoice history.
Is a progress claim the same as a deposit?
Not exactly. A deposit is a specific upfront payment, usually a percentage of the total. A progress claim can include the deposit as the first claim, but it can also be a later stage. The key difference is that a deposit is often non-refundable, while progress claims are for work already done.
What if the customer refuses to pay a progress claim?
First, check your contract terms. If the claim is valid, send a reminder from Xero. If they still refuse, you may need to stop work or seek legal advice. Do not escalate without reviewing the contract, as progress claims often have specific dispute resolution clauses.
Can I set up automatic progress claims in Xero?
Yes, for fixed schedules. Use repeating invoices with a set frequency (e.g., monthly). For percentage-based claims tied to milestones, you cannot automate the approval of work done, so you will need to create each invoice manually.
Final Tips for Smooth Progress Billing
Keep a separate contact or project code for each contract so you can run reports. Always include the contract total and the claim number on the invoice. Send the invoice immediately after the work stage is completed, not at the end of the month. And reconcile payments in Xero as soon as they arrive, so you know exactly what has been paid and what is outstanding.
If your situation involves complex contract law, tax rules, or financing, ask a qualified accountant or legal professional to review your progress claim process.