How to Use Advance Invoices and Progress Billing in Construction Projects

What is an advance invoice and when is it useful?

An advance invoice (also called a deposit invoice) is issued before any work starts, typically when the client accepts the quotation. It requests part of the total contract price to cover early costs such as materials and labour.

What is a progress bill and how does it differ?

A progress bill is issued during the project and reflects the work that has actually been completed. After each defined phase you calculate the percentage of the total contract that has been finished and invoice that amount, subtracting any amounts already received through advance invoices.

Example billing schedule (fictional)

Each invoice should clearly show:

• The total contract amount.
• The cumulative amount already invoiced.
• The amount due on the current invoice.
• The remaining balance.

VAT on advance invoices

An advance can create a VAT chargeable event, but the timing and evidence depend on the transaction and payment flow. Do not derive the VAT period solely from a generic example. Confirm the treatment with your accountant and the official FPS Finance invoicing guidance before issuing the first advance invoice.

Defining the phases for progress billing

Agree the project phases in the quotation. Typical phases for a renovation might be:

1. Demolition and structural work.
2. Installation of technical systems (electrical, plumbing, heating).
3. Finishing works (plastering, tiling, painting).
4. Final hand‑over and clean‑up.

For longer projects or public contracts, some contractors prefer a regular (e.g., monthly) progress bill regardless of phase completion. Choose the method that matches the contract and the client’s expectations.

What to include on a progress bill

A progress bill is a regular invoice with a few extra fields:

• Total contract amount (as quoted).
• Percentage of work completed or a brief description of the completed items.
• Amount already invoiced (cumulative).
• Amount due for the current bill.
• Remaining balance.

Adding a short description per line item can help avoid disputes.

The final invoice and hand‑over

The final invoice is issued after the client accepts the completed work. It is common for the client to retain the final payment until any punch‑list items are resolved. Prepare a punch‑list together with the client, address the items, and then issue the final invoice for the remaining balance.

Checklist for healthy cash flow

• Issue invoices promptly – send the progress bill in the same week a phase is finished.
• Reference the quotation – mirror the phase structure and line items from the quotation on each bill.
• Track cumulative amounts – keep a simple ledger showing total contract value, amounts invoiced, and balance due.
• Send reminders early – a polite reminder shortly after a due date can improve collection speed.
• Document VAT – record the VAT amount on each invoice and ensure it is reported in the correct VAT return period.

Common pitfall to avoid

Do not postpone invoicing out of politeness. Waiting until the end of a multi‑month project means you finance materials, wages and VAT from your own cash. Stick to the invoicing schedule agreed in the contract; it is a contractual right, not a favour.

For further assistance on structuring invoices and managing construction contracts, consider consulting a professional accountant or legal adviser familiar with Belgian construction law.