Progress billing offers a tremendous opportunity in terms of improving cash flow, managing risk, and better meeting customer demands. But if you don’t have the right tools, the management of progress billing and retainage can become overwhelming and inefficient. Read on to find out about the progress billing software options available to you and how they can benefit your business. This could include finding a fully-integrated construction project management software, or a stand-alone software for progress billing.
Progress billing software creates invoices that bill for work completed along the way of a lengthy project. Instead of invoicing at the completion of the project, progress billing software creates invoices incrementally as the entire project advances. This billing method is used when companies want to keep track of their spending while they’re working on a project, or if there’s no clear end date for the project.
Primarily used for large-scale projects in the construction industry, progress billing software helps keep track of reimbursements a company is owed for the work they have done. It allows businesses to track costs, payments, and work, and is an invaluable tool in project management and getting paid for the work that has been done.
Read more: What is Progress Billing?
One of the fundamental questions for any company performing project or contract work is how will it be billed? What billing options will be made available?
There are a number of reasons why your company may want to bill based on progress, including:
The challenge for many companies isn’t in determining if progress billing is required. That’s often fairly self-evident. The challenge typically arises in terms of effectively managing all the different aspects that go into successful progress billing.
The reality is that many, many accounting and billing programs simply do not have the capabilities to effectively manage progress billing. Different programs have different limitations. But there are a few main culprits. The ability to recognize deposits and partial payments in the accounts receivable portion of a billing system is the most basic of the common disqualifiers for programs not up to the task of progress billing. Progress billing also requires a number of integrations with other functional areas to work well. The ability to integrate information held in job costing, project management, time tracking, estimating, and even CRM modules is important to successful progress billing. These multiple integration points can make progress billing difficult to support as an add-on to a core accounting system. It’s not uncommon for progress billing to be one of the feature improvements that pushes project oriented businesses out of a more basic accounting or ERP program into a more industry specific and robust option.
There are a number of benefits associated with managing your progress billing through a program designed specifically for the task:
Let’s take a closer look at some of the main functionality provided by a progress billing solution:
Invoice creation. Creating consistent, attractive invoicing documents is a key part of any progress billing solution. Customizability is particularly important in a progress billing solution, where line items need to be clearly documented and additional information about job completion relayed.
Accounts receivable and progress payments. An accounts receivable structure that allows for processing of partial payments is a critical differentiator of specifically adapted progress billing solutions. In many cases, progress billing will be as simple as collecting an upfront deposit and a final payment. However, the progress billing software should allow for further flexible division of payments. Typical payment divisions can be based on a percentage of completion, project milestone dependencies, specific project dates, and even project categories in terms of the type of work performed. The accounts receivable portion of a progress billing solution handles the application of any payment terms and the record keeping related to the receipt of payment.
Project management and job cost integration. Integration with project management and job costing modules is important for a streamlined, efficient progress billing solution. Data passed from project management solutions can automatically create alerts when certain billing thresholds have been reached. Integrating with job cost solutions provides a more reliable and much less error prone method of identifying individual job charges than manually re-entering line items.
Multiple payment methods. There are progress billing solutions designed to handle payment from a variety of different payment types, including: check, credit cards, and electronic funds transfers.
AIA billing. AIA billing is a standardized methodology of progress billing created by the American Institute of Architects. Solutions that conform to AIA billing standards will include two key forms, G-702 and G-703.
If you have had the experience of trying to manage progress billing without the right software tools, you already know how frustrating that challenge can be. If you’re now at the point where you are ready to find which progress billing software solutions are right for you, we can help. Whether you are looking for a standalone progress billing package or a complete accounting system, through a brief phone call, our software specialists will look to better understand your business and software needs to help you locate the most relevant solutions for your requirements. Get started today!