Progress invoicing in QuickBooks starts with an estimate. You cannot create progress invoices from scratch. They are generated from an existing estimate that you bill against in portions as work gets completed. If you have been invoicing without estimates, you will need to change your workflow.

First, enable the feature. In QuickBooks Online, go to Settings, then Account and Settings, then Sales. Turn on Progress Invoicing under the Products and Services section. This setting is not on by default, so many users never realize it exists until they go looking for it.

Create an estimate for the full project amount and break it down by line item, phase, or however you structure your bids. For a bathroom remodel, you might have separate lines for demolition, plumbing rough-in, electrical, tile work, fixtures, and final finishes. The more detailed your estimate, the more control you have over what gets billed and when.

When you are ready to bill, open the estimate and click Create Invoice. QuickBooks will ask how much of each line item to include. You can enter percentages or specific dollar amounts. The invoice pulls directly from the estimate, and QuickBooks tracks what has been billed versus what remains outstanding. Each progress invoice shows the customer exactly what portion of the project they are paying for.

For contractors, structure your estimates to match how you actually build and bill. If your contract calls for payments at foundation, framing, drywall, and completion, set up your estimate with those phases as line items or groups. This makes progress invoicing straightforward. When you hit a milestone, you bill that phase. A small business bookkeeper in American Fork who understands construction can help set up your estimate templates so they match your typical contract structure.

Change orders add complexity. When scope changes, update the original estimate before creating the next progress invoice. Add new line items for additional work rather than modifying existing ones. This preserves your history and makes it clear what was in the original contract versus what got added later. Your customer sees exactly what they are paying for on each invoice.

QuickBooks does not handle retainage natively. If you hold back 10% until project completion, you need a workaround. Some contractors create a separate Retainage line item on estimates and bill it last. Others track retainage outside of progress invoicing and send a final invoice separately. Neither method is perfect, but consistency matters more than which approach you choose.

The common mistake is creating regular invoices instead of progress invoices. If you bypass the estimate and create standalone invoices, you lose the connection between what you quoted and what you have billed. You also cannot see remaining contract balance at a glance. For construction job costing to work properly, your invoicing needs to tie back to the original project scope.

Keep your estimates accurate throughout the project. Progress invoicing only works when the estimate reflects actual scope. If your estimate says $40,000 but you have done $12,000 in change orders you never documented, your progress billing will be off and your reporting will not reflect reality.