Specialized Construction Billing: Fixed Priced Billing, Time & Materials Billing and Progress Billing

Construction Billing

Moose Creek Bookkeeping specializes in construction billing of all kinds. If you are in the construction business and are scratching your head on the best way to charge your clients, both large and small, you’re not alone. As we discussed in previous blog posts, keeping detailed accounts of all your costs is a critical yet daunting task. Proper documentation is the key to getting paid.


Your business might just be picking up speed and you’re looking for help on how to reign in some lost revenue, or perhaps you’re considering selling your business and moving to a tropical island and want to make sure the books are all shipshape for the new owner. Whatever your business status, we are able to help you create the most accurate bookkeeping procedures YTD.


One of the main reasons such strict bookkeeping is essential in construction billing is because it’s not as cut and dry as in other industries. Jobs can take extensive time to finish, costs can go up or down over the course of the job, and each project is custom. Now, that’s not to say Fixed Priced Billing isn’t used in construction, it’s just typically reserved for smaller jobs that tend to all be the same. For example, let’s say your company specializes in tiny homes and you have just 3 models to choose from. Your company knows exactly what each home costs and can price accordingly. The site prep might look different for each property but the construction project itself is fairly straightforward, and so are the charges to your client. However, Fixed Price Billing can be risky to the contractor because any overruns could not be covered by the customer.


Now, let’s take a look at a Custom Tiny Home. Even though it’s still a small project, the costs would vary greatly throughout the project. This type of project would benefit from the Time and Materials Billing method. This is a very transparent billing format where the customer is aware of everything (even markups) so adjustments and changes can be made by the customer or team.

Some drawbacks to the Time and Materials Billing method is that it does require extensive documentation, if a receipt is lost – that cost is also lost. Moose Creek specializes in helping keep you organized so this doesn’t happen.


There is a third type of Specialized Construction Billing that can benefit both parties greatly and is very commonly used; Progress Billing. This method works well for large projects with many stages. Approval of each stage of the job is done by the client, then payment is made. For example, once the foundation is poured, payment is made. Then another payment is made when the siding goes up, then the roof and so on.  This method is beneficial to both client and contractor because it shields them from typical end-of-the-job problems just as the dreaded non-payment. If the client chooses to not pay at a given stage, the construction stops. Alternatively, if the client isn’t satisfied with the job, adjustments can be made early, rather than late. Progress Billing is a great alternative to your standard 50% now and 50% upon completion.


Regardless of which stage your business is in, Moose Creek Bookkeeping can help you organize your records and help guide you through which of the many Construction Billing Methods (there are more!) works best for your business. Schedule your call today!