Construction progress billing, also known as AIA billing, is the process of billing a client in installments (typically monthly) for work completed on a construction project. While the concept is straightforward, the reality is often a nuanced and time-consuming endeavor filled with potential pitfalls—especially for subcontractors. For instance, the current progress billing process:
- Lacks standardization, with many general contractors (GCs) opting to forgo standard AIA billing forms (which cost money) for custom versions. This forces subcontractors to learn and adapt to new formats for every project.
- Caters to owners’ needs, with little consideration for other project stakeholders’ (a.k.a. subcontractors’) workflows and obligations.
- Involves extensive documentation requirements, including detailed breakdowns of completed work, material costs, lien waivers, compliance forms, and backup materials.
- Operates separately from accounting software, as most accounting systems can’t accommodate the multitude of custom GC forms, nor do they integrate with GC submission portals. Subcontractors are left to manage a significant portion of the process manually.
However, recent advancements in construction technology have brought forth construction progress billing software—a specialized solution designed to streamline payment workflows and alleviate the headaches subcontractor accounting teams face. But how do you know if your business could benefit from such a tool? Here are the telltale signs that it’s time to explore progress billing software and how your construction business would benefit from it.
10 Signs It’s Time for Construction Progress Billing Software
Not every subcontractor needs progress billing software. If you run a small specialty trade company that only bills for one or two projects at a time, this type of software probably isn’t necessary. On the other hand, if you’re managing multiple projects monthly, progress billing software can be a game-changer, because it centralizes all the information impacting your cash flow, prevents errors, and accelerates payments.
Use these indicators as a litmus test for whether your organization could benefit from a progress billing tool.
16 Must-Track Financial Metrics for Subcontractors
1. Completing progress billing forms is a logistical, time-consuming nightmare.
Whether it's the standard G702 and G703 forms or a GC’s custom version, manually filling out progress billing forms can be incredibly time-consuming, especially if your company juggles multiple projects simultaneously. It's an endless cycle of paperwork that hinders productivity and saps valuable resources.
2. You’re dealing with custom forms from multiple GCs.
As mentioned, many GCs create their own billing forms to avoid paying for the standard AIA documents. While these custom forms often align with AIA's requirements, your accounting software cannot accommodate them, forcing your team to edit PDFs and Excel worksheets manually—adding an extra layer of work to an already arduous process.
3. Spreadsheets serve as your progress billing command center.
Even if your accounting software includes standard AIA billing forms, you're likely managing part of the process—such as invoice statuses or collecting schedules of values (SOV) from project managers (PMs)—in spreadsheets. This approach carries the same risks as a fully manual workflow outside your accounting system, making it easy to miscalculate, break formulas, forget retention billing, miss supporting documents, or overlook payment draws.
4. Remembering billing due dates is a constant struggle.
With every GC enforcing its own billing schedule (often with unique due dates per project), it's nearly impossible to remember what's due and when. And as you're well aware, missing a due date means missing out on that entire pay cycle—a costly mistake for your cash flow.
5. Rejected pay applications are a recurring headache.
Payment applications must be flawless. If your math is off, you use the wrong form, omit supporting documents, any compliance requirements are expired, or the GC thinks you've overbilled, they'll reject the application. This rejection often occurs mere hours before the deadline, forcing you into a frantic race against the clock to rectify the issues and resubmit the invoice before risking payment delays.
6. Juggling multiple GC submission rules is a logistical nightmare.
Unlike most industries, where invoices are simply emailed, subcontractors must follow each GC's unique instructions for submitting payment applications—whether via email, fax, mail, or payment portals like Textura, GCPay, and Procore. As it stands, ERPs and accounting systems rarely integrate with these portals, creating more logins to track, systems to learn, and processes to manage. Also, if you have some clients using Textura, some using GCPay, and some using email, then you’re left managing pay apps across separate systems with no holistic visibility into the status of everything.
7. Your project billing documentation is decentralized and disorganized.
Regardless of the company, file management is always a challenge. Some team members diligently upload documents to the shared drive, while others continuously save important files locally with no standard approach to version control. This disjointed approach to managing progress billing forms is a recipe for disaster, making it extremely difficult to locate the most up-to-date and accurate information when you need it.
8. Breakdowns in field-to-back-office communication hinder your billing process.
One of the biggest bottlenecks in the progress billing process is the back-and-forth between the back office and field teams. The accounting staff must prepare the billing sheets, share them with the project managers for input, follow up (often numerous times) for completion, and then reassemble them based on the field's feedback before submitting. This disjointed and outdated process often results in miscommunication, lost information, and delays on both sides.
9. Collecting lien waivers is like a game of “Whac-A-Mole.”
AIA billing forms aren't the only required documents for progress billing. Each time you submit a pay application, you must also submit the appropriate lien waivers for your company and any lower-tier subs or vendors. As you can imagine (or have likely experienced), this collection process can quickly become convoluted if you collect documents from numerous companies.
10. You lack visibility into your projects’ billing health.
Payment apps, invoice statuses, team communications, and GC submission channels exist across disconnected systems and spreadsheets. This fragmented approach means you never have a clear, real-time picture of completed work, pending payments, missed deadlines, or remaining contract values—making it nearly impossible to monitor billing health, forecast cash flow accurately, or quickly spot issues before they become costly problems.
Benefits of Construction Progress Billing Software
If some or most of these signs hit home for you, it’s time to explore how subcontractor progress billing software—like Siteline—can streamline these workflows, automate the routine work, and help you regain control of your cash flow. Just imagine: as quick as next month, your new software is humming along, helping you:
- Rapidly (and accurately) generate pay apps by automating custom form population and calculations
- Reduce time to payment by eliminating manual data entry and minimizing errors that can trigger rejections
- Streamline billing workflows by centralizing all project documentation and providing clear visibility into billing statuses and deadlines
- Set reminders for progress payment schedules to ensure deadlines are met
- Synchronize field and back office teams with real-time A/R data, enhancing collaboration to streamline pay app generation
- Proactively collect unconditional lien waivers from your lower-tier subcontractors while automatically generating your own, too
- Quickly analyze billing data to identify potential bottlenecks and make informed decisions
If you’d like to learn more about how Siteline can help you streamline progress billing, minimize payment delays, and enable cash flow visibility, schedule a personalized demo now.
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