Progress Billing Key Terms

Take inventory of the terms associated with progress billing

By Jennifer Ehlenfeldt, Freelance Writer

Progress billing is a simple solution to long term jobs and projects. The billing concept works on the principle of invoicing in partial billing amounts based on work or time the project takes. The billing option works well for companies that need the income while the project is ongoing.

To understand progress billing and find out how it can benefit your company, you'll need to understand a few basic terms. Learn the ropes and compare progress billing as an option for your company.

Retainage

Retainage refers to the sum of money held until the job or project is completed. The payer agrees to make finale payment, of the retainage amount, once the work is done.
Try: Read the definition of retainage at GoldenSeal Reference Manual. The software manufacturer explains progress billing and other billing options in depth.

Earned and unearned

Earned and unearned are both terms used to describe the way income is produced. Earned income is simply money someone works to obtain, while unearned income is the opposite. It is money someone receives from investments such as stocks, bonds, interest income and rental income.
Try: Read the definitions of both earned and unearned income at Investorwords.com. The dictionary of financial terms includes descriptions of both.

Schedule of values

The schedule of values is a listing of work details with assigned monetary amounts. Progress billing breaks projects into sections and gives them each value amounts. These amounts are kept in a list, or schedule of values.
Try: The WikiCFO gives the definition of schedule of values and explains how the listing is used with progress billing.

Progress payment

A progress payment is a monetary compensation made based on a specific milestone during a job period. The amount can be based on progress of the work or a specific time period.
Try: Wideman Education Foundation defines progress payment in their explanation of progress billing.

Partial billing

Partial billing is a simple invoice made during the course of a project or job. The bill is usually for an estimated amount found on the schedule of values.
Try: Get the definition of partial billing at QuickBooks.

Revenue recognition

Revenue recognition is explained as the idea that revenue is acknowledged through the completion of work that results in payment. It is one of the four main principles of accounting which also includes cost, matching principle and disclosure.
Try: Tenrox gives an indepth explanation of revenue recognition. The organization provides a wide scope of human resource solutions.