A construction progress bill should request the newly billable amount for the period, while keeping earlier unpaid invoices visible separately. Calculate cumulative work earned, subtract the agreed retention and prior billing, then reconcile actual receipts. Deducting cash received in place of previous billing can charge the same old work again.
This worked example is for a small building contractor collecting staged payments. All figures and contract choices are hypothetical, in euros and before tax. It is not a real project, an AIA form, a tax calculation or a legal recommendation. Use your contract's approval process and any mandatory local documents before requesting payment.
Download the two-period calculation worksheet. It contains the same figures and checks as the article, without macros or customer data.
Set the assumptions before doing the arithmetic
Assume an original contract of €20,000 and one approved variation of €2,000, making the revised contract €22,000. The parties have expressly agreed 5% retention on earned work, with release handled separately. That percentage is an example, not a statutory or universal rate.
There are no stored-material claims, advance payments, credits, tax, interest or retention releases in the first two periods. Both parties have agreed the measured completion percentages used below. If any of those assumptions change, rebuild the calculation rather than reusing the total.
On contracts requiring a certified payment application, the invoice is not the approval. AIA's official payment-application guidance distinguishes the summary from its supporting schedule of values. Use the licensed or required contract forms where applicable. PayRequest invoicing is a collection workflow, not a substitute for construction certification.
Calculate the work earned at the current cut-off
Assume these are cumulative completion figures, not the percentage completed this month alone. Keep approved variation work identifiable rather than burying it in the original contract.
| Work package | Agreed value | Cumulative completion | Cumulative earned |
|---|---|---|---|
| Preparation | €4,000 | 100% | €4,000 |
| Main installation | €10,000 | 50% | €5,000 |
| Finishing | €6,000 | 0% | €0 |
| Approved variation V01 | €2,000 | 100% | €2,000 |
| Total | €22,000 | Not a simple average | €11,000 |
The weighted earned value is €11,000: €4,000 + €5,000 + €0 + €2,000. Do not average 100%, 50%, 0% and 100% and apply that average to the contract: the work packages have different values.
At the assumed retention rate, retain €11,000 × 5% = €550. Net earned to date is €11,000 − €550 = €10,450.
Separate prior billing from money received
Assume the previous period earned €5,000 gross, retained €250 and produced invoice P01 for €4,750. Only €3,000 of P01 has been received. The previous invoice therefore still has €1,750 outstanding.
The current period's new invoice is cumulative net earned less the net amount already billed:
This also checks from the change in earned work: €11,000 − €5,000 = €6,000 new gross work; retention increases by €550 − €250 = €300; €6,000 − €300 = €5,700.
| Separate record | Amount | What to do with it |
|---|---|---|
| Prior invoice P01 | €4,750 | Keep its original reference |
| Receipt allocated to P01 | €3,000 | Reduce P01's balance |
| P01 still outstanding | €1,750 | Show on the account statement |
| New invoice P02 | €5,700 | Request only the approved current amount |
| Total invoices less receipts | €7,450 | Account receivable, not another new invoice |
| Cumulative retention | €550 | Track outside the currently collectible balance |
The reconciliation is €4,750 + €5,700 − €3,000 = €7,450. It also equals net earned €10,450 minus received €3,000. Both paths agree.
If you subtract only the €3,000 received when creating P02, you would issue a new €7,450 invoice while P01 still shows €1,750 unpaid. That duplicates €1,750. An account statement may show the combined balance; a new invoice must not silently rebill it.
Collect the approved amount and record its allocation
Send the current bill with the work-period reference, agreed valuation, retention calculation, approved variation reference and any documents required by the payer. Include the project, contract or PO, invoice number, due date and authorized billing contact. Resolve differences between the amount requested and the amount approved before creating a payment request for it.
PayRequest invoicing provides an invoice with a payment link and payment tracking. Create P02 for the approved current amount, with the breakdown and reference your payer needs. Supply the supporting valuation through the agreed project-document channel. Keep the schedule of values and retention register separately; do not assume invoice creation calculates or certifies them.
Connect a payment provider eligible for your business and country. Use the payment methods available to that account. Do not mark the balance received from a screenshot or a pending payment. When money arrives, allocate it to the correct invoice and preserve the reference. If the client pays several invoices together, reconcile the allocation before sending another reminder.
Roll the next period forward
Now assume the following cut-off: preparation remains €4,000, installation is 100% earned (€10,000), finishing is 80% earned (€4,800), and V01 remains €2,000. Cumulative gross earned becomes €20,800.
With no retention release, retention is €20,800 × 5% = €1,040 and cumulative net earned is €19,760. The prior invoices total €10,450. Therefore the next new bill, P03, is €19,760 − €10,450 = €9,310.
Assume the client has now paid P02's €5,700 and another €1,000 toward P01. Total receipts are €3,000 + €5,700 + €1,000 = €9,700. P01 still has €750 outstanding; P02 is settled.
| Next-period check | Calculation | Result |
|---|---|---|
| Current invoice P03 | €19,760 − €10,450 | €9,310 |
| Total account outstanding | €19,760 − €9,700 | €10,060 |
| Invoice-by-invoice check | €750 + €0 + €9,310 | €10,060 |
| Retained outside current collection | €20,800 × 5% | €1,040 |
| Contract value not yet earned | €22,000 − €20,800 | €1,200 |
The remaining contract value, retained amount and unpaid invoices are three different numbers. The €1,040 retention does not become overdue merely because a progress invoice is due. Release it only at the contractual and legally valid trigger, using the required approval and documentation. Do not add the unearned €1,200 to the current bill.
Know when the simple model is insufficient
Stop and adapt the worksheet if the job includes different retention rates, stored materials, disputed progress, advance-payment recovery, tax changes, credits or a variation that has not been approved. A disputed or withheld amount needs its own documented treatment; changing an invoice total alone does not resolve the underlying agreement.
AIA's official G702 instructions describe a review and certification process under those documents. The numerical bridge here is an original small-project explanation, not a reproduction or a representation that every jurisdiction uses AIA billing. Retention rules, tax and payment rights vary; use the requirements governing your actual project.
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Editorial note: AI assisted with the draft and illustrative cover. The project, percentages, receipts and invoices are hypothetical. The worksheet arithmetic was checked; no construction payment, certification or customer result was tested. Sources and product pages reviewed on 11 November 2026.
