How should I structure progress billing on a build that takes months?
Short answer
Bill on defined milestones tied to work actually completed, not on a calendar schedule, and never let more than a few weeks of unbilled labor pile up. A build that runs four months with one invoice at the end is a build where you're financing the customer's project with your own payroll.
Milestones beat monthly invoices for build work
A calendar-based invoice, billing on the 1st regardless of progress, is easy to administer but doesn't match how build work actually happens, which is uneven: slow weeks waiting on parts, then a burst of labor once everything arrives. Milestone billing ties the invoice to something the customer can see and verify: teardown complete, machine work back and assembly started, engine in the vehicle and running, final tune and delivery.
Four to five milestones on a typical multi-month build keeps your cash flow matched to your labor and materials cost as you actually incur them, instead of carrying the whole job on your books until the end.
Never let unbilled labor run more than a few weeks deep
Track hours weekly even if you're not invoicing weekly. If you notice you're three weeks and forty hours into a job with no invoice sent, that's a cash flow problem you're creating for yourself, not one the customer is creating for you. Send the milestone invoice as soon as the milestone is hit, don't let it slide because you're mid-momentum on the wrench.
Put non-payment consequences in writing before you need them
State plainly that work pauses if a milestone invoice isn't paid within a defined window, typically 5 to 7 business days, and that storage fees can begin accruing on a stalled project per your storage policy. This isn't about being harsh with good customers, it's about having a real mechanism instead of an awkward phone call the first time someone goes quiet on payment.
Milestone billing example on a four-month engine build
| Milestone 1: Deposit + parts ordered | 50% of estimate |
|---|---|
| Milestone 2: Teardown complete, machine work back | 15% |
| Milestone 3: Assembly complete, engine installed | 20% |
| Milestone 4: Tuned, tested, ready for delivery | 15% + any approved change orders |
The math: Total of all milestone percentages equals 100% of the current estimate, with change orders billed as separate line items at the milestone where they occurred.
Progress payment terms line for build contracts
PROGRESS BILLING This build will be invoiced at the following milestones: [list milestones and percentages]. Each invoice is due within 5 business days of being sent. If a milestone invoice is not paid within this window, work on the vehicle will pause until payment is received. Vehicles left unpaid and unattended beyond 30 days from a paused milestone may be subject to storage fees and/or a mechanic's lien under [state] law.
Where owners get this wrong
- Billing one invoice at the very end of a multi-month build.
- Letting unbilled labor hours accumulate for weeks without sending an invoice.
- Having no written consequence for a missed milestone payment, so work continues on trust alone.
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