Progress billing and retainers for small architecture firms

Step by step

1. 1Choose the billing method in the agreement

   Fixed fee by phase, hourly, hourly up to a cap, or a mix such as a fixed fee for design and hourly for construction administration. Write it down before work starts.

2. 2Write the fee split by phase

   List each phase and the percent of the fee it carries. That table is what every progress invoice is measured against.

3. 3Set the retainer terms

   State the amount, when it is due (at signing, before work starts) and how it is applied: credited on the final invoice, or against the first invoices.

4. 4Fix the billing date and the route

   Invoice on the same day each month. Ask the client up front who approves invoices and what they need on them, as the AIA's Getting paid guide advises.

5. 5Get percent complete from the project lead

   Each month, ask the person running the project for percent complete on each active phase. Use the deliverables list, not a feeling.

6. 6Calculate this month's amount

   Earned to date is each phase's fee times its percent complete, added up. This invoice is earned to date minus everything billed before. Hourly work and reimbursable expenses go on separate lines.

7. 7Show the client the math

   Put a progress table on the invoice: phase, fee, percent complete, earned, billed before, this invoice. A client who can follow the numbers has fewer reasons to hold the invoice.

8. 8Apply the retainer on the final invoice

   Show the retainer as a credit line on the last invoice, with the date it was received.

Four ways to bill, and what the client sees

Whatever the method, the AIA's Getting paid guide says to settle the payment route at the start: who reviews and approves the invoice, when they want to receive it, what format or information they need, and how long they take from receipt to payment.

A worked example

No currency. A fixed fee of 100,000, split 15, 20, 40, 5 and 20 percent. By the end of month four, schematic design is finished and design development is half done. Three earlier invoices total 18,000.

Earned to date is 25,000. Billed before is 18,000. This month's invoice is 7,000. The retainer is not touched until the final invoice.

Retainers: two ways to apply them

• Credit on the final invoice. The retainer stays in place for the whole project, so it covers the last stretch, when unpaid work is hardest to recover. The AIA's standard owner-architect agreement (B101) has a line for an initial payment credited on the final invoice; check the wording in your edition.
• Apply against the first invoices. Simpler for the client, but the cover is gone after a month or two.

Pick one, write it in the agreement, and repeat it on the retainer invoice. The amount is your decision; we do not suggest one.

Hourly work, additions and expenses

Keep three things off the progress table: hourly services, additional services the client approved in writing, and reimbursable expenses. Each gets its own line with its own backup (hours, the signed approval, receipts). If a request may be outside scope, use the additional services notice in the client follow-up emails guide before any work starts.

When the invoice goes out

A progress invoice still needs following up. The late invoice schedule covers the first two weeks, and the invoice chaser drafts each reminder from your own invoice list. To check that billing keeps pace with spending, compare each project's cost against its budget in the same month.

Copy-paste templates for progress billing

A retainer request, a monthly cover email, a progress table to paste into the invoice and a final-invoice note. Replace everything in [square brackets].

Download the templates as a plain text file, no signup needed.

Hi [first name],

Thank you for signing the agreement for [project]. Attached is the retainer invoice for [amount], as set out in [section reference].

We hold the retainer for the length of the project and credit it in full on the final invoice. Work starts on [start date] once it is received.

From [month], we will invoice on the [day] of each month for the work completed in each phase, with a table showing the progress behind each amount.

[your name]
[firm name]

Hi [first name],

Attached is invoice [number] for [project], covering work to [date]. The amount this month is [amount], due on [due date].

The table on the invoice shows each phase, the percent complete and what was billed before, so you can see how the amount is calculated. This month we [one line on progress, for example completed design development and started construction documents].

If anything on it needs explaining, reply here or call me on [your number].

[your name]
[firm name]

Phase | Fee | % complete | Earned to date | Billed before | This invoice
[Schematic design] | [fee] | [%] | [earned] | [billed] | [amount]
[Design development] | [fee] | [%] | [earned] | [billed] | [amount]
[Construction documents] | [fee] | [%] | [earned] | [billed] | [amount]
[Construction administration] | [fee] | [%] | [earned] | [billed] | [amount]
Total | [total fee] | [overall %] | [earned] | [billed] | [amount]

Hourly services this period: [hours and amount, or none]
Reimbursable expenses this period: [amount, receipts attached]
Retainer held: [amount], credited on the final invoice

Hi [first name],

Attached is the final invoice for [project]. It bills the remaining [amount] of the fee and credits the retainer of [retainer amount] received on [date], as set out in [section reference]. The balance due is [balance], by [due date].

Thank you for the work together on [project].

[your name]
[firm name]

Frequently asked questions

Sources

• AIA Best Practices, Getting paid (what to agree with the client about invoices before work starts)
• RIBA Journal, How should architects deal with clients if they don't pay invoices on time? (regular payments over stage payments, February 15, 2024)