You're sitting in your truck at 11 PM, staring at your bank balance on your phone. The commercial project in West Des Moines is 60% complete. You've got $180,000 in labor and materials invested. Your next draw request isn't approved yet—it's been sitting on the GC's desk for eight days. Meanwhile, your material suppliers want payment in three days, and payroll hits in five.

Sound familiar?

Most Des Moines contractors think progress billing problems come from slow-paying clients. The real issue? Your billing system is fundamentally broken, and you don't even know it.

The uncomfortable truth: Generic CPAs treat progress billing like it's just another invoice. They don't understand AIA billing documents, retention holdbacks, or how to structure your Schedule of Values to accelerate cash without raising red flags. They've never walked a job site, never dealt with a suspicious project manager questioning your completion percentages, and never helped a contractor avoid the cash flow death spiral that kills profitable companies.

This isn't another generic "send invoices promptly" article. This is a comprehensive framework for Des Moines construction contractors who need to transform their progress billing from a monthly administrative headache into a strategic cash flow tool—without front-loading your SOV so aggressively that you torpedo future draws.

Let's fix your billing system.

Why Most Des Moines Contractors Get Progress Billing Wrong (And Why It's Costing You $40,000+ Annually)

The Front-Loading Trap That Destroys Cash Flow in Months 4-8

Here's what happens on most commercial projects in the Des Moines metro:

Month 1: You submit your Schedule of Values to the GC. Mobilization is at $45,000. Rough-in electrical is at $120,000. You're excited because you can bill mobilization at 100% immediately and get cash flowing fast.

Month 2: You bill mobilization at 100% ($45,000) and rough-in at 25% ($30,000). After 10% retention, you receive $67,500. Cash flow looks great. Your bookkeeper thinks you're a genius.

Month 3-4: You continue billing rough-in and finish work at reasonable percentages. Cash keeps flowing. Everything seems fine.

Month 5-7: The nightmare begins. You've already billed mobilization fully. Your early trade work is maxed out. But you're still incurring costs daily—just in different line items. Your billing percentages look too high relative to actual job completion. The GC starts questioning every draw. Your cash flow craters while you're 70% complete on actual work performed.

Month 8: You're technically owed $140,000 based on work performed, but your Schedule of Values has you painted into a corner. You've front-loaded so aggressively that claiming what you're actually owed would show line items at 110-130%. The GC rejects your draw. You're profitable on paper and broke in reality.

This scenario plays out constantly with contractors across Ankeny, Johnston, West Des Moines, and Waukee. The irony? You created this problem yourself by following conventional wisdom about "accelerating cash flow."

The AIA G702/G703 Documents Your Generic CPA Doesn't Understand

When Des Moines commercial contractors bill progress payments, they're typically using AIA (American Institute of Architects) standard forms:

• G702 (Application and Certificate for Payment): The summary form showing total contract value, previous payments, current request, and amounts due
• G703 (Continuation Sheet): The detailed Schedule of Values breakdown showing each line item, completion percentage, and amounts claimed

Here's what generic CPAs miss about these documents:

1. The Schedule of Values is a strategic document, not an accounting exercise

Your SOV isn't just a list of costs. It's a cash flow management tool that determines when and how quickly you can bill throughout the project lifecycle. How you structure line items in Week 1 determines your cash position in Month 6.

2. Retention holdback calculations compound with front-loading

Most commercial projects in Iowa hold 10% retention. When you front-load early line items, you're not just accelerating cash—you're also accelerating your retention holdback. That $45,000 mobilization you billed at 100% in Month 1? You only received $40,500. The other $4,500 is stuck in retention until project completion, which might be 14 months away.

3. Percentage-of-completion recognition creates documentation vulnerabilities

When your billing percentages don't align with actual physical completion, you create audit exposure. If your electrical rough-in SOV line item is at 85% billed but any neutral third party walking the site would assess physical completion at 60%, you've got a problem. This shows up in financial statement audits, bonding reviews, and IRS examinations.

4. Over-billing creates tax recognition issues

Your CPA should be tracking over-billing vs. under-billing as balance sheet items. When your billing exceeds costs incurred plus reasonable profit, you've created an over-billing liability. This affects your financial statements, your Work-in-Progress schedule, and potentially your tax position under percentage-of-completion accounting methods.

Most generic CPAs treating your construction company like a retail store have no idea how to track these issues. They're just recording revenue when you bill and calling it a day.

Learn more about construction-specific accounting: Construction Accounting Services

The Strategic Schedule of Values Framework: How to Structure SOV Line Items for Consistent Cash Flow

Forget what your generic CPA told you about billing. Here's how Des Moines contractors should actually structure their Schedule of Values:

Framework Step 1: Design Your SOV Architecture Around Project Cash Flow Phases

Stop thinking in trade phases. Start thinking in cash flow phases.

Most contractors structure their SOV like this:

• Mobilization
• Site Work
• Foundation
• Framing
• Rough-in (MEP)
• Drywall/Finishes
• Final/Closeout

This follows construction sequencing, which makes logical sense. But it creates cash flow disasters.

Instead, structure your SOV around these cash flow principles:

Phase 1 - Early Cash Acceleration (0-20% project completion)

• Mobilization (5-8% of contract value)
• Permits/Engineering (2-4% of contract value)
• Material procurement deposit allocation (3-5% of contract value)

These line items should total approximately 10-17% of your contract and should be billable very early with minimal GC pushback. Why? Because they represent real, verifiable costs you incur before you physically start work.

Phase 2 - Foundation Work Period (15-35% project completion)

• Excavation/site preparation
• Underground utilities
• Concrete/foundation work
• Material receiving and staging

These items bridge the gap between early acceleration and the heavy middle work period. They're physically verifiable and difficult to dispute.

Phase 3 - Primary Work Period (30-70% project completion)

• Structural work
• MEP rough-in (broken into 3-4 sub-items, not one large bucket)
• Envelope/exterior work
• Major systems installation

This is where most of your labor and material costs actually occur. The key is breaking this into numerous smaller line items rather than a few large ones. When rough-in electrical is one $120,000 line item, you can only bill it once or twice before reaching dangerous percentage levels. When it's divided into "underground electrical" ($30K), "panel installation" ($25K), "rough-in wiring - 1st floor" ($35K), and "rough-in wiring - 2nd floor" ($30K), you can bill incrementally across 4-6 progress payments without any individual line item appearing overcooked.

Phase 4 - Finish Work Period (65-90% project completion)

• Interior finishes (again, broken into multiple line items)
• Trim/fixtures installation
• Testing/commissioning
• Punch list allocation

Phase 5 - Closeout Period (85-100% project completion)

• Final inspections
• Owner training
• Warranty documentation
• Closeout/project management

Notice what's different about this structure:

1. Overlapping completion ranges: Your line items span overlapping completion percentages. This means you always have multiple billable items active simultaneously, preventing the cash flow gaps that occur when one phase ends and another hasn't started.
2. Granular line items in the 30-70% range: This is where your cash burn is highest. Breaking work into smaller SOV components gives you more frequent billing opportunities without front-loading any single item dangerously.
3. Meaningful closeout items: Most contractors treat closeout as an afterthought—maybe 2-3% of contract value. This creates cash flow problems in final months when you're still incurring costs but have nothing left to bill. Proper closeout allocation (8-12% of contract) ensures you have legitimate billing capacity through project completion.

For more on managing project cash flow: Cash Flow Management Services

Framework Step 2: Calculate Safe Front-Loading Limits (The 15/30/50 Rule)

Here's the dangerous game contractors play: You want to accelerate cash flow, but you can't front-load so aggressively that you destroy your billing capacity for the middle 60% of the project.

The 15/30/50 Rule provides safe guidelines:

Milestone 1 - First 15% of project completion

• You can safely bill up to 22-25% of contract value
• This gives you 7-10 percentage points of front-loading cushion
• Achievable through mobilization, permits, material deposits, and early site work

Milestone 2 - First 30% of project completion

• You can safely bill up to 38-42% of contract value
• Maintains 8-12 percentage points of front-loading cushion
• This is your maximum sustainable front-loading position

Milestone 3 - 50% project completion

• You should be billed at approximately 50-54% of contract value
• By project midpoint, your billing should align closely with actual completion
• Maintaining more than 5-6 points of front-loading past 50% completion creates end-of-project cash flow problems

Construction accounting expertise matters: Construction CPA Services Des Moines

Framework Step 3: The Material Procurement Allocation Strategy

Here's a progress billing secret most Des Moines contractors miss: Material procurement allocations allow legitimate early billing without traditional front-loading risks.

How it works:

When you're contracting a commercial HVAC project in West Des Moines, you often order major equipment 2-4 months before installation:

• Rooftop units: $45,000
• Ductwork materials: $28,000
• Controls/thermostats: $12,000
• Indoor air handlers: $35,000

Total material procurement: $120,000

Traditional approach: You create a line item called "HVAC Equipment - $120,000" and bill it when equipment is installed (months 4-6).

Strategic approach: You create separate SOV line items for material procurement:

• "HVAC Equipment Procurement Deposit - $60,000"
• "HVAC Equipment Delivery & Receiving - $30,000"
• "HVAC Equipment Installation - $30,000"

Now you can bill the procurement deposit when you actually place the order (month 1), bill delivery/receiving when materials arrive at the site (month 3), and bill installation when equipment goes in (month 5).

Why this works:

1. Legitimate billing basis: You're billing based on actual cash outlays, not inflated completion percentages
2. GC acceptance: Project managers understand material procurement costs and rarely challenge these line items
3. Documentation support: Your purchase orders and material invoices provide clear backup for these draws
4. Avoids over-billing liability: You're billing against actual costs incurred, keeping your WIP schedule clean

Practical implementation for Des Moines contractors:

• Electrical contractors: Separate line items for panel/switchgear procurement, wire/conduit delivery, fixture/device procurement
• Plumbing contractors: Separate line items for major equipment (water heaters, pumps), fixture packages, underground materials
• HVAC contractors: Separate line items for rooftop units, ductwork materials, controls/automation equipment
• General contractors: Separate line items for long-lead structural materials, millwork packages, specialty systems

This strategy works particularly well on projects where you're ordering $75,000+ in materials with 60+ day lead times. You legitimately incur these costs early, so billing them early is defensible.

For electrical contractors specifically: Electrician Accounting Services

The Monthly Progress Billing Process: A Step-by-Step System for Des Moines Contractors

Most contractors treat progress billing like a last-minute monthly scramble. Here's the systematic approach that Des Moines contractors should follow:

Step 1: Job Site Progress Documentation (Days 1-23 of billing month)

You cannot bill accurately without job site documentation systems.

Daily tracking requirements:

• Labor allocation: Track crew hours by SOV line item daily, not at month-end. When your foreman tracks "8 hours on the Johnson project," that's useless for progress billing. You need "8 hours - rough-in wiring 2nd floor" to allocate labor to specific SOV line items.
• Material receiving logs: Document all material deliveries with SOV line item allocation at time of receipt. When that lumber package arrives, note which SOV line item it supports before materials hit the job site.
• Equipment usage tracking: If your SOV includes equipment rental line items, track daily equipment costs by line item. When you're renting a boom lift for $800/day, you need to know which SOV line items are benefiting from that equipment.
• Subcontractor progress: If your SOV includes subcontractor work, track their progress weekly. Don't wait until billing deadline to ask your HVAC sub what percentage of their rough-in is complete.

Weekly progress assessment (Every Friday):

Walk the job site with your foreman/superintendent and assess physical completion percentage for each major SOV line item:

• Rough-in electrical - 1st floor: 75% complete (was 60% last week)
• Panel installation: 40% complete (was 25% last week)
• Underground electrical: 100% complete (was 100% last week)
• Rough-in electrical - 2nd floor: 35% complete (was 15% last week)

These weekly assessments create a tracking log that supports your progress billing and provides documentation if the GC questions your completion percentages.

Photographic documentation:

Take progress photos of each major work area weekly. When the GC questions whether your rough-in is really 75% complete, you can provide time-stamped photos showing:

• Last month: Bare walls, no electrical
• Two weeks ago: Boxes installed, limited wiring
• Last week: Extensive wiring, devices being installed
• This week: Rough-in substantially complete, ready for inspection

Photos don't just support your billing—they prevent payment disputes that cost you 30-60 days of cash flow delay.

Step 2: Cost Accounting Integration (Days 20-25 of billing month)

Your progress billing must tie to your job costing system. If they're disconnected, you're creating accounting disasters.

Cost-to-complete analysis by SOV line item:

For each line item in your Schedule of Values, calculate:

1. Budgeted cost: What you estimated this line item would cost
2. Costs incurred to date: What you've actually spent on this line item
3. Estimated costs to complete: What you still expect to spend
4. Total expected cost: Costs incurred + estimated to complete
5. Variance: Total expected cost vs. budgeted cost

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For most Des Moines contractors, billing should be based on the lower of:

1. Physical completion percentage
2. Cost-based completion percentage

This conservative approach keeps your Work-in-Progress schedule clean and avoids over-billing problems.

Job costing is critical: Job Costing for Contractors

Step 3: Retention Tracking and Reconciliation (Day 25 of billing month)

Most contractors don't reconcile retention until project closeout. This is insane.

Every month, your retention reconciliation should show:

Current billing month:

• Total amount billed this month: $45,000
• Retention rate: 10%
• Retention held this month: $4,500
• Net amount due this month: $40,500

Cumulative project:

• Total billed to date: $285,000
• Total retention held to date: $28,500
• Total payments received to date: $256,500

Retention reconciliation:

• Previous retention balance: $24,000
• Retention held this billing: $4,500
• Retention released this billing: $0
• Current retention balance: $28,500

This monthly reconciliation catches retention calculation errors immediately. When you wait until project completion to discover the GC shorted you $8,000 in retention across 14 monthly billings, good luck collecting. The project is closed, the superintendent has moved on, and nobody remembers the details.

Common retention problems Des Moines contractors face:

1. Retention rate changes mid-project: Contract says 10% retention for first $250,000, then 5% retention thereafter. Your accounting system keeps calculating 10% for the full project. You're owed $7,500 more than your records show.
2. Retention caps: Contract says 10% retention with a $35,000 cap. You bill $500,000 total, expecting $50,000 in retention. Contract caps it at $35,000. That $15,000 difference should flow through as cash during billing months 8-14, but your bookkeeper doesn't know this because they don't read contracts.
3. Change order retention treatment: You bill a $25,000 change order. Does the GC hold 10% retention on change orders? Some contracts say yes, some say no, some are silent. Your monthly reconciliation catches discrepancies immediately rather than at final billing.

Track retention like the asset it is: Construction Financial Management

Step 4: AIA Document Preparation and Internal Review (Days 26-28 of billing month)

Your G702/G703 should go through internal review before submission. Here's the checklist:

G703 Schedule of Values review:

• No line item billed at 100% unless physically complete and verified
• No line item showing percentage decline from previous month (unless correcting an error)
• Line item percentages align with job site documentation and photos
• Material procurement items supported by purchase orders and receiving documents
• Cost-to-complete analysis supports billing percentages
• Change orders properly incorporated into line items or listed separately

G702 Application for Payment review:

• Contract sum matches original contract plus approved change orders
• Previous payment amounts match your records and bank deposits
• Current payment requested equals sum of G703 line item amounts
• Retention calculation accurate based on contract terms
• Balance to finish equals contract sum minus amounts billed to date

Supporting documentation attachment:

• Lien waivers from all subcontractors and major material suppliers
• Change order backup documentation if billing change orders this month
• Material delivery receipts for material procurement line items
• Any requested photos or progress reports

Common mistakes that delay payment:

1. Math errors: Your G703 line items total $45,000 but your G702 shows $45,300 requested. The GC's project manager rejects the entire draw and asks you to resubmit. You just lost 5-7 days of cash flow.
2. Missing lien waivers: Most commercial contracts in Iowa require conditional lien waivers from subs before progress payment. Forgetting your HVAC sub's lien waiver means the GC shorts your draw by the HVAC billing amount.
3. Percentage decrease without explanation: Your G703 shows Panel Installation at 60% this month, but last month it was 65%. The GC assumes this is an error and calls you for explanation. Maybe you corrected an over-billing from last month, but without documentation, this looks like sloppiness and raises red flags about all your percentages.
4. Change order documentation gaps: You're billing $12,000 for change order work, but you never attached the approved change order. The GC won't pay change order amounts without the approved change order documentation, even if the work is complete.

These seem like minor administrative issues. But each one delays your payment by 7-14 days, and when you're managing $400,000 in working capital across six active projects, 14-day delays destroy cash flow.

Step 5: Submission Timing and Follow-Up Protocol (Days 28-30+ of billing month)

When you submit matters as much as what you submit.

Optimal submission timing for Des Moines commercial projects:

• Best: Submit on the date specified in your contract (often the 25th of the month). Many GCs have internal approval workflows that align with contract submission dates. Early submissions hit their process at the optimal time.
• Acceptable: Submit 1-2 days before contract deadline. Shows you're on top of billing without being annoyingly early.
• Problematic: Submit on the last day or after deadline. You've now given the GC's project manager an excuse to bump your payment to next month's approval cycle. "We received this after the cutoff" becomes their defense for 30-day payment delays.

Post-submission follow-up system:

Day 1 after submission (Day 26-27):

• Email confirmation to GC project manager: "Submitted Application for Payment #6 via [method] on [date]. Please confirm receipt."
• This creates a paper trail if payment is delayed

Day 5 after submission (Day 30-31):

• If no response to receipt confirmation, phone call to project manager: "Following up on Application #6 submitted on [date]. Do you need any additional documentation?"
• 80% of payment delays happen because of missing documentation. Finding out on Day 5 instead of Day 20 saves you weeks.

Day 10 after submission (Day 5-6 of following month):

• Email to project manager: "Checking on approval status for Application #6. Our records show payment due per contract on [date]."
• This reminds them of contractual payment obligations

Day 20 after submission (Day 15-16 of following month):

• If still no payment, escalate to GC project executive or owner representative
• Reference contract payment terms and request status update
• Consider pausing work if payment is significantly overdue and contract allows

Day 30 after submission (Day 25-26 of following month):

• If still no payment and no satisfactory explanation, consult with construction attorney regarding mechanics lien options
• Iowa mechanics lien deadlines are strict—don't wait until day 60 to start this process

For contractors across Ankeny, Johnston, Grimes, Clive, Waukee, and West Des Moines: Payment delays are not inevitable. Systematic follow-up and escalation protocols recover 70%+ of delayed payments without legal action.

More on managing contractor operations: Contractor Business Advisory Services

Advanced Progress Billing Strategies for Des Moines Contractors

Once you've mastered the fundamentals, these advanced strategies accelerate cash flow without increasing risk:

Strategy 1: Stored Materials Provisions (How to Get Paid Before Installation)

Many Des Moines commercial contracts include "stored materials" provisions allowing billing for materials delivered to the job site but not yet installed.

Standard stored materials contract language:

"Contractor may include in Applications for Payment the reasonable value of materials suitably stored at the site or at approved off-site locations, provided such materials are covered by appropriate insurance and clearly identified for this project."

How to use this strategically:

Traditional approach: You order $40,000 in electrical panels for a West Des Moines commercial project. Panels arrive in Week 8. You install panels in Week 12. You bill for panels in Month 4 when installation is complete.

Stored materials approach: You order $40,000 in electrical panels. Panels arrive in Week 8. You create a dedicated "stored materials" section in your job site layout, clearly marking these panels for the specific project. You take photos of the stored materials with visible project identification. You submit a progress billing in Month 3 including these stored materials at 100% of their value (minus retention).

Result: You receive payment for these panels 4 weeks earlier than traditional approach, improving cash flow by $36,000 (after retention).

Requirements for successful stored materials billing:

1. Contract authorization: Your contract must allow stored materials billing. Review your contract before attempting this.
2. Proper storage and identification: Materials must be clearly identified as belonging to this specific project. Use tags, markings, or dedicated storage areas.
3. Insurance coverage: Your property insurance must cover stored materials. Some policies have limitations on covered property at job sites.
4. Progress photos: Document stored materials with photos showing quantity, condition, and project identification.
5. Risk assumption: Once you bill stored materials, you've transferred title to the owner. If materials are stolen or damaged, you're responsible for replacement. Factor this risk into your decision.

Best applications in Des Moines market:

• Electrical contractors with major panel, switchgear, or generator equipment
• Plumbing contractors with expensive water heaters, pumps, or equipment
• HVAC contractors with rooftop units or major mechanical equipment
• Specialty contractors with long-lead custom materials

Stored materials billing works best for high-value, low-volume items. Don't try to bill stored materials for $3,000 in conduit and wire—the administrative burden outweighs the cash flow benefit.

Strategy 2: Early Closeout Coordination for Retention Release

Most Des Moines contractors wait for final completion to recover retention. This is leaving $30,000-80,000 on the table for 60-90 extra days.

Standard approach: Project reaches substantial completion. You finish punch list over next 30 days. Final completion occurs. You submit final Application for Payment requesting retention release. GC processes payment in 30 days. Total time from substantial completion to retention payment: 60-90 days.

Strategic approach:

60 days before projected substantial completion:

• Email GC project manager: "Project on track for substantial completion approximately [date]. Please provide punch list requirements and final closeout document checklist so we can begin preparation."
• This signals you're organized and thinking ahead

30 days before projected substantial completion:

• Begin preparing closeout documents: warranties, O&M manuals, as-built drawings, training schedules
• Pre-schedule final inspections with authorities having jurisdiction
• Request preliminary punch list walk-through with GC

At substantial completion:

• Submit substantially complete closeout package with only minor items pending
• Punch list is minimal because you've been addressing items proactively
• Final inspections scheduled within days rather than weeks

15 days after substantial completion:

• All punch list items complete
• Submit final Application for Payment with retention release
• All closeout documents complete and delivered

Result: Retention payment received 30-45 days after substantial completion instead of 60-90 days—accelerating cash flow by $40,000-70,000 depending on contract size.

Practical implementation:

Create a project closeout checklist 90 days before expected completion:

• Warranties collected from all subcontractors and material suppliers
• O&M manuals compiled and formatted per contract specifications
• As-built drawings coordinated with all trades and updated
• Training schedule coordinated with owner/facility management
• Final inspections scheduled with all relevant authorities
• Spare parts/materials delivered per contract requirements
• Lien waivers prepared for final submission
• Final change order reconciliation complete

Most contractors start this process after substantial completion. Starting 90 days early cuts your retention recovery time in half.

Strategy 3: Contract Negotiation Strategies That Improve Billing Terms

Progress billing problems often originate in contract terms you accepted during bidding.

Red flag contract terms Des Moines contractors should negotiate:

Payment timing:

• Standard term: "Payment within 30 days of approval"
• Improved term: "Payment within 15 days of submission"
• Best term: "Payment within 10 days of submission with 1.5% monthly late fee"

Why this matters: On a $400,000 contract with monthly billing, negotiating from 30-day to 15-day payment terms improves your cash flow by $50,000 on average across the project.

Retention terms:

• Standard term: "10% retention held until final completion"
• Improved term: "10% retention through 50% completion, 5% retention thereafter"
• Best term: "10% retention with $40,000 cap" or "10% retention released to 5% at substantial completion"

Why this matters: On a $500,000 project, capping retention at $40,000 releases $10,000 to you during the project that would otherwise be held until final completion.

Stored materials provisions:

• Standard term: Silent on stored materials (meaning not allowed)
• Improved term: "Stored materials may be billed when suitably stored at the site"
• Best term: "Stored materials may be billed when suitably stored at the site or at approved off-site locations"

Why this matters: Off-site storage provisions allow billing for materials stored at your shop or warehouse before delivery to the job site, accelerating cash flow by 2-4 weeks.

These terms are negotiable, especially in competitive bidding environments where GCs need qualified bidders. Many Des Moines contractors assume contract terms are fixed. They're not—especially on negotiated projects or when you're a qualified specialty contractor they want.

More on contractor finances: Construction Financial Planning

The Work-in-Progress Schedule: How Your Progress Billing Impacts Financial Statements

Your generic CPA probably doesn't explain this, but how you bill progress payments directly impacts your financial statements, tax position, and bonding capacity.

Understanding Over-Billing vs. Under-Billing

Under-billing occurs when your costs incurred (plus reasonable profit) exceed amounts billed:

• Job costs incurred: $180,000
• Amounts billed: $150,000
• Under-billing: $30,000

This appears as a current asset on your balance sheet—essentially an account receivable from the project. This is generally good for your financial position.

Over-billing occurs when amounts billed exceed costs incurred (plus reasonable profit):

• Amounts billed: $220,000
• Job costs incurred: $180,000
• Reasonable profit earned: $25,000
• Over-billing: $15,000

This appears as a current liability on your balance sheet—essentially a deferred revenue obligation. This is generally bad for your financial position and can create tax complications.

Why this matters for Des Moines contractors:

1. Bonding capacity: Sureties review your WIP schedule to assess financial health. Significant over-billing suggests cash flow problems or aggressive accounting. This can reduce your bonding capacity or increase your bonding costs.
2. Tax reporting: Under percentage-of-completion accounting (required for many contractors), over-billing can accelerate tax recognition of income you haven't truly earned yet.
3. Bank lending: When you're applying for that equipment loan or line of credit with your Des Moines bank, they're reviewing your balance sheet. Over-billing distorts your true financial position.
4. Financial statement accuracy: Your income statement should reflect economic reality—revenue earned from work performed. When billing percentages don't align with costs incurred and work completed, your financial statements misrepresent your actual business performance.

The connection to front-loading:

Aggressive front-loading in months 1-3 creates over-billing. That over-billing sits on your balance sheet as a liability for months 4-12 until your costs catch up to your billing. During this period:

• Your balance sheet shows a liability that concerns lenders and sureties
• Your tax position may be distorted
• Your true job profitability is obscured

This is why the 15/30/50 Rule exists—it provides enough front-loading to help cash flow without creating over-billing problems that damage your financial position.

Construction accounting requires expertise: Construction Accounting Specialists

The Monthly WIP Schedule Process

Every month, your accounting system should produce a Work-in-Progress schedule showing:

For each active project:

1. Original contract amount
2. Approved change orders
3. Revised contract amount
4. Costs incurred to date
5. Estimated costs to complete
6. Total estimated costs at completion
7. Estimated profit at completion
8. Profit percentage
9. Amounts billed to date
10. Over-billing or under-billing

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This WIP schedule tells you:

• Total backlog: $1,081,000 in active contracts
• Work performed to date: $603,000 in costs incurred
• Gross profit position: $163,000 estimated profit across all jobs ($1,081,000 - $918,000)
• Net over-billing: $4,000 over-billed across all projects (liability)

Your CPA should review this WIP schedule monthly and discuss:

• Jobs showing estimated losses at completion (need immediate attention)
• Jobs with significant over-billing (billing may be too aggressive)
• Jobs with significant under-billing (may need to accelerate billing)
• Overall profitability trends

Most generic CPAs never produce a WIP schedule. They're just coding expenses to jobs and recording revenue when you bill. They have no idea whether your jobs are profitable, whether you're over-billing, or whether your financial statements accurately reflect reality.

This is why construction accounting specialists matter: Why Construction Companies Need Specialized CPAs

Common Progress Billing Mistakes That Cost Des Moines Contractors $40,000+ Annually

Mistake #1: Treating All Line Items Equally in SOV Structure

The problem: Most contractors create Schedule of Values line items that mirror their estimate or cost codes. Every line item gets treated identically.

Why this kills cash flow:

Some line items are easy to bill early with minimal GC pushback:

• Mobilization
• Permit costs
• Material deposits
• Equipment rental

Other line items face intense scrutiny every billing cycle:

• General conditions
• Project management
• Overhead allocations

When you allocate significant value to scrutiny-prone line items, you create monthly billing battles that delay payment.

The fix:

Allocate more contract value to low-scrutiny, early-billable items and less to high-scrutiny items. This doesn't mean dishonest allocation—it means strategic structuring within legitimate ranges.

Example - Electrical contractor SOV structure:

Weak structure:

• Mobilization: $8,000 (1.6%)
• Site electrical: $95,000 (19%)
• Rough-in: $285,000 (57%)
• Trim/finish: $95,000 (19%)
• Project management: $17,000 (3.4%)

Strategic structure:

• Mobilization: $25,000 (5%)
• Permits/engineering: $10,000 (2%)
• Material procurement - panels: $45,000 (9%)
• Material procurement - wire/conduit: $35,000 (7%)
• Site electrical - underground: $40,000 (8%)
• Site electrical - overhead: $35,000 (7%)
• Rough-in - 1st floor: $70,000 (14%)
• Rough-in - 2nd floor: $75,000 (15%)
• Panel installation: $40,000 (8%)
• Trim/finish - devices: $50,000 (10%)
• Trim/finish - fixtures: $45,000 (9%)
• Testing/commissioning: $20,000 (4%)
• Project closeout: $10,000 (2%)

Both structures total $500,000. But the strategic structure:

• Allows $70,000 in early billing (mobilization + permits + initial material procurement) vs. $8,000
• Breaks high-value rough-in work into smaller, more frequently billable components
• Eliminates the "project management" line item that always gets questioned
• Includes testing/commissioning and closeout items that preserve billing capacity through project end

This restructuring alone can improve your cash flow by $30,000-50,000 across a typical project by accelerating early billing and preventing late-project cash crunches.

Mistake #2: Billing Without Photographic Documentation

The problem: Contractors submit progress billings based on internal assessments without photos supporting their completion percentages.

Why this costs you money:

When the GC questions your rough-in completion percentage (and they will), you have two options:

Option A - No photos: "I assessed it at 75% complete" GC response: "I think it's closer to 60%. We're adjusting your draw accordingly." Result: Payment reduced by $4,500. You spend 3 weeks arguing about it and eventually accept a compromise at 67% completion. You lost $2,400 and wasted 8 hours of management time.

Option B - With photos: "Here are photos from the past three weeks showing progressive installation. You can see [specific evidence] supporting 75% completion." GC response: "Okay, that documentation looks reasonable."
Result: Payment approved as submitted. No delays, no reductions.

The fix:

Take systematic progress photos on every project:

• Weekly overview photos: Same vantage points each week showing overall progress
• Detail photos of major work: Close-ups showing work quality and completion status
• Before/during/after series: Show transformation of work areas over time
• Timestamp and location tags: Use apps that embed date/time/GPS data

Store photos organized by:

• Project name
• Date
• SOV line item
• Work area/location

When you submit your G703, you have a ready library of supporting documentation if any line item is questioned.

Cost of systematic photo documentation: 15-20 minutes per week per project

‍Value of payment dispute prevention: $5,000-15,000 per project in avoided payment reductions and delays

ROI is extraordinary, yet most contractors ignore this simple practice.

Mistake #3: Ignoring Contract Payment Terms Until Problems Arise

The problem: Contractors submit progress billings without understanding their contract's specific payment terms, then wonder why they're not getting paid on time.

Common contract payment provisions Des Moines contractors miss:

Conditional payment provisions: "Owner's payment to Contractor is conditioned upon Owner's receipt of payment from [project lender/end user/etc.]"

This means your payment timing isn't based on your submission date—it's based on when the GC gets paid by their customer. If that's 60 days after your submission, you're waiting 60 days regardless of what the contract says about "30-day payment terms."

Retainage phase-out provisions: "Retainage shall be 10% through 50% completion, then 5% thereafter"

If you don't track project completion percentage and actively invoke this provision, the GC will often continue holding 10% for the entire project. This costs you $15,000-25,000 in unnecessarily delayed cash on a typical commercial project.

Stored materials restrictions: "No stored materials shall be included in progress payments unless approved in writing by Owner"

If your contract has this language and you submit billing including stored materials without getting approval, your entire draw gets rejected and you lose 15-20 days of payment timing.

Invoice submission requirements: "Contractor shall submit Applications for Payment via [specific portal/email/format] by the [25th] of each month"

If you submit via email when the contract requires portal submission, or you submit on the 27th when the contract says 25th, the GC has grounds to defer your payment to the following month.

The fix:

Create a contract payment terms summary sheet for every project:

• Payment timing: [X] days after [submission/approval]
• Submission method: [portal/email/mail]
• Submission deadline: [date] of month
• Retainage rate: [X]% with [any phase-out provisions]
• Retainage cap: [$X] or [no cap]
• Change order retention: [held/not held]
• Stored materials: [allowed/not allowed/requires approval]
• Required supporting documents: [lien waivers/other]
• Late payment provisions: [interest rate/other penalties]

Review this sheet before submitting every progress billing. Following contract requirements precisely prevents 80%+ of payment delays.

For more on contract management: Construction Contract Review Services

The Cash Flow Impact: How Progress Billing Discipline Improves Working Capital by $75,000+

Let's make this concrete with a real-world example:

Scenario: Des Moines electrical contractor with three simultaneous projects

Traditional approach (weak progress billing):

West Des Moines Office (Month 4):

• Billed to date: $180,000 (63% of contract)
• Actual completion: 55%
• Position: Over-billed by 8 percentage points
• Cash flow: Good in months 1-3, declining in months 4-6
• Remaining billing capacity: Limited

Ankeny Retail (Month 7):

• Billed to date: $245,000 (58% of contract)
• Actual completion: 60%
• Position: Slightly under-billed
• Cash flow: Consistent but not optimized
• Remaining billing capacity: Good

Waukee Industrial (Month 2):

• Billed to date: $125,000 (37% of contract)
• Actual completion: 25%
• Position: Over-billed by 12 percentage points
• Cash flow: Excellent in month 1, will decline sharply months 3-4
• Remaining billing capacity: Very limited

Total cash position: $550,000 billed, $495,000 received after retention

Problems with this approach:

1. West Des Moines project will have cash flow problems in months 5-7
2. Waukee project will have severe cash flow problems in months 3-5
3. Combined over-billing of $80,000 creates balance sheet liabilities
4. Working capital crunch likely in 60-90 days

Strategic approach (disciplined progress billing):

West Des Moines Office (Month 4):

• Billed to date: $165,000 (58% of contract)
• Actual completion: 55%
• Position: Appropriately billed with 3-point cushion
• Cash flow: Consistent throughout project
• Remaining billing capacity: Strong through months 5-8

Ankeny Retail (Month 7):

• Billed to date: $270,000 (64% of contract)
• Actual completion: 60%
• Position: Front-loaded by 4 percentage points (strategic)
• Cash flow: Optimized while preserving billing capacity
• Remaining billing capacity: Good for months 8-12

Waukee Industrial (Month 2):

• Billed to date: $95,000 (28% of contract)
• Actual completion: 25%
• Position: Front-loaded by 3 percentage points
• Cash flow: Strong in months 1-2, will remain strong months 3-6
• Remaining billing capacity: Excellent throughout project

Total cash position: $530,000 billed, $477,000 received after retention

Wait—the strategic approach billed $20,000 LESS than traditional approach. How is this better?

The difference shows up in months 5-8:

Traditional approach cash flow (months 5-8):

• Month 5 billing: $115,000 (running into billing capacity constraints)
• Month 6 billing: $95,000 (severe constraints on over-billed projects)
• Month 7 billing: $80,000 (very limited billing capacity)
• Month 8 billing: $105,000 (only one project still active)
• Total months 5-8: $395,000 billed

Strategic approach cash flow (months 5-8):

• Month 5 billing: $145,000 (preserved billing capacity allows higher billing)
• Month 6 billing: $140,000 (consistent capacity across projects)
• Month 7 billing: $135,000 (maintained billing strength)
• Month 8 billing: $125,000 (strong close on active projects)
• Total months 5-8: $545,000 billed

The strategic approach bills $150,000 MORE in months 5-8 because it preserved billing capacity by not over-billing in early months.

After-retention cash impact: $135,000 additional cash received in months 6-9

This is the power of disciplined progress billing. You sacrifice $20,000 in early cash flow (months 1-4) to gain $150,000 in middle-to-late cash flow (months 5-8). Your working capital position is $130,000 stronger, and you never face a cash crunch that forces you to delay vendor payments or miss payroll.

Transform your construction cash flow: Cash Flow Management for Contractors

Action Plan: Implementing This Progress Billing Framework in Your Des Moines Construction Company

Immediate Actions (This Week)

Day 1-2: Contract and current project audit

For every active project:

• Pull your contract and read payment terms section completely
• Create contract payment terms summary sheet
• Note submission deadlines, retainage provisions, stored materials allowances
• Review your current SOV structure for each project
• Calculate current over-billing or under-billing position

Day 3-4: SOV restructuring for current projects

• Identify any upcoming projects where you can restructure SOV before submission
• For active projects, determine if SOV amendments are possible/worthwhile
• Create revised SOV templates using the cash flow phase framework
• Break large line items into smaller, more frequently billable components

Day 5: Documentation system setup

• Establish weekly progress photo protocol
• Create photo organization system (folders by project > date > SOV item)
• Schedule weekly job site walks for progress assessment
• Set up monthly WIP schedule template

30-Day Implementation (This Month)

Week 1-2: Process documentation

• Document your new progress billing process (use the step-by-step system in this article)
• Create internal checklists for monthly billing cycle
• Establish review protocols before G702/G703 submission
• Train project managers/foremen on new documentation requirements

Week 3: Cost accounting integration

• Ensure job costing system tracks costs by SOV line item
• Implement cost-to-complete analysis by line item
• Create monthly cost-vs-billing reconciliation process
• Set up over-billing/under-billing tracking

Week 4: Contract negotiation preparation

• Develop preferred payment terms list for future contracts
• Create payment terms negotiation talking points
• Review past contracts to identify consistently problematic provisions
• Prepare alternative language for future contract negotiations

90-Day Transformation (Next Quarter)

Month 1: Current project optimization

• Implement new billing practices on all active projects
• Track payment timing and identify improvement vs. historical baseline
• Address any GC pushback on revised billing approaches
• Refine documentation systems based on initial experience

Month 2: Financial integration

• Review monthly WIP schedule with your CPA
• Analyze over-billing/under-billing trends
• Assess impact on balance sheet and bonding capacity
• Refine cost-to-complete estimating based on actual vs. estimated costs

Month 3: Results measurement and refinement

• Calculate cash flow improvement vs. previous quarter
• Measure payment timing (submission to receipt) across all projects
• Document lessons learned and process refinements
• Train any additional team members on new systems

Expected results after 90 days:

• 12-18 day reduction in average payment timing
• $40,000-75,000 improvement in working capital position (for contractor with $2-4M annual revenue)
• Elimination of over-billing liability issues
• Improved bonding capacity due to cleaner financial statements
• Reduced payment disputes and associated administrative time

Why Generic CPAs Can't Fix Your Progress Billing Problems

Here's the reality Des Moines contractors need to understand:

Your generic CPA doesn't know:

• How to structure a Schedule of Values strategically
• The difference between legitimate front-loading and over-billing
• How AIA billing documents work or what GCs look for when reviewing them
• How to calculate and track over-billing vs. under-billing
• How progress billing impacts your WIP schedule, balance sheet, and tax position
• How to integrate job costing with progress billing for accurate completion assessments
• Contract payment term nuances that affect your cash flow
• Bonding surety expectations for WIP schedules and billing practices

Your generic CPA thinks:

• Progress billing is just sending invoices
• Revenue should be recorded when you bill (incorrect for percentage-of-completion contractors)
• Job costing is optional or can be done casually
• Retention is just another receivable (not understanding the implications for cash flow and financial statements)

The difference this makes:

With generic CPA: You're recording revenue when you bill, your financial statements don't reflect economic reality, your WIP schedule doesn't exist or is inaccurate, your bonding surety questions your financial reporting, and you face cash flow crises because nobody's managing billing strategically.

With construction accounting specialist: Your progress billing is strategically structured, your financial statements accurately reflect job profitability, your WIP schedule supports bonding applications, and your cash flow is optimized because billing aligns with project lifecycle and contractual requirements.

This isn't about hourly rates or CPA firm size. It's about construction-specific expertise.

A CPA who understands construction accounting knows that progress billing isn't an administrative task—it's a strategic financial management function that determines your working capital, bonding capacity, tax position, and ultimately whether you're able to grow your business or you're constantly scrambling to make payroll.

Take Control of Your Progress Billing: Next Steps for Des Moines Contractors

If you're a construction contractor across Des Moines, Ankeny, West Des Moines, Johnston, Grimes, Clive, Waukee, or surrounding areas and you recognize these progress billing problems in your business, here's what to do:

Option 1: Implement This Framework Yourself

This article provides everything you need to transform your progress billing practices. The frameworks, checklists, and processes are all here. You can implement this internally if you have:

• Time to dedicate to process redesign
• Team members who can execute new procedures consistently
• Discipline to follow through on systematic implementation
• Willingness to learn and refine based on results

Many contractors successfully implement these strategies on their own. It takes 90 days of focused effort, but the working capital improvements are substantial and permanent.

Option 2: Get Construction Accounting Expertise

If your current CPA doesn't understand construction-specific accounting, you're operating with a fundamental disadvantage. You need:

• Monthly WIP schedule preparation and review
• Progress billing strategic guidance
• Job costing integration with financial reporting
• Contract term analysis and payment term negotiation support
• Over-billing/under-billing tracking and management

Performance Financial LLC specializes in construction contractor accounting. We work exclusively with contractors, builders, and construction-related businesses throughout Iowa and the Midwest. We understand:

• How to structure SOV line items for optimal cash flow
• Progress billing strategies that improve working capital without creating over-billing problems
• Contract payment terms that affect your cash flow
• How progress billing impacts bonding capacity and financial statements
• Integration of job costing, progress billing, and financial reporting

Option 3: Start with Tax Reduction Analysis

Maybe you're not ready to change CPAs. That's fine. But you should at least understand what you're missing.

Performance Financial offers a Tax Reduction Analysis that includes:

• Review of your current financial statements and job costing systems
• Assessment of your progress billing practices and cash flow management
• Identification of tax savings opportunities specific to construction contractors
• Analysis of whether your current accounting provides the information you need to manage your business

There's no cost for this analysis. It's a consultation to help Des Moines contractors understand whether their current accounting serves their business or holds them back.

Schedule your Tax Reduction Analysis: Book Consultation

Final Thoughts: Progress Billing as Competitive Advantage

Most Des Moines contractors view progress billing as an administrative burden—something their bookkeeper handles at month-end with minimal strategic thought.

This is exactly wrong.

Progress billing is one of the most powerful cash flow management tools you control. How you structure your Schedule of Values, when and how you submit draws, how you document progress, and how you integrate billing with job costing—these decisions determine whether you're constantly fighting cash flow fires or whether you have consistent working capital to fuel growth.

The contractors who master strategic progress billing have:

• Better bonding capacity because their financial statements accurately reflect job performance
• Lower financing costs because they need less working capital credit from banks
• Faster growth because they can take on new projects without cash flow constraints
• Better vendor relationships because they pay on time consistently
• Lower stress because they're not scrambling to make payroll every other week

All of this comes from treating progress billing as the strategic financial function it is—not as an administrative afterthought.

You can fix this. The frameworks in this article work. Thousands of contractors across the country use these exact strategies to transform their cash flow.

The question is whether you'll implement them or whether you'll keep doing what you've always done—billing reactively, hoping for the best, and wondering why cash flow never improves despite profitable projects.

Des Moines contractors who want to fix their cash flow problems have the tools right here. The only question is whether you'll use them.

About Performance Financial LLC

Performance Financial is a Des Moines-based CPA and accounting firm specializing in construction contractors, builders, and construction-related businesses throughout Iowa and the Midwest. Unlike generic CPAs who treat construction companies like retail stores, we provide construction-specific accounting expertise including job costing, progress billing strategy, cash flow management, tax planning, and business advisory services.

We work with electricians, HVAC contractors, plumbers, general contractors, landscapers, and other construction trades across the Des Moines metro area including Ankeny, West Des Moines, Johnston, Grimes, Clive, Waukee, and Pella.

Learn more: Performance Financial Construction Accounting

Contact us: Schedule Consultation

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Ready to transform your progress billing and cash flow? Schedule your Tax Reduction Analysis with Performance Financial today. No cost, no obligation—just a conversation about whether your accounting is helping or hurting your construction business.

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