A mill installation is not a repair ticket. It runs for months, drags in rigging crews, crane rentals, foundation work, electrical, and a commissioning window that shifts every time a gearbox shows up late. Billing that work on one invoice at the end is a fine way to fund your customer's project with your own working capital.

Progress billing fixes the cash-flow problem. It also creates a second set of problems: milestones that don't line up with your costs, retainage that sits on the books for a year, change orders that never got priced, and a work-in-progress schedule nobody trusts. Here is a practical way to set it up and keep it clean.

Build the billing schedule before the first truck rolls

It's tempting to bill 50% when the equipment ships and 50% at startup. Owners push back on that, and it usually leaves your heaviest labor months unbilled. Map the money to the actual sequence of work instead:

• Engineering, drawings, and submittals
• Equipment procurement and fabrication
• Foundations and structural preparation
• Mechanical installation and alignment
• Piping, electrical, and controls
• Commissioning and performance testing
• Final acceptance and punch list closeout

Then assign a value to each. On a $1.4 million installation, a workable split might be 15% at contract release and approved drawings, 35% on delivery of major equipment to site, 30% at mechanical completion, 15% at successful commissioning, and 5% at final acceptance. The exact percentages matter less than the logic: each draw should roughly track cost you have already incurred or are about to incur.

Two mistakes show up over and over. Milestones tied to calendar dates rather than events, which pays you for work not yet done and starts an argument later. And schedules weighted so heavily to the end that your company effectively finances the project. Tie every milestone to something a person can walk out and verify.

Choose how you measure progress, then expect a gap

For accounting, a custom mill installation is normally recognized over time, because the work is specific to that mill and you have a right to payment for what you have performed. The usual measure is cost-to-cost: costs incurred to date divided by total estimated costs, applied to the contract price.

That percentage rarely equals your billing percentage on any given day, and that's fine. Billing is a contract term. Revenue recognition is an accounting conclusion. What matters is that you can explain the difference. Keep a job cost budget by phase in your ledger, update it when scope changes, and compare it against cumulative billings every month. If you're 62% complete by cost but have billed 80%, you're borrowing from the customer. If you're 62% complete and have billed 40%, you're lending to them.

One caution: not every dollar spent represents progress. Equipment sitting in your yard or on a supplier's dock, uninstalled and not yet part of the mill, generally shouldn't push your percentage complete upward. Track stored materials separately so they don't distort the job.

What belongs in the pay application

The draw itself is the easy part. The support behind it is what gets you paid on time. A complete application usually includes:

• The owner's pay application form, with both current and cumulative totals
• The specific milestone being billed and the evidence that it's been met
• Delivery receipts, bills of lading, or signed field acceptance for that milestone
• Conditional lien waivers from your company and your subcontractors for the prior payment
• A change order log showing approved and pending items separately
• Retainage as its own line, never folded into the draw

Send it before you need the cash, not after. Terms usually start running at approval, not submission, so a two-week approval lag quietly becomes a 45-day cycle. Get the owner's representative to confirm acceptance in writing, even if that's a one-line email saying the mill is mechanically complete. Verbal confirmation is worth nothing in month four.

Retainage: small percentage, big bookkeeping

Most contracts withhold somewhere between 5% and 10% of each draw until the work is accepted. That money is real revenue you've earned, so treat it like a receivable with its own general ledger account and its own aging, not a footnote buried inside accounts receivable.

Release often comes in stages: part at mechanical completion, the balance after the punch list is closed and the warranty period runs. Nobody calls to remind you to bill it. Put a tickler on the calendar for each release trigger and invoice it the week it comes due, with whatever certification or waiver the contract requires.

Watch your subcontractors' retainage at the same time. If you're holding 10% from the millwright while the owner holds 10% from you, your ledger needs to show both sides. Whether you can pass a retainage hold down the chain depends on your subcontract language and your state's prompt payment rules, so have the contract reviewed rather than assuming pay-when-paid will protect you.

Price change orders before the crew starts

Anything that touches equipment specification, foundation dimensions, installation sequence, or schedule is a change. The trap is the friendly verbal change: the mill manager asks for a different discharge chute, your foreman says sure, and eight weeks later nobody agrees on what it cost.

Write it up with labor hours, equipment and crane time, subcontractor cost with markup, and a stated schedule impact. Say explicitly whether retainage applies to the change, because that detail gets argued about later. Get a signature before the work proceeds when you can. When the schedule won't allow that, send a written notice of the change the same day and follow with pricing within a week — most contracts require notice within a set number of days, so missing that window can cost you the whole amount.

Keep one change order log for the job and include it with every pay application. It keeps the approved contract value in your accounting system honest and gives the owner's rep a single place to see what's pending.

Keep revenue recognition clean

When you bill more than you've recognized as revenue, the difference is a contract liability — often labeled billings in excess of costs. When you've recognized more than you've billed, including retainage you haven't invoiced, it's a contract asset or an unbilled receivable. Both are normal on a long installation. Neither should be a surprise at year-end.

The fix is a work-in-progress schedule, refreshed monthly, showing contract value, costs to date, estimated cost to complete, percent complete, revenue recognized, billings to date, and the resulting over- or under-billing. Review it with the project manager, not just the accounting staff, because the estimate to complete is the number that drives everything else. A stale estimate turns a profitable job into a reported loss the month before closeout.

Accounting treatment for long-term contracts has real nuance, particularly around uninstalled materials and how you measure progress. A CPA who works with contractors is worth the fee here.

The month-end routine that keeps it straight

Progress billing gets messy when it's handled in a panic at close. Handled as a routine, it takes an hour or two per job:

1. Post all job costs through the cut-off date and check for invoices still sitting in accounts payable.
2. Update the estimate to complete and flag any phase running over budget.
3. Recompute percent complete and compare it to cumulative billings.
4. Reconcile the change order log against the contract value in your system.
5. Roll retainage forward, confirming what has been billed and what is still being held.
6. Walk the WIP schedule with the project manager before the books close.

Do that consistently and the awkward questions disappear: why the job shows a loss, why retainage is bigger than you expected, why the last change order never made it onto an invoice. The work doesn't change. You just stop discovering it six months late.

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