Progress payment bills are sometimes used for fixed-price projects that require a long lead time before deliveries under the contract can be made, or where substantial amounts of money must be expended before the contractor becomes eligible for partial payments on deliveries.

Progress payment bills are interim bills that allow you to recover a percentage of your incurred costs, even if deliveries have not been made.

With progress payment billings, your company is, in effect, operating under an arrangement similar to a line of credit. You submit bills on a monthly basis to the customer for a percentage of the incurred costs. The percentage of incurred costs that you can bill varies by project, but usually is from 80% to 95%. The remaining percentage is held until the finished goods are delivered.

The incurred costs eligible for billing depend on the status of your company ("large" or "small" business) for a given project. If your company is classified as a "large business" on a project, you use cash basis billing and, in general, only those costs that have been paid for can be billed. If your company is classified as a "small business" on a project, all incurred costs are eligible for billing. If you are using subcontractors on a project, they are also subject to the rules of progress payment bills. Reimbursement is made in full for subcontractors because their invoices submitted to you have already been reduced by the progress payment billing rate.

The provisions for progress payment billings are promulgated in Federal Acquisition Regulation (FAR) 52.232-16. Any company considering a progress payment billing arrangement must become very familiar with the provisions outlined in this FAR clause, and with the instructions on the back of form 1443.

Projects that bill using progress payments submit two distinct types of bills to the customer: progress payment invoices and delivery invoices. As noted previously, progress payment invoices are based on costs incurred and are usually submitted on a monthly basis. In Costpoint, progress payment bills are generated on the Calculate Progress Payment Bills screen.

Delivery invoices are based on deliveries accepted by the customer and are submitted when the deliveries are made. You can submit delivery invoices using government form DD-250, Material Inspection and Receiving Report, or any generic invoice. You can print form DD-250s on the Print DD250 Invoices screen, if your company has purchased Costpoint Sales Order Entry. Companies without Costpoint Sales Order Entry can enter and print delivery invoices in Costpoint Billing on the Manage Project Product Bills screen and the Print Project Product Bills screen.