If you've ever finished a big job only to wait 60 days for your money, you already know the problem. Progress billing — also called milestone invoicing or staged invoicing — is the fix. Instead of invoicing once at the end, you invoice at agreed points throughout the job. You get paid as the work progresses. Your client gets a clear financial roadmap. Everyone wins.
This guide walks through how progress billing works in New Zealand, how to set it up in your quotes, what the law says, and how to avoid the traps that catch out tradies every year.
What Is Progress Billing?
Progress billing means raising invoices at pre-agreed stages of a job, rather than a single invoice at completion. A typical structure might look like:
- Deposit (10–20%) — due before work starts, covers materials and mobilisation
- Stage 1 (25–30%) — due when rough-in or foundation work is complete
- Stage 2 (25–30%) — due at lock-up or mid-project milestone
- Practical completion (20–25%) — due when the job is substantially finished
- Final retention (5–10%) — released after any defects period (if applicable)
The exact percentages depend on your trade and the job type. A plumber on a new build will set stages differently from a painter on a large commercial repaint. What matters is that the stages are defined in writing before work starts.
Why It Matters More Than Ever in 2026
Cash flow is under pressure across the NZ construction sector. The 2026 market has seen a wave of builder insolvencies, extended credit terms from suppliers, and clients stretching payment timelines. According to the MBIE Construction Sector Accord, delayed payment remains one of the top causes of financial stress for small construction businesses.
The minimum wage increase to $23.95/hr from 1 April 2026 also means your labour costs are higher from day one of any job. If you're funding those wages out of pocket while waiting for a single end-of-job payment, you're effectively lending your client money — interest free.
Progress billing solves this directly. Each milestone payment funds the next stage of work. You're not gambling your business on a client's willingness to pay at the end.
What NZ Law Says
The Contract and Commercial Law Act 2017 (CCLA) governs most commercial contracts in New Zealand. It doesn't mandate progress billing, but it does provide clear rules around contractual payment terms — meaning whatever you agree in writing is enforceable.
For residential work, the Building Act 2004 applies. Under the Act:
- All residential building contracts over $30,000 (including GST) must be in writing.
- The contract must specify the price (or how it will be calculated) and the payment schedule.
- Progress payments must be clearly described in the contract.
If you do residential building work without a written contract and payment schedule, you lose the legal right to enforce those payment terms. WorkSafe and MBIE both flag this as a common area where tradies get caught out.
For commercial work, the Construction Contracts Act 2002 (CCA) is the key piece of legislation. It gives subcontractors and contractors the right to make progress payment claims, and sets out strict timescale rules for clients to respond — they must pay or issue a payment schedule within the time specified.
Key CCA rights: - You can make a progress payment claim at any time specified in the contract, or if not specified, at the end of each month. - The payer (your client) has 20 working days to respond with a payment schedule. - If they don't respond and don't pay, you can suspend work — and in many cases apply for adjudication to recover the debt quickly.
This is powerful legal protection. But it only works if your contract is in writing and your progress claims are properly worded.
How to Structure Milestone Payments in a Quote
Setting up progress billing starts in your quote. Use clear, unambiguous language. Vague milestones like "when work is underway" will cause disputes. Specific milestones like "completion of concrete slab pour and cure" will not.
A good milestone payment clause in a quote looks like this:
Payment Schedule This quote is subject to the following progress payment terms: - Deposit: $3,500 (20%) — due on acceptance of this quote - Stage 1: $5,250 (30%) — due upon completion of framing and roof structure - Stage 2: $5,250 (30%) — due upon completion of cladding and weathertight fix - Final: $3,500 (20%) — due within 7 days of practical completion
All amounts include GST. Payment is due within 7 days of invoice unless otherwise agreed in writing.
You can use our Job Cost Calculator to work out your total job cost first, then break it into milestone amounts that cover your material outlays at each stage.
Tips for Making Progress Billing Work
1. Link milestones to observable, verifiable events "Completion of rough-in plumbing" is a clear milestone. "When we're about halfway done" is not. If a milestone is ambiguous, your client will interpret it in their favour.
2. Collect the deposit before ordering materials Never order $8,000 of materials before the deposit is in your account. This is the single most common cash flow mistake tradies make. Your deposit exists to cover exactly this cost.
3. Send the invoice on the day you hit the milestone Don't wait until the end of the week. The moment you hit the milestone, the invoice goes out. Every day you delay is a day added to your wait time.
4. Use invoicing software with payment tracking Apps like Fastcrew (fastcrew.nz) are built for tradies and let you create progress payment schedules linked to a job, send invoices from your phone on-site, and track which milestones have been paid. That's a big step up from a spreadsheet or paper invoice.
5. Include GST on each progress invoice Each milestone invoice is a separate tax event. You must include GST on each one if you are GST registered. Use our GST Calculator if you need to check the breakdown on a specific amount.
6. Know when to stop work Under the Construction Contracts Act, if a client misses a progress payment and doesn't issue a payment schedule, you have the right to suspend work after giving proper notice. This is not a move to make lightly, but it's in the Act for a reason. Use it when a client is stringing you along.
Common Progress Billing Mistakes
Setting milestones that are too large If your Stage 1 milestone is worth 60% of the job, you've got a lot of exposure if the client disputes it. Smaller, more frequent milestones reduce your risk.
Not getting the contract signed before the deposit A verbal agreement to progress billing terms is very hard to enforce. The contract must be in writing and signed by both parties before work starts — especially on residential jobs over $30,000.
Confusing retention with the final milestone Retention (a percentage held back until a defects period expires) is different from your final progress payment. If you're doing commercial work with retention clauses, make sure your cash flow plan accounts for potentially waiting 6–12 months for that last 5–10%.
For more on managing cash flow across a job, see our guide on cash flow management for NZ tradies.
A Practical Example
Josh is an Auckland-based builder doing a $75,000 deck and outdoor area renovation. Previously he invoiced at the end. The client took 45 days to pay and Josh funded $28,000 in timber and hardware out of his own pocket for six weeks.
This time, Josh quotes with a milestone schedule:
| Milestone | Amount (inc. GST) |
|---|---|
| Deposit on acceptance | $11,250 |
| Posts, bearers and joists installed | $18,750 |
| Decking boards and balustrade complete | $22,500 |
| Practical completion and tidy-up | $22,500 |
He sends the deposit invoice with the quote. The client pays before Josh orders a single piece of timber. Each subsequent invoice goes out the day he completes that stage. By the end of the job, his maximum out-of-pocket exposure at any point is the cost of the current stage — not the whole job.
Free Templates to Get Started
Download our free NZ tradie templates at tradietools.nz/templates/ — including a progress payment schedule template and a residential building contract checklist you can use on your next job.
NZ Tradie Tools provides free calculators, templates and guides for New Zealand tradies. Visit tradietools.nz.
Not sure if your quote is fair? Use our free NZ tradie quote checker to compare any quote against typical rates for your city and job type.