Progress Billing for Canadian Contractors — Deposits, Draws, and Final Invoices

For any job over a few thousand dollars — roof replacements, full HVAC installs, rénovations, new construction, landscaping projects, commercial electrical — sending one giant invoice at the end is a recipe for cash flow pain and higher risk.

Progress billing (also called stage billing, draw billing, or milestone invoicing) lets you collect money as the work advances. You finance less of the materials and labour, the client stays committed, and you catch issues earlier.

This guide explains how to structure progress billing the Canadian way, with real examples, tax handling, wording you can use, and links to tools that make it fast.

Why Progress Billing Matters for Canadian Trades

• Materials for a roof or HVAC job can be 40-60% of the total. Why should you carry that for 4-8 weeks?
• Larger invoices are psychologically harder for clients to pay in one shot.
• Deposits create commitment and help you schedule with confidence.
• You reduce the "I didn't realize it would be that much" surprise at the end.
• Better cash flow = less stress, ability to take on more work, pay your own subs and suppliers on time.

Recommended Structure for Most Residential and Commercial Jobs

Example: $12,000 roofing job (numbers are illustrative)

1. Deposit / Booking Invoice (sent when contract signed)

• 40-50% of total: $5,000 (example 42%)
• Due: immediately or within 3-5 days to secure the date and order materials.
• Invoice note: "Deposit to schedule work and order materials. Non-refundable after 7 days / per contract terms."
• This invoice gets paid fast because the client wants the work to start.

2. Progress Draw 1 (e.g., tear-off complete + underlayment)

• 25-30%: ~$3,000
• Due: on completion of this stage (often same day or Net 7).
• Reference: "Progress billing — tear-off & ice & water complete per quote #Q-442"

3. Progress Draw 2 or Final (installation complete, inspection passed)

• Remaining balance: $4,000
• Due: on final walkthrough and sign-off.
• Note: "Final invoice — balance after deposit and progress draw #INV-8831. All work complete and inspected."

Total collected in three smaller, easier payments instead of one $12k hit.

Common Structures by Trade

Roofing

• 40-50% deposit (materials order)
• 30% after tear-off / decking ready
• 20-30% final on completion + cleanup

HVAC / Mechanical

• 40-50% deposit (equipment ordered)
• 30-40% on rough-in or delivery + start of install
• 10-20% final on startup, testing, and client walkthrough

Electrical / General Contracting (larger Renos)

• 30% deposit
• 30% at rough-in / framing
• 30% at drywall / pre-finish
• 10% final on completion & deficiencies cleared (or holdback if required)

Landscaping / Hardscaping / Decks

• 30-40% deposit (materials + scheduling)
• 30-40% mid-project (after demo or base prep)
• Balance on final (plants in, sod down, walkthrough)

Deposit Wording Examples (copy/adapt)

"Deposit of $X,XXX.00 received [date] to secure scheduling and order materials. This amount is non-refundable after [X] days per our signed agreement."

"50% deposit ($Y,YYY) due upon acceptance to order equipment and schedule crew. Balance due on completion."

Progress Invoice Wording

"Progress billing — Stage 2 (tear-off complete, new decking installed where required). Per quote Q-442 dated March 12, 2026. Original contract value $12,000.00. Previous payments: $5,000.00 deposit. Amount due this stage: $3,200.00."

"Final invoice — all work complete, inspected, and signed off. Thank you for your business."

Tax Handling on Progress Invoices

• You generally charge the applicable GST/HST/QST/PST on each progress invoice based on the value of work/supplies provided in that stage.
• Deposits: In many cases you charge tax on the deposit invoice when it relates to a taxable supply. Confirm with your accountant — treatment can vary.
• Show previous payments clearly so the client sees the running total and remaining balance.
• Your registration numbers must appear on every invoice, including deposit ones.
• Use an invoicing tool that lets you easily reference prior invoices or show "less deposit received" lines.

Deposit Invoices Vs. Full Invoice with Credit

Two Common Approaches

A. Separate deposit invoice for the deposit amount only. Then separate progress/final invoices for the stages.

B. One "master" invoice for the full contract amount, with "Less deposit received [date]" and "Less progress draw 1" lines on subsequent documents. This keeps one invoice number for the whole job.

Many contractors prefer option A for simplicity and cleaner client communication. Either works if documented clearly.

Lien Act and Holdback Considerations for Larger Jobs

On bigger projects, especially commercial or multi-unit residential, provincial Construction Lien Acts (or similar) may require holdbacks (e.g., 10% of each payment held back for a period after substantial completion).

If Holdback Applies

• Note it on the invoice: "10% holdback ($Z,ZZZ) to be released per [Act] requirements after substantial completion and lien period."
• Track it separately in your records.

Talk to a construction lawyer or your accountant if you do this type of work regularly.

Tools That Make Progress Billing Easy

• Ability to create multiple invoices against the same client/job.
• Easy "less previous payments" or reference fields.
• Saved line items for stages ("Deposit — 40%", "Progress — tear-off complete", etc.).
• Clear PDF output that clients and their accountants understand.

The free generator on this site supports creating as many invoices as your plan allows. Premium removes limits so you can comfortably do deposit + 2-3 progress draws per large job.

Cash Flow Impact — Real Example:

Roofer doing 8-10 roofs/month in season, average $9,000 job:

• Without progress: carrying ~$50-70k of materials and labour across jobs at any time.
• With 45% deposit + 30% progress: dramatically lower carrying cost, ability to pay suppliers on time for better pricing, less stress.

Many roofers and HVAC companies say switching to structured progress billing was the single best cash flow decision they made.

Related Resources

• How to Get Paid Faster as a Canadian Contractor
• Contractor Invoice Checklist (progress invoices still need all the basics)
• Canadian Contractor Tax Guide 2026 (tax on deposits and stages)
• Roofer, HVAC, General Contractor invoice templates (examples of stage wording)
• Invoice Payment Terms Canada