Module 6: Billing & Job Costing

Core promise: By the end of this module, you can prepare accurate progress bills, calculate retainage, follow up on unpaid invoices, check sub invoices before they're paid, read a job cost report, hand clean records to the bookkeeper, and close out a job completely.

Bill it → Collect it → Pay it → Track costs → Hand off → Close out

Why this module matters: Contractors don't fail because they can't build. Many fail because billing is late, costs run over unnoticed, or paperwork is missing at the end. Careful money admin is one of the most valuable services a VA can offer.

An important boundary: You prepare and organize the numbers. The contractor approves every invoice and payment, and the bookkeeper or accountant handles the accounting records, taxes, and financial advice. This course doesn't give accounting, tax, or legal advice.

In this module

1. How Contractors Get Paid
2. Preparing a Progress Bill
3. Retainage
4. Collecting Payment and Following Up
5. Checking Sub and Vendor Invoices
6. Job Costing Basics
7. Receipts, Time, and the Bookkeeper Handoff
8. Closing Out the Job
9. Hands-On Exercises
10. Knowledge Check

Module learning objectives

By the end of this module, you will be able to:

• Explain how contractors get paid through deposits, progress payments, change orders, and final payment.
• Prepare an accurate progress bill and calculate the remaining contract balance.
• Calculate retainage and the net amount due.
• Follow up on unpaid invoices professionally and keep a receivables tracker.
• Check sub and vendor invoices before the contractor approves payment.
• Read a job cost report and spot budget problems early.
• Hand clean records to the bookkeeper and close out a job completely.

Lesson 6.1: How Contractors Get Paid

Most contractors aren't paid all at once at the end. Money comes in steps, tied to the progress of the work. This protects the owner, who pays as work is completed, and the contractor, who isn't financing the whole job.

The usual pieces

• A deposit at signing.
• Progress payments at set milestones.
• Change orders, which add to the contract total when they're signed.
• A final payment when the work is complete.

The Hartley payment schedule

This is the schedule from Module 2, based on the original contract of $48,500.

How change orders get billed

The contract says what's billed and when, so ask the contractor how to handle change orders. In this course, Marcus's rule is simple: a signed change order is billed with the next progress payment. That keeps invoices clean and gives the owners one bill at a time.

Lesson 6.2: Preparing a Progress Bill

A good invoice is clear enough that the owners never have to call and ask what it's for. Besides the amount due, it shows where the whole contract stands.

What it includes

• An invoice number, the date, and the due date.
• The owner's name and the project.
• A description of what's being billed, such as the milestone and any change orders.
• A contract summary: the original price, change orders to date, and the current contract total.
• What's been billed before, what's billed now, and the remaining balance.
• Payment terms and how to pay.

Example: Progress Payment 1 for the Hartley job

The rough inspection has passed, and Change Order #1 has been signed.

Ridgeline Builders: Invoice 002
Bill to: Priya and Tom Hartley
Project: Hartley kitchen remodel
Date: [date]   Due: [date, per contract terms]

Progress Payment 1: rough inspection passed (30% of original contract): $14,550
Change Order #1: cabinet finish change: $1,150
Total due: $15,700

Original contract: $48,500
Change orders to date: $1,150
Current contract total: $49,650
Billed before this invoice (deposit): $4,850
This invoice: $15,700
Billed to date: $20,550
Remaining balance: $29,100

How to check your math

Two formulas catch most errors. The remaining balance is the current contract total minus the amount billed to date. And the amount billed to date must equal everything billed before plus this invoice. Here, $49,650 − $20,550 = $29,100.

Before you send

• The milestone is confirmed complete.
• The amount matches the payment schedule.
• Every change order on the invoice is signed.
• The running totals tie out.
• Names, addresses, and the invoice number are right.
• Marcus has approved the invoice.

Then send it, save the PDF in 10 Billing and Lien Waivers, and add it to your receivables tracker.

Lesson 6.3: Retainage

You met retainage in Module 1: a percentage of each payment held back until the work is complete. It gives the owner leverage to make sure everything gets finished. It's common on commercial projects and in some residential contracts, and it's only used if the contract says so. Contractors can also hold retainage from their subs.

How it works

The contract states a percentage, such as 10%. On each bill, that percentage is held back. The owner pays the rest now, and the held-back amount is released at completion, as the contract describes.

Example: what if the Hartley contract had 10% retainage?

Suppose retainage applied to the progress payments only. On Invoice 002 ($15,700):

The retainage held is still part of the contract total. It's simply not due until completion, so the invoice should show it clearly: the amount billed, the retainage held, the net due, and the total retainage held to date.

Lesson 6.4: Collecting Payment and Following Up

Sending the invoice isn't the finish line. Money in the bank is. Prompt, polite follow-up is one of the biggest ways a VA improves a contractor's cash flow.

A receivables tracker

A follow-up rhythm

Sample reminder

Subject: Invoice 002, Hartley kitchen remodel

Hi Priya and Tom,

This is a friendly reminder that Invoice 002 for $15,700 was due on [date]. In case it's helpful, I've attached it again with the payment instructions.

If you've already sent payment, thank you, and please ignore this note. If you have any questions about the invoice, I'm happy to pass them to Marcus.

Thank you,
[Your name], for Marcus Webb, Ridgeline Builders

When payment arrives

1. Record it in the receivables tracker, with the date and amount.
2. Send a short thank-you or receipt.
3. Tell the bookkeeper (see Lesson 6.7) so it's recorded in the accounting system.
4. Request unconditional lien waivers from subs who have now been paid, as in Module 3.

Lesson 6.5: Checking Sub and Vendor Invoices

Money goes out as well as in. Before a sub or supplier is paid, someone should verify that the invoice is correct. You do that check, and Marcus approves the payment. Never pay an invoice yourself, unless he has explicitly authorized it.

The three-way check

1. The invoice matches the agreement. The amount follows the subcontract, quote, or purchase order.
2. The work or delivery is complete. Marcus or the foreman confirms it.
3. The paperwork is in order. The insurance certificate is current, and the right lien waiver is ready (conditional before payment, unconditional after).

Example: Delgado Plumbing

Delgado's subcontract is $7,200, with 50% due when rough plumbing is complete.

After Marcus approves and the payment goes out, you request the unconditional waiver and record the payment. If any line doesn't check out, you don't send it forward as ready. You flag the problem and say exactly what's missing.

Lesson 6.6: Job Costing Basics

Job costing answers one question: are we making the money we expected on this job? To answer it, you compare what the contractor planned to spend (the budget) with what they're actually spending.

Key terms

• Budget: the planned cost for each category, built from the estimate.
• Actual: what has really been spent or invoiced so far.
• Remaining budget: budget minus actual. A negative number means the category is over budget.
• Gross profit: the contract price minus the costs.
• Committed cost: money promised but not yet paid, like a purchase order that has been placed.

Example: the Hartley job cost report at the end of Week 5

The planned budget for the original scope is $40,100, against a contract price of $48,500, for a planned gross profit of $8,400 (about 17%).

Two lines are already over budget: the permit and dumpster by $70, and materials by $140. These are small, but the report's job is to show problems while there's still time to act. Change orders have their own costs, which are tracked on separate lines so they don't blur the original budget.

Keep the data clean

A job cost report is only as good as what goes into it. Every invoice, receipt, and time record needs a project and a category. Entering a cost against the wrong job, or leaving it uncoded, makes the whole report unreliable.

Lesson 6.7: Receipts, Time, and the Bookkeeper Handoff

The bookkeeper categorizes transactions, reconciles accounts, and closes the month. Your part comes before that: making sure the bookkeeper receives clean, complete, labeled information.

Capturing receipts and time

• Receipts: ask crews to photograph every receipt and send it to a dedicated email address or shared folder, with the project name. You label and file it.
• Coding: note the project and the cost category for each one (materials, labor, permit, and so on).
• Crew hours: collect time by project, so labor costs land on the right job. Payroll itself belongs to a payroll provider or the bookkeeper.
• Reimbursements: track anything the crew paid for out of pocket, so they're repaid and the cost is recorded.

The monthly handoff package

• A list of invoices sent and payments received.
• Sub and vendor invoices that were approved and paid, with the lien waiver status.
• Receipts, labeled by project and category.
• Crew hours by project.
• The change order log.
• The current job cost report.
• A short list of open questions for the bookkeeper.

The bookkeeper records, categorizes, and reconciles. You make their job fast. You don't change the accounting records unless you've been trained and authorized to do so.

Lesson 6.8: Closing Out the Job

The last 5% of a job often takes the most effort. Closeout is where loose ends become money, documents, and referrals. Careful VAs make sure nothing is missed.

The closeout checklist

• The punch list is complete and the owners have signed off.
• The final inspection has passed.
• The final invoice is sent and paid.
• Final lien waivers are collected from every sub and supplier (conditional before payment, unconditional after).
• Ridgeline's final waiver is prepared for the owners, if the contract requires it.
• Warranty documents, manuals, and product details (paint colors, model numbers) are gathered.
• The closeout packet is sent to the owners.
• The final job cost report is complete, and the bookkeeper has everything.
• The project folder is moved to Completed Projects.
• A review and referral request is sent.

The closeout packet

Think of it as a "home file" the owners can keep. It usually includes the signed contract and change orders, the final inspection sign-off, warranties and manuals, a list of subs and their contact details, product and paint selections, and the final lien waivers.

Sample closeout email

Subject: Your kitchen is complete: closeout documents

Hi Priya and Tom,

It was a pleasure working with you on your kitchen. Attached is your closeout packet, including your warranty information, product details, and a list of the team who worked on your home.

If you were happy with the experience, a short review would mean a great deal to Marcus and the team, and we'd be glad to meet any friends or family who are thinking about a project.

Please reach out if anything comes up.

Thank you,
[Your name], for Marcus Webb, Ridgeline Builders

Lesson 6.9: Hands-On Exercises

Try each exercise on your own first. Then open the self-check answers to compare.

Lesson 6.10: Knowledge Check

Answer each question in your own words, then check yourself.

1. How do you calculate the remaining balance on a contract?
2. What is retainage, and when is it released?
3. What three things do you check before a sub invoice goes to the contractor for approval?
4. In job costing, what does a negative "remaining budget" mean?
5. Name three things that belong in a closeout packet.

Before you finish the course

You've finished the core course when you can say yes to each of these:

• I can prepare a progress bill and tie out the contract balance.
• I can calculate retainage and the net amount due.
• I can follow up on a late invoice professionally.
• I can check a sub invoice before the contractor approves it.
• I can read a job cost report and flag problems early.
• I can run a complete closeout.

Congratulations on completing the six core modules. The bonus module covers how to find your first construction clients.