How AIA Progress Billing Works: G702 and G703 Explained
On a $600,000 contract billed monthly over ten months, every dollar you collect flows through two documents: the G702 application for payment and the G703 continuation sheet behind it.
We support AIA-style billing for subcontractors as part of running their books, and the pattern is consistent: subs who understand how these forms actually work get paid on schedule, and subs who treat them as paperwork to rush through on billing day spend their cash flow waiting on rejected pay apps and reconciliation arguments.
This post explains the system from a subcontractor's seat: the schedule of values that everything hangs on, what each form actually says, how stored materials and retainage move through the math, and why the whole thing has to tie to your books.
The schedule of values: the document everything else depends on
Before the first pay app, you submit a schedule of values, the SOV, which breaks your total contract into line items with a dollar value on each: mobilization, rough-in by area or floor, equipment, trim, closeout, however the work sensibly divides. The SOV becomes the fixed skeleton of every application for payment on the job. Each month, you bill by claiming a percentage complete against each line, so how you build the SOV in week one shapes your cash flow for the entire contract.
Two practical principles we’ve learned from live billing.
First, more line items beat fewer: a contract broken into fifteen or twenty lines lets you bill precisely for what's actually done, while a five-line SOV forces crude percentage guesses that reviewers push back on.
Second, front-loading matters and gets policed. Weighting early-phase line items somewhat heavier, mobilization, submittals, early rough-in, is normal and legitimate, because your real costs concentrate early and retainage will squeeze the back end. But an SOV that's obviously gamed gets rejected before the first pay app, so the weighting has to be defensible against your actual cost curve.
The G702: the summary page
The G702 is the application and certification for payment, and it's one page of arithmetic that summarizes the job to date. The key lines, in the order they compute: original contract sum, net change by change orders, contract sum to date, total completed and stored to date (which comes off the G703), retainage held, total earned less retainage, less previous certificates for payment, and finally current payment due.
The structure is cumulative, which is the thing to internalize. You're not billing "what we did this month" directly; you're stating the total value of everything completed and stored since the job began, and the current amount due falls out as the difference between that total and everything previously certified. The form ends with a signed certification, frequently notarized, that the work covered has been completed per the contract documents.
A worked month: contract sum $600,000, no change orders yet.
Through this period you've completed $270,000 of work, 45 percent of the job.
At 10 percent retainage, $27,000 is held, leaving $243,000 earned less retainage.
Previous certificates total $189,000. Current payment due: $54,000. Next month the same lines recompute at the new totals, and every number has to reconcile to last month's application plus this period's progress.
The G703: where the detail lives
The G703 continuation sheet is the SOV with the month's story told across its columns. For each line item: scheduled value, work completed from previous applications, work completed this period, materials presently stored, total completed and stored to date, percent complete, balance to finish, and retainage. The G703's totals feed the G702's summary, and a reviewer reads the G703 first, because that's where the claims are specific enough to check against what they see on site.
The column that deserves its own paragraph is materials presently stored. Materials purchased and stored, on site or in approved off-site storage, but not yet installed, can be billed before installation, which matters enormously for subs who buy expensive equipment ahead of installation. Billing stored materials properly means documentation: invoices, bills of sale, insurance on stored items, and sometimes a site walk to verify. When the material installs, its value moves from the stored column into work completed. Done right, stored materials billing pulls six figures of cash forward on an equipment-heavy job.
Done sloppily, it's one of the fastest ways to get a pay app kicked back.
Retainage and change orders moving through the forms
Retainage runs through every application: the held percentage accumulates on the G702 as work progresses, and the accounting treatment on your side, tracking it as retainage receivable rather than letting it pollute regular AR, is covered in Retainage Accounting in QuickBooks Online. The billing-side detail worth knowing: many contracts reduce retainage at substantial completion, and the reduction shows up on the G702's retainage lines, so your books need to move in step with what the applications state.
Change orders enter the system as adjustments to the contract sum and as new or revised lines on the G703. The discipline that saves subs money: no approved change order, no billing line. Work performed on verbal direction that never became a signed change order is work you cannot put on a pay app, and the G702's change order summary makes the gap visible month after month. The subs who get burned are the ones whose field teams execute changes faster than their offices paper them.
Why the pay app has to tie to your books
The G702 and G703 are statements about money earned, and your accounting system is making its own statements about the same money. When the two diverge, problems compound. Revenue on the books that doesn't match total completed to date raises questions at review, at audit, and at bonding.
Retainage on the balance sheet that doesn't match the retainage the applications show held means one of them is wrong. Billings that exceed what the books support are a dispute waiting for the closeout conversation.
The clean setup runs one pipeline: the invoice in QuickBooks mirrors the pay app, full amount earned this period with retainage moved to its own account, so books and applications tell one story, with job costing underneath showing what the billed work actually cost, which is the machinery covered in How to Track Job Costs in QuickBooks Online.
On covered public work, the certified payroll layer sits alongside it, and the full picture is in Certified Payroll for Subcontractors: The Complete Guide. One data spine, three outputs: pay apps, compliance, and margin visibility.
The rhythm that keeps payment on schedule
Billing day shouldn't be an event. The subs who collect on schedule run a monthly rhythm: progress assessed against the SOV before the cutoff, stored materials documented as they arrive, change orders papered when they happen rather than at billing time, the G703 built from real completion data, the G702 computed and certified, and the books updated to match the same day.
When the GC's reviewer calls with a question, the answer exists, because the application was built from records rather than reconstructed from memory.
At Prophet Accounting, we support AIA-style progress billing for construction subcontractors as part of the full back office: applications that tie to the books, retainage tracked by contract, job costing underneath, and certified payroll on covered work.
If your pay apps get bounced, or billing day eats a week of office time, schedule a consultation at prophetaccounting.com/construction or give us a call at (772) 380-2871.
