What Is AIA Billing? A Simple Guide for General Contractors

If you bid commercial work, sooner or later an owner or architect will tell you to bill on AIA forms, and a sloppy application can hold up a payment you have already earned. This guide explains what AIA billing is, how the G702 and G703 forms actually work, and how to fill them out so your draws get approved the first time. You will come away knowing how to build a schedule of values, apply retainage correctly, and avoid the mistakes that delay your money.

What Is AIA Billing in Construction?

AIA billing is a standardized method of invoicing for progress payments on construction projects, built around forms published by the American Institute of Architects. The two forms at the center of it are the G702 Application and Certificate for Payment and the G703 Continuation Sheet. Together, they are the most widely used billing format on commercial construction projects in the United States.

The system exists because large projects are not paid in one lump sum. The work happens over months, and the contractor bills for the portion of work completed in each period, usually monthly. AIA billing gives the owner, the architect, and the contractor a common format to document how much work has been completed, how much has already been paid, how much retainage is being held, and how much is due this period. The architect reviews the application and certifies it, which is the approval that releases payment.

If you have only ever worked residential or done your own simple invoices, AIA billing can look intimidating. It is not complicated once you see how the two forms connect. The G703 does the detailed math line by line, and the G702 summarizes it into a single payment request.

Why AIA Billing Matters for Contractors

Getting AIA billing right is not a paperwork formality. It directly controls when, and whether, you get paid.

It Is Often Required to Get Paid At All

On most commercial and public projects, the contract requires billing on AIA forms. The architect will not certify a payment application that does not follow the format. If your application is incomplete, miscalculated, or does not match the approved schedule of values, it gets rejected or sent back for correction, and your payment slips to the next cycle. On a project where you are already carrying labor and material costs, a rejected application means financing the work out of your own pocket for another 30 days. Protecting that timing is central to healthy construction cash flow.

It Protects Your Cash Flow

A clean AIA application that is submitted on time and certified without question keeps your cash moving on schedule. Because the form documents exactly what has been completed and what is owed, it leaves little room for an owner to delay or dispute payment. The discipline of accurate AIA billing is one of the strongest tools a contractor has for keeping cash flowing on a long project.

It Creates a Documented Record

Each certified application is a signed record of work completed and accepted to date. If a dispute arises later about scope, progress, or payment, the chain of certified G702s is the documentation that supports your position. Sloppy or inconsistent billing weakens that record.

How the G702 and G703 Forms Work

The two forms work as a pair. You build the detail on the G703, then carry the totals to the G702. Here is how each one functions.

The G703 Continuation Sheet

The G703 is where the line-item detail lives. It is essentially your schedule of values turned into a billing worksheet. Each row is a line item of work, and the columns track its financial status. The key columns are:

• Item No. and Description of Work identifies each line item
• Scheduled Value is the dollar amount allocated to that line item, taken from your schedule of values
• Work Completed From Previous Application is the cumulative value billed in prior periods
• Work Completed This Period is the value of work done in the current billing cycle
• Materials Presently Stored captures materials delivered to the site but not yet installed
• Total Completed and Stored to Date sums the completed work and stored materials
• Percent Complete shows how far along that line item is
• Balance to Finish is the scheduled value minus what has been completed and stored
• Retainage is the amount withheld on that line item

When you total the columns at the bottom of the G703, those totals feed directly into the G702.

The G702 Application and Certificate for Payment

The G702 is the summary and the request for payment. It takes the totals from the G703 and walks them through a simple calculation to arrive at the amount due this period:

1. Original Contract Sum plus approved change orders gives the Contract Sum to Date
2. Total Completed and Stored to Date comes from the G703
3. Retainage is subtracted, both on completed work and on stored materials
4. Total Earned Less Retainage is what you have earned net of the holdback
5. Less Previous Certificates for Payment subtracts what has already been paid
6. Current Payment Due is the result, the amount the owner pays this cycle

The bottom of the G702 has the contractor's signature certifying the application is accurate, and a block for the architect to certify the amount approved for payment. That architect's certification is the trigger that releases your money.

How to Build a Schedule of Values

Everything in AIA billing rests on the schedule of values, the breakdown of your total contract price into line items. A well-built schedule of values makes billing smooth. A poorly built one causes disputes and slow payments all the way through the project.

Break the Contract Into Logical Line Items

Divide the contract sum into the major components of work, often following your cost codes or the CSI MasterFormat divisions: general conditions, sitework, concrete, masonry, structural steel, carpentry, finishes, mechanical, plumbing, electrical, and so on. Each line gets a dollar value, and the values must add up to the total contract sum. Too few line items make it hard to bill accurately as work progresses. Too many create unnecessary complexity. Aim for a breakdown detailed enough to reflect real progress.

Front-Load Carefully and Legally

Some contractors weight early line items, like general conditions and mobilization, slightly higher to improve early cash flow. This is common, but architects scrutinize it, and aggressive front-loading gets rejected. The schedule of values must reasonably reflect the actual value of each component. Bill for what you have honestly completed. Front-loading too hard can push a project into an overbilled position that creates problems later in the job.

Account for Stored Materials

If your contract allows billing for materials delivered to the site but not yet installed, set up your schedule so stored materials can be tracked separately. You will typically need to show proof of delivery and sometimes proof of payment to the supplier, and stored materials usually still have retainage applied.

Tie It to Your Cost Codes

The schedule of values works best when it aligns with your internal job cost structure. When your billing line items map to your cost codes, you can compare what you have billed against what the job has actually cost at the same level of detail. This connection between billing and job costing is what lets you see in real time whether each portion of the work is profitable.

How Retainage Works in AIA Billing

Retainage is the percentage the owner withholds from each progress payment until the project is substantially complete, typically 5 or 10 percent. AIA billing has retainage built directly into the forms. On the G703, retainage is calculated on the completed and stored amounts. On the G702, it is subtracted to arrive at the total earned less retainage. For a deeper look at how holdbacks affect your cash position, see our guide to retainage in construction.

The cumulative retainage shown on your AIA application should match the retainage receivable on your books for that project. If your application shows $60,000 in retainage held and your accounting records show something different, one of them is wrong, and that mismatch is a sign your billing and your books are out of sync. Tracking retainage as a separate receivable, not buried in regular accounts receivable, is essential. Your bookkeeping needs dedicated retainage accounts so the numbers on your AIA forms and your financial statements always agree.

Some contracts also reduce retainage after the project reaches a milestone, such as dropping from 10 percent to 5 percent at 50 percent completion. Your billing has to reflect those changes when they happen.

Common AIA Billing Mistakes Contractors Make

AIA billing errors are the difference between getting paid on time and chasing a check for two months. These are the ones that come up most.

Billing More Than the Work Justifies

Overstating percent complete to pull cash forward is tempting, but architects catch it, and it damages your credibility for the rest of the project. It also creates an overbilled position that comes back to bite you when the later, less-billed work still has to be done. Bill accurately.

A Schedule of Values That Does Not Match the Contract

If your line items do not sum to the contract sum, or change orders are not added correctly, the G702 math will not reconcile and the application gets rejected. Keep the schedule of values current as change orders are approved.

Forgetting to Update Previous Certificates

Each application carries forward the cumulative totals from prior periods. If you pull the wrong previous figure, every number downstream is wrong. The continuation sheet has to roll forward cleanly from one period to the next.

Mishandling Change Orders

Approved change orders increase the contract sum and usually get their own line items on the schedule of values. Billing for change order work before it is approved, or failing to add approved changes to the contract sum to date, throws off the application. Track change orders carefully and only bill approved work.

Retainage That Does Not Match the Books

When the retainage on your AIA applications does not reconcile to your retainage receivable, your financial statements and your billing tell two different stories. This is a red flag to bonding companies and banks. Reconcile retainage monthly, ideally as part of a structured monthly close handled by your controller services team.

Software and Tools for AIA Billing

AIA billing can be done by hand, but on active projects, the right tools save hours and reduce errors.

QuickBooks can handle progress billing and is the most common platform for small to mid-size contractors, though it needs proper setup with line-item billing and dedicated retainage accounts to mirror the AIA format. With the right QuickBooks setup, you can produce the underlying numbers that feed your applications and keep your books reconciled to your billing.

Foundation Software and Sage 100 Contractor are construction-specific platforms with AIA billing built in. They generate G702 and G703 forms directly, track the schedule of values, calculate retainage automatically, and roll figures forward period to period. For contractors running high volumes of AIA-billed work, these platforms save significant time.

Construction management platforms like Procore and Buildertrend manage the project side and can feed billing data into your accounting system, so your applications reflect actual field progress. Connecting field data to your books through a QuickBooks and Procore integration keeps your applications in step with real progress. These tools work as a construction layer on top of your general accounting, not a replacement for it.

How FinTruction Handles AIA Billing for Contractors

At FinTruction, we build the billing structure that makes AIA applications clean and fast to certify. We set up your schedule of values to align with your cost codes, configure your accounting system to mirror the G702 and G703 format, and keep retainage tracked as a separate receivable that always reconciles to your applications.

Our controller services make sure each application is accurate before it goes to the architect, so you stop losing billing cycles to rejected or corrected applications. We tie your billing to your job costing so you can see whether each line item is profitable as the project moves, not just whether you got paid.

When AIA billing is handled correctly, your draws get certified on schedule and your cash keeps moving. When it is sloppy, you finance your own work while you wait for corrections.

Frequently Asked Questions About AIA Billing

What is the difference between the G702 and G703?

The G703 Continuation Sheet contains the line-by-line detail of your schedule of values, showing scheduled value, work completed, materials stored, retainage, and balance to finish for each item. The G702 Application and Certificate for Payment summarizes those totals into a single payment request and includes the contractor's certification and the architect's approval. The G703 does the detailed math, and the G702 presents the result.

Do I have to use AIA forms to bill?

Only if your contract requires them, but on commercial and public projects, they usually do. The owner and architect want a standardized format they can review and certify consistently. Some owners use their own pay application forms that follow the same structure. If your contract calls for AIA billing, using the correct forms is how you get paid.

What is a schedule of values?

A schedule of values is the breakdown of your total contract price into individual line items of work, each with a dollar amount. The values must add up to the full contract sum. It is the foundation of AIA billing because each progress payment is based on the percentage of each line item completed. A well-built schedule of values makes billing smooth and accurate.

Can I bill for materials I have not installed yet?

Often, yes, if your contract allows it. Materials delivered to the site but not yet installed can be billed as stored materials, usually with proof of delivery and sometimes proof of payment to the supplier. Stored materials are typically still subject to retainage. Check your contract terms, because not every owner allows billing for stored materials.

Why does my AIA application keep getting rejected?

The most common reasons are billing more than the work justifies, a schedule of values that does not reconcile to the contract sum, errors carrying forward previous certificates, billing for unapproved change orders, and retainage calculations that do not add up. Most rejections come down to math that does not tie out or progress that the architect cannot verify. Accurate, conservative billing that reconciles cleanly gets certified the first time.