How do I invoice clients if I’m paid by milestone in the US?

Understanding milestone-based invoicing in the US

Milestone-based payment is one of the most common ways freelancers, agencies, consultants, and contractors get paid in the United States. Instead of billing by the hour or collecting one lump sum at the end, you agree to a project price and break it into “milestones” that correspond to meaningful deliverables or phases. Each time a milestone is completed (or reached), you invoice for that portion of the total fee.

This approach protects both sides. Clients feel safer paying in stages because they see progress before releasing more funds. You benefit because you’re not carrying all the cost and risk until the end, and you maintain steady cash flow during the project. It’s also easier to manage scope changes: if the client wants to add work, you can add or revise milestones rather than trying to renegotiate a single end-of-project invoice.

That said, milestone invoicing in the US comes with some practical questions: What exactly should be on each invoice? How do you structure deposits? When do you collect sales tax (if at all)? How do you handle partial completion, retainers, change requests, and final acceptance? The good news is that once you set up a clear milestone plan and a consistent invoicing system, billing becomes straightforward and professional.

What counts as a “milestone” (and what doesn’t)

A milestone should be a clear, verifiable point in the project that signals progress. Typically, it aligns with a deliverable, a phase, or a decision gate. Milestones work best when they’re objective: either the milestone has been met or it hasn’t, and everyone understands the definition before the project begins.

Examples of strong milestones include:

• “Discovery workshop completed and requirements document approved”

• “Design mockups delivered for all key pages”

• “Prototype deployed to staging environment”

• “Phase 1 features completed and client acceptance received”

• “Final deliverables handed over and project closed”

Milestones that are too vague can cause payment friction. For example, “work started” or “progress update” is usually not specific enough unless you define it precisely in your agreement. Another common pitfall is using time-based milestones that don’t map to deliverables, such as “Week 3 payment.” Those can work, but clients often prefer paying for something tangible. If you do use time-based milestones, tie them to a checklist of outputs you will deliver by that date.

Start with the right paperwork: scope, milestone schedule, and payment terms

Milestone invoicing works best when your contract, proposal, or statement of work includes three critical components: scope, milestone schedule, and payment terms. In the US, you don’t need a complicated document for most client relationships, but you do need clarity.

1) Scope

Scope describes what you are delivering. It can be a list of features, deliverables, services, and exclusions. The more complicated the project, the more you should define what is included and what is not.

2) Milestone schedule

This is the heart of milestone billing. It should include the milestone name, what constitutes completion, the amount due, and any dependency (such as client feedback, approvals, or access). Many providers add estimated dates, but the best practice is to also state that dates can shift based on client responsiveness or changes in scope.

3) Payment terms

Payment terms explain when invoices are issued and when payment is due. Common terms include “Net 7,” “Net 14,” or “Due on receipt.” If you plan to charge late fees, specify them up front. You should also define whether milestone payment is triggered by delivery or by acceptance, because those are different. “On delivery” means you invoice when you deliver the work, regardless of how long the client takes to review. “On acceptance” means the clock starts after the client approves, which can delay your cash flow. Many businesses choose a hybrid approach: invoice on delivery, due within a set number of days, and include an acceptance window to prevent indefinite delays.

Choosing a milestone structure that matches your project

There isn’t one perfect milestone structure for every industry, but most milestone billing falls into a few proven patterns. Pick the structure that best fits the risk and effort distribution of your work.

Option A: Deposit + staged milestones + final payment

This is the most common approach for custom work. You collect an initial deposit to secure the project and cover early effort, then bill additional milestones as you deliver, and finish with a final invoice at completion.

A typical breakdown might be:

• 30% deposit to begin

• 30% after initial deliverable (design, outline, prototype)

• 30% after implementation (build, draft, production version)

• 10% after final delivery and handoff

This structure helps you avoid front-loading all your risk. It also gives the client a clear view of costs throughout the project.

Option B: Phase-based milestones

Phase-based milestones are ideal for longer projects with multiple steps, like consulting engagements, software development, marketing campaigns, or renovations. Each phase has its own milestone invoice.

For example:

• Phase 1: Strategy and planning

• Phase 2: Build and execution

• Phase 3: Testing and refinement

• Phase 4: Launch and support

When phases are well-defined, clients can budget more easily, and you can pause between phases if priorities change.

Option C: Deliverable-based milestones

This works well when you’re producing distinct deliverables, such as a set of designs, a training program, a video series, or a content package. Each deliverable triggers its own invoice.

Examples include:

• Invoice upon delivery of first draft

• Invoice upon delivery of final assets

• Invoice upon delivery of supplemental materials

This approach is simple and easy to defend because it ties payment to something concrete.

Option D: Milestones with retainage (common in construction and some B2B work)

In some industries, clients may hold back a percentage until the end of the project as “retainage” to ensure completion. If you agree to retainage, spell out the percentage and when it will be released (for example, after final inspection, delivery of lien waivers, or after a specified period).

Even if retainage is used, you can still invoice at milestones—just note the withheld portion and the net amount due.

What to put on a milestone invoice

Milestone invoices are still invoices, and in the US they should look professional and include the same core elements you would include in any standard invoice. The difference is how you describe the line items and how you communicate the context of the milestone.

Here’s what each milestone invoice should include:

• Your business details: name, address, email, phone (and your logo, if you use one)

• Client details: client name and billing address (and company name if applicable)

• Invoice number: unique, sequential, and easy to track

• Invoice date: the date you send the invoice

• Due date: based on your payment terms

• Payment terms: due on receipt / net 7 / net 14 / net 30, etc.

• Project reference: project name, purchase order number, or contract ID if the client uses one

• Milestone description: what milestone this invoice covers and what “complete” means

• Amount due: milestone amount, taxes (if applicable), discounts, and total

• Payment methods: card, bank transfer, ACH, check, or digital wallets

• Notes: brief, helpful information such as “Milestone 2 payment per SOW dated [date]” or “Thank you—please include invoice number in payment memo.”

If your invoice is tied to a contract or statement of work, referencing it on the invoice reduces confusion. It’s common to add a line like: “Milestone 2 of 4 (as outlined in Statement of Work).”

How to write milestone line items so clients understand instantly

The line item description is where you can make milestone invoicing frictionless. Keep it specific and aligned with your agreement. Avoid vague wording like “services rendered.” Instead, use the milestone name and a brief deliverable summary.

Strong line item formats include:

• “Project Alpha – Milestone 1: Discovery & Requirements (completed)”

• “Website Redesign – Milestone 2: UI Design Deliverables (homepage + 6 internal pages)”

• “Consulting Engagement – Phase 1: Strategy Workshop + Summary Report”

• “Video Production – Milestone 3: Final Edit Delivery (3 videos)”

If the milestone includes acceptance, you can note the acceptance date or reference approval in a short note. If acceptance is pending but you invoice on delivery, you can phrase it as “delivered” rather than “accepted.”

Deposits and upfront payments: invoice or request payment?

In the US, many providers collect a deposit before starting. There are two main ways to handle this operationally: you can send an invoice for the deposit, or you can send a payment request (sometimes called a “deposit request”). Both work, and the best choice depends on your workflow and accounting preferences.

If you want the deposit to appear in your invoice history and be easy to reconcile, invoicing the deposit is usually best. Use a line item like “Project Deposit (to begin work)” and note whether it’s refundable or non-refundable, if that’s part of your terms.

Then, when you invoice future milestones, you can either:

• Invoice only the milestone amount (treating the deposit as its own milestone), or

• Apply the deposit as a credit on the final invoice, depending on how you structure the agreement.

Either is fine as long as it is consistent and clearly stated in your contract. Clients often prefer the deposit to be part of the planned milestone schedule so they can see exactly how the total price is allocated.

Progress billing vs milestone billing: what’s the difference?

Milestone billing and progress billing are related, but not identical. Milestone billing ties payment to a specific event or deliverable. Progress billing ties payment to the percentage of work completed or cost incurred during a period.

If you’re paid by milestone, your invoices should not read like “50% complete” unless your milestone is explicitly defined as a percentage completion milestone. Clients may accept progress billing in construction or large-scale projects, but many creative and professional services clients prefer milestone billing because it feels more concrete.

Still, if your industry expects progress billing, you can blend the two: define a milestone like “Phase 2: Implementation (50% of total scope)” with a checklist of what “50%” includes.

When to invoice: on delivery, on acceptance, or on a date?

Timing is one of the most important choices in milestone invoicing. In the US, there’s no single rule. What matters is that you align with your agreement and communicate clearly.

Invoice on delivery

You send the invoice when you deliver the milestone output. This is common because it protects your cash flow. If the client’s review is slow, you still have a due date based on your terms.

Invoice on acceptance

You send the invoice only after the client approves the milestone. This feels client-friendly, but it can delay payments if approvals are slow. If you invoice on acceptance, consider adding an acceptance window (for example, “Client will review within 5 business days”).

Invoice on a schedule

Sometimes the milestone date is fixed (e.g., monthly deliverables or compliance work). In this case you invoice on the scheduled date, but you still describe what the milestone includes for that period.

For most service providers, “invoice on delivery” with clear milestone definitions and payment terms is the simplest and most predictable approach.

How to handle partial milestone completion

Projects don’t always move in perfect blocks. A milestone may be partially complete when priorities shift, or the client may pause the project mid-phase. In milestone billing, you generally have three options:

1) Do not invoice until the milestone is complete

This is simplest, but it can hurt your cash flow and may not be fair if you’ve already completed a large portion of the work.

2) Create a new interim milestone

This is often the best approach. You renegotiate the milestone schedule and add a new milestone that reflects what has been delivered. Then you invoice that new milestone amount.

3) Invoice a partial payment with clear documentation

If your contract allows it, you can invoice for the completed portion, but be careful: clients may dispute partial milestone invoices if they expected all-or-nothing deliverables. If you choose this route, attach a clear summary of what has been delivered and how the partial amount was calculated.

A good way to avoid drama is to design milestones that are small enough to complete regularly but large enough to avoid excessive invoicing. For many projects, 3–6 milestones is a sweet spot.

Change requests and scope creep: invoicing additional work

Milestone billing makes change management easier, but you still need a process. When the client asks for something outside the original scope, you have a few choices:

• Add a new milestone

Create a “Change Request Milestone” and invoice it when delivered, or invoice it upfront if it requires significant additional effort.

• Increase an existing milestone

If the change fits naturally into an upcoming milestone, you can revise the milestone amount and description. Make sure the client approves the new amount in writing before you proceed.

• Convert a portion of the project to hourly

Some providers keep milestones for the core scope and bill changes hourly. If you do this, document the hourly rate, how you track hours, and how/when you invoice.

Whichever approach you choose, keep the invoice description aligned with the change approval. That reduces disputes and keeps your accounting clean.

Sales tax and milestone invoices in the US

Sales tax in the US is not one-size-fits-all. Whether you charge sales tax depends on what you sell, where you and your client are located, and whether you have “nexus” in a particular state. Many services are not taxable in many states, but some services and many digital goods can be taxable in certain jurisdictions. If you sell taxable items, you may need to collect and remit sales tax.

Milestone invoicing doesn’t fundamentally change how sales tax works, but it does affect how often you calculate tax and what portion of the total gets taxed at each step. If a project includes both taxable and non-taxable components, consider breaking your invoice line items out so the taxable portion is clearly separated.

If you’re not sure whether sales tax applies to your business, it’s worth checking your state’s guidance or speaking with a qualified tax professional. From an invoicing workflow perspective, the key is consistency: apply tax rules the same way on each milestone invoice and keep good records.

How to invoice milestones for fixed-price projects

Fixed-price projects are a natural fit for milestone billing. The total project price is agreed in advance, and each milestone is a portion of that price.

To invoice effectively:

• Make sure the milestone amounts add up exactly to the total project price.

• Use milestone descriptions that match your proposal or contract.

• Reference the total project value in your agreement (and optionally in invoice notes) so clients see the overall context.

Some providers also include a progress summary in the notes, such as “Milestone 2 of 4.” That helps clients track how far along the project is and what payments remain.

How to invoice milestones for time-and-materials or blended projects

Sometimes a project is partly fixed and partly variable. For example, you might have a fixed price for design and a time-and-materials phase for implementation. You can still use milestones, but you’ll want to structure them carefully.

Common blended approaches include:

• Milestones for fixed phases, plus separate monthly invoices for variable work

• Milestones that include an “allowance” of hours, with overages billed separately

• Milestones for deliverables, with optional add-ons priced individually

If you bill overages, be transparent. On the invoice, separate the fixed milestone line item from any variable line items. This keeps client approvals simple and reduces the chance of disputes.

Final invoice: what to include at project completion

The final milestone invoice is often the one clients scrutinize most closely. It’s your chance to close the project cleanly and leave a strong professional impression.

Your final invoice should include:

• The final milestone description (e.g., “Final Delivery & Handoff”)

• A summary of what was delivered (brief and factual)

• Any remaining balance due

• Credits or deposit applications, if you apply the deposit at the end

• Any retainage release amount, if applicable

• Clear due date and payment methods

It’s also a good practice to include a short “thank you” note and any next-step instructions, such as support options or how to request future work.

Receipts, payment confirmations, and recordkeeping

Once a milestone invoice is paid, your client may want a receipt or confirmation. Even if they don’t ask, sending a payment confirmation can reduce confusion—especially for larger projects where multiple payments happen over time.

For your own records, keep:

• Copies of each invoice and any associated approvals

• Payment dates and payment methods

• Any changes to the milestone plan

• Notes on disputes, credits, or adjustments

These records help at tax time and make it easier to manage future client work.

How to prevent disputes with milestone invoicing

Most invoice disputes happen because of misaligned expectations, not bad intentions. Milestone invoicing helps when it’s paired with clear communication.

Practical ways to reduce disputes include:

Define “done” for each milestone

Include acceptance criteria in your agreement, or at least a short description of what the client will receive.

Use written approvals

Even a simple email or message confirming approval can help. For larger clients, approvals may come through a project management tool.

Set an acceptance window

If clients can delay feedback indefinitely, payments will be delayed too. A review window encourages momentum.

Invoice promptly

Send the invoice as soon as the milestone is delivered or accepted (based on your terms). Delayed invoicing can create confusion about what’s due and when.

Keep invoice descriptions consistent

Match the wording from your statement of work. The client’s accounting department will thank you, and you’ll get paid faster.

Common milestone invoice terms clients expect to see

US clients, especially larger businesses, often expect standardized invoicing language and formatting. While requirements vary, the following items can speed up approvals:

• Purchase order number (PO) if they require one

• Vendor name matching what’s in their system

• Remit-to address (where checks are sent, if applicable)

• Payment instructions (ACH details, card link, etc.)

• Clear due date and terms

• Itemized line items instead of a single vague line

Even smaller clients appreciate invoices that are easy to understand at a glance.

Example milestone invoicing flow for a typical project

To make this concrete, here’s a simple example of how milestone invoicing might work for a $10,000 fixed-price project.

Milestone 1: Deposit to begin (30%)

Invoice amount: $3,000

Trigger: signed agreement and project kickoff scheduled

Milestone 2: Initial deliverables (30%)

Invoice amount: $3,000

Trigger: delivery of first major outputs (e.g., design mockups or outline)

Milestone 3: Implementation (30%)

Invoice amount: $3,000

Trigger: delivery of build/prototype/production-ready version

Milestone 4: Final delivery and handoff (10%)

Invoice amount: $1,000

Trigger: final assets delivered, handoff completed

This setup is easy to explain, easy to invoice, and gives the client confidence that payments map to progress.

What if the client asks for one invoice instead of multiple?

Occasionally a client may prefer fewer invoices for administrative reasons. If you’re paid by milestone, you can still accommodate them while protecting your cash flow.

Options include:

• Combine two milestones into one invoice (for example, invoice 60% after a larger combined deliverable)

• Invoice the full amount but show a payment schedule (less common and riskier unless you trust the client)

• Keep milestone invoices but reduce the number of milestones

If a client insists on a single end-of-project invoice, consider requesting a larger deposit or retainer to reduce your risk. Milestones exist to balance risk; removing them often shifts risk back to you.

How invoice24 can streamline milestone invoicing

When you invoice by milestone, speed and consistency matter. A good invoicing workflow helps you send professional invoices quickly, track what’s been billed, and follow up without awkwardness.

With invoice24, you can set up your client details once, create clean invoice templates, and generate milestone invoices in minutes. For each milestone, you can add a clear description, set a due date, include payment terms, and send the invoice in a format clients recognize. As payments come in, you can track what’s paid and what’s outstanding so you always know the project’s billing status.

Milestone invoicing also becomes easier when you can reuse line items, keep invoice numbering organized, and maintain a record of what was invoiced at each stage. That way, if a client asks, “What does this invoice cover?” you can answer immediately with documentation that matches the project plan.

Practical tips to get paid faster on milestone invoices

Getting paid promptly is often about removing friction. Here are practical ways to speed up payments on milestone billing:

Send invoices to the right person

Ask early who handles payments: the client contact, an accounting department, or a bookkeeper. If you send invoices to the wrong inbox, you’ll wait longer than necessary.

Include the client’s required details

If they require a PO number or special formatting, add it from the start.

Make the due date obvious

A clear due date reduces “When is this due?” back-and-forth.

Offer easy payment options

The easier it is to pay, the faster you get paid. Many clients prefer card or ACH.

Invoice immediately when the milestone triggers

Don’t wait until the end of the week. Prompt invoicing keeps your project cash flow predictable.

Use friendly, consistent reminders

Payment reminders are normal in business. A polite reminder shortly before or after the due date is often all it takes.

Handling late payments in milestone-based projects

Late payments can disrupt your schedule and put you in a difficult position, especially if you’re expected to keep working while waiting for payment. The best way to handle late payments is to set expectations in advance and follow a consistent process.

Best practices include:

• Include late fee terms (if you charge them) in your agreement

• Pause work if a milestone invoice is overdue beyond a stated grace period

• Send a friendly reminder first, then a more direct follow-up

• Keep communication professional and factual

Milestone projects are particularly well-suited to a “no payment, no next milestone” policy. If that policy is in your agreement, it’s easier to enforce without damaging the relationship.

What to do if a client disputes a milestone invoice

If a client disputes an invoice, start by clarifying whether the dispute is about the deliverable, the timeline, or the amount. Often, the fastest resolution is to point back to the milestone definition and show what was delivered.

Steps that help:

• Share the milestone description and acceptance criteria from the agreement

• Provide evidence of delivery (email, files, links, meeting notes)

• Offer a short call to resolve misunderstandings

• If the issue is a change request, propose a revised milestone plan

The goal is to keep the conversation anchored to documented expectations. Milestone invoicing shines here because it creates natural checkpoints and paper trails.

Milestone invoicing checklist you can use for every project

Use this simple checklist to make milestone invoicing consistent:

• Define milestones with clear completion criteria

• Assign a dollar amount to each milestone that totals the project price

• Decide whether invoicing triggers on delivery or acceptance

• Specify payment terms and due dates

• Collect any deposit before starting work

• Invoice promptly when each milestone triggers

• Use specific, contract-matching line item descriptions

• Track payments and send reminders when needed

• Close with a final invoice that summarizes final delivery and any remaining balance

Bringing it all together

If you’re paid by milestone in the US, invoicing clients doesn’t have to be complicated. The key is to define milestones that reflect real progress, document them in your agreement, and invoice consistently when each milestone is delivered or accepted. Strong milestone descriptions, clear payment terms, and prompt invoicing reduce confusion and help you get paid on time.

Once you adopt a milestone workflow, you’ll likely find that clients appreciate the transparency. They know what they’re paying for, you know when you’re getting paid, and the project stays organized. With invoice24, you can create professional milestone invoices quickly, keep records of each stage, and manage payments smoothly from kickoff to final delivery.