What is progress billing, and how is it calculated?

Progress billing (hakediş) is the document that measures the work a contractor completed under a contract in a given period, prices it, and ties it to a payment. Construction and contracting work in Turkey usually runs in monthly periods. Each month, the work done is measured and priced at the contract rates, deductions are subtracted, and what remains is the net amount payable.

In private-sector contracts, the parties set the period, the deductions, and the approval time in the contract. In public construction works, the rules come from the General Specification for Construction Works (Yapım İşleri Genel Şartnamesi), an annex to the Regulation on the Implementation of Construction Works Tenders.

How is progress billing handled in public works?

Article 39 of the General Specification was amended by the Public Procurement Authority (Kamu İhale Kurumu). The amendment was published on July 30, 2025, and took effect on September 1, 2025. Under the current text:

• The interim progress billing report (geçici hakediş raporu) is prepared within the first 5 business days of each month at the contractor’s request. If the contractor doesn’t request it, the contracting authority prepares it unilaterally within the same month.
• The authority approves the report no later than 30 days after the contractor or its representative signs and submits it, then accrues the payment (tahakkuk) within the 30 days following approval. Unless the contract sets a different period, payment is made within 15 days of the accrual date.
• If the authority considers it necessary, it can prepare a supplementary interim progress billing report, once only, between provisional acceptance and final acceptance.
• The contractor submits any objection to corrections made on a progress billing report by written petition, no later than the date the final accounts are delivered to the authority.

To see which version of the rules a given contract follows, check the contract and specification annexes in the tender documents.

What is deducted from a progress billing?

In public construction works, progress billing is cumulative. Under Article 39 of the General Specification, the previous progress billing amount is subtracted from each new one, and VAT is added to the remainder. The deductions set in the contract, any debts the contractor owes the authority, penalties, and taxes required by law are then taken off that figure.

Some deductions are set directly by law. Under Article 12 of the Public Procurement Contracts Law (Law No. 4735), when price escalation paid on the work raises the contract price, an additional performance bond of 6% of the increase is required. This bond can also be withheld from progress payments.

Under Article 43 of the Public Procurement Law (Law No. 4734), in consultancy service tenders where the performance bond wasn’t taken before the contract, 6% of each progress payment is withheld as a guarantee. Under Article 94 of the Income Tax Law (Gelir Vergisi Kanunu), tax is also withheld from progress payments (istihkak) for construction and repair work that spans more than one calendar year.

Progress billing in IWB

In IWB, progress billing lives in the Contracts module. You turn it on in a contract type’s settings; it’s off in the contract types that ship with IWB. You can prepare interim, final, and supplementary progress billings.

You enter the work completed in the period as a gross amount excluding VAT. IWB subtracts advance recovery, retention, stamp tax, and withholding tax to calculate the net amount payable. Deduction types and rates come preset in Settings, and your organization can edit them.

Offsets for unpaid Social Security Institution (SGK) premiums and for tax debts are conditional deductions. The same period can’t be billed twice.

A progress billing moves through Draft, Presented, Approved, Invoiced, and Paid. Once it’s approved, its deductions are locked and its retention is posted to the collateral ledger in Finance. To correct it, you create a new progress billing that reverses the original.

When you invoice a progress billing, its invoice is prepared as a draft in Sales. You mark a progress billing Paid by hand; recording the collection doesn’t change its status on its own.

Preparing and approving a progress billing are separate permissions. Reminders for the approval deadline, the payment due date, and the objection period can be created as tasks. The basis for price escalation is kept as text on the contract; progress billing doesn’t calculate price escalation.

In Field Service, progress billing means something else and covers the dealers and authorized service providers in your service network. At the end of each month or quarter, a progress billing is created for each service point, and the confirmation statement goes to the dealer.