Billing & Payments
RA Bill Format: How Running Account Bills Work in Construction
RA bill full form, format and a worked example — measured quantity, retention, advance recovery and deductions explained in plain language for contractors.
Interim payments are the lifeblood of construction. No contractor can fund an entire project and wait until handover to get paid — so work is billed in stages through Running Account (RA) bills. Yet RA bills are also where the most confusion and disputes happen: retention, advance recovery, "previous bill" adjustments. This guide makes the whole thing clear.
What "Running Account" actually means
The word running is the key. An RA bill is cumulative: each bill values all the work done from day one up to today, then subtracts everything already paid. You are not billing "this month's work" in isolation — you are re-measuring the whole job to date and settling the difference.
That is why RA bills are numbered in sequence — RA-1, RA-2, RA-3 — and why RA-2 always references RA-1. The final bill simply closes out the last running account.
The anatomy of an RA bill
Every RA bill, whatever the format, follows the same logic:
| Step | Line | Example (₹) |
|---|---|---|
| A | Gross value of work done to date | 20,00,000 |
| B | Less: value paid in previous RA bills | 12,00,000 |
| C | Gross value of this bill (A − B) | 8,00,000 |
| D | Less: Retention @ 5% of C | 40,000 |
| E | Less: Mobilisation advance recovery | 80,000 |
| F | Less: TDS / other statutory deductions | as applicable |
| G | Net payable this bill (C − D − E − F) | ≈ 6,80,000 |
The exact percentages come from your contract. But the skeleton above is universal.
A worked example
Say your contract is worth ₹50,00,000. You took a 10% mobilisation advance (₹5,00,000) to start, recovered proportionately across bills. Retention is 5%.
RA-2, work done to date = ₹20,00,000; RA-1 already paid ₹12,00,000 gross.
- Gross this bill (C): 20,00,000 − 12,00,000 = ₹8,00,000
- Retention (D): 5% × 8,00,000 = ₹40,000
- Advance recovery (E): if recovered at 10% of this bill = ₹80,000
- Net payable (G): 8,00,000 − 40,000 − 80,000 = ₹6,80,000 (before TDS/GST treatment as per your contract)
Do this cleanly and the client can check every figure — which is exactly why a well-made RA bill gets released faster.
What backs an RA bill: measurements and proof
An RA bill is a claim. A claim needs evidence. Two things back it up:
- The Measurement Book (MB). Every quantity in the bill must trace to a recorded measurement — length × breadth × depth, item by item. No measurement, no payment.
- Quality proof. Increasingly, clients (rightly) want to know the billed work is acceptable work. Photos and quality-check records attached to the bill remove the "but was it done properly?" objection before it is raised.
The fastest-paid bill is the one the client cannot argue with. Measurements plus quality proof is how you get there.
Retention: why part of your money is held back
Retention money is a guarantee. The client holds back a small percentage of every bill so that if a defect shows up, there is money in hand to fix it. Typically:
- 5–10% retained from each RA bill,
- half released at practical completion,
- balance released after the defect-liability period (often 6–12 months), once defects are made good.
It is your money — it just arrives last. Track it, because unclaimed retention is one of the most common ways contractors quietly lose lakhs.
Common RA bill disputes (and how to avoid them)
- Quantity disagreements — avoided by a joint, signed MB.
- Rate disputes on extra items — avoided by getting variation orders approved before execution.
- "We already paid for that" — avoided by the cumulative-minus-previous structure being shown clearly.
- Retention never released — avoided by tracking retention per bill and claiming it on schedule.
Preparing RA bills by hand — re-measuring to date, tracking previous bills, retention and advance recovery across many bills — is slow and error-prone. When your quality-approved work automatically carries a value, and receipts are confirmed by both sides, the whole running account stays clean without the monthly spreadsheet marathon.