One of the keys may be to documenting the cash /receipts/ invoices used for the improvements.

Try invoice pro.

IN this particular situation the Borrower/contractor is doing work first, showing proof of completion w photos, paid invoices and materials, and then getting reimbursed.

I also worked in accounting, and I document this situation in a memo to myself, in place of contractor invoice, his name, phone number, what he did, requests for a receipt, and keep it on file.

Quote from @Raquel Gonzalez: Some property managers mark up every invoice with a fee.

Your BF needs to submit an invoice and you need to pay it and then you are covered even if you go in front of a judge.  

The tile company was able to find a clause that also allows me to send the invoice directly to them and they will settle it from the funds left in escrow. 

I know how to use Quickbooks but it has major cons (it's expensive, can't really easily build in features of a mortgage, recurring invoices are only for the $90/mo. plan), Quicken might be good but their property management is only on Windows, Stessa seems like it's pretty good but not comfortable with its terms (nothing in life is really free, folks!

Just make sure you have invoice/receipt, proof of payment (paid by check) and 1099 sent to the contractor if required.

I use Quickbooks to maintain invoices, expenses, reports, mileage, etc...It sounds like you have done well for yourself and I admire this.