Their contracts should have a clearly defined payment plan indicating the down payment, all advancement payments and a final payment due on the day of the essential completion of the contract. Advancement payments should be clearly planned at the beginning of a work phase and not after the completion of this work. Payments are how cash flows are paid to your business. Plan payments correctly, and you have a positive cash flow at every job. Your acomphement should range from 40% for smaller jobs to 20% for larger jobs. Advancement payments should be scheduled approximately every two weeks. Your last progress payment and balance should match one of the previous progress payments. The balance should be approximately 2% of the sale price and be due on the date on which the order is essentially concluded. Accordingly, contracts should define how payments are made if the work continues beyond the original deadlines. When customers use legitimate, licensed and related contractors, they are protected.
NB: In Grove Developments Ltd v Balfour Beatty Regional Construction Ltd , it was found that Balfour Beatty was not entitled to other interim payments and that the regime applicable to construction contracts was not applicable, as the parties had not agreed to extend the payment plan in the event that the completion of the work took longer than expected. A payment plan usually contains the following details: Your contract should make it clear that you do not charge or charge orders. The payment plan is in the contract and if it is not followed, you will close the post. If they hide too late now, give them 24 hours to pay. They are not a bank or lender and are not required to finance their project. By the way, if you set up a payment plan but don`t impose it, you accept by default the new payment plan that your customer might want to use. Set the payment plan and force it. If you work in a state that imposes payment plans, you need to figure out how to organize your payment plan so that you can keep your bills paid. Some contractors use a 1/3, 1/3 and 1/3 payment plan, which however results in negative cash flows. Before the second payment, you have already spent more than 1/3 of your labor cost, which means you are working out of pocket. And by the end of the job, you`ve spent well over 2/3 of the job price (on employment and overhead), which means you`re financially in a hole until your client makes the final payment.
And if they decide to play games with this last payment, you are in trouble. Spreading payments, so that cash flows are closer to cash flows….