How Fast Must I Pay After Construction Work Is Complete?

Considerations

• Managing cash flow in a construction business is a challenge. Contractors pay for their materials up-front, and workers are paid as the work is done. Therefore, contractors must finance their projects until the customer pays the bill. If a customer delays a payment, this can increase the cost of the overall project.

Milestone Payments

• Because of this difficulty, most contractors write a construction contract with their customers to manage payments. Some construction contracts will outline certain milestones and the payment associated with each milestone. In this case, payment is due for the specified milestone as soon as the work associated with the milestone is complete.

Monthly Payments

• Other contracts use a monthly payment schedule. Typically, the contractor will invoice for actual expenses incurred in the previous month. The payment is then due each month when the invoice is received.