Learn how to build a clear construction payment schedule with smart milestones, deposits, and holdbacks so you protect cash flow and avoid payment delays.
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On most jobs, cash flow kills you before costs do. A simple, clear construction payment schedule fixes that. It breaks the job into milestones and sets when invoices go out. Clients know what they owe and when. You know when you’ll get paid. In this guide, we’ll show you how to build a payment schedule that fits your work. We’ll cover deposits, holdbacks, and milestone examples. You’ll see how to protect your margin and keep money moving without drama.
A strong construction payment schedule uses a fair deposit, clear milestones tied to visible work, and a final payment on completion. Include any provincial holdback. Put it in the contract, get it signed, and invoice the moment each milestone is hit.
Cash flow is the lifeblood of your business. Materials need payment now. Crews expect wages every 1–2 weeks. When you wait 30–60 days to get paid, you fund the job. That’s risky.
A clear construction payment schedule sets money dates before work starts. It cuts payment delays, reduces arguments, and keeps suppliers happy. It also helps you plan labour and material buys with less stress.
This pairs well with understanding project timelines. If you need a hand there, check our guide on managing project timelines.
Here’s a simple process you can use on any job size.
Define the scope, line by line.
Pick 3–6 milestones you can show on site.
Set fair percentages for each milestone.
Include materials-heavy stages earlier.
Add your holdback line if required.
Lock payment timing.
Put it in the contract and get a signature.
If you’re also looking to streamline professional proposals, our guide covers creating professional proposals.
Use clear checkpoints that anyone can see. Here are practical examples by trade or project type.
These are examples, not rules. Adjust to your risk, costs, and job length. If the job is 1–2 days, try 50% deposit and 50% on completion. If it’s 8–12 weeks, use 4–6 milestones.
For contractors dealing with change orders, we recommend a clear change orders process to keep milestones clean.
Deposits help cover early costs and secure the schedule. Many contractors ask 10–30% depending on job size and lead time. Keep deposits reasonable and explain why you need them (materials, booking time). Some provinces have consumer rules, so check local requirements.
In many provinces, lien laws require a statutory holdback, commonly 10% of the contract price or amounts paid. The owner holds this back until the holdback period expires. The goal is to protect subcontractors and suppliers. Show the holdback on every invoice so the math is clear.
Typical flow:
Check your province’s rules and timelines. Ontario, BC, Alberta, and others have similar laws, but details can vary.
On some private jobs, clients ask for extra retainage, like 5%. Treat it like a holdback. Show it, track it, and state when it releases (for example, at substantial completion or 30 days after).
This pairs well with using invoice templates that save time, so your holdback math is consistent every time.
A payment schedule only works if it’s written, signed, and enforceable.
Use language like “upon passing electrical rough-in inspection” or “after tile set and grout complete.” Avoid vague words like “substantial” unless you define it (for example, “usable space with all systems operating, minor defects only”).
Extras happen. Do not fold them into your next milestone quietly. Use a written change order with its own price and payment timing (for example, “50% on approval, 50% on completion”). This avoids eating your cash mid-job.
If payment is late beyond X days (often 7–14), reserve the right to pause work until payment clears. Be fair, but firm. Most clients understand clear rules.
If you’re new to this, our guide on change orders can help you protect your margin while keeping the schedule steady.
Paperwork delays payment. A clean workflow speeds it up.
Many contractors find this cuts back-and-forth by half and speeds payment by 2–3 days. Small gains add up over 5–10 milestones.
It depends on job size, materials, and lead time. Many contractors use 10–30% to cover early costs and secure the schedule. Keep it reasonable, explain it to the client, and check any provincial consumer rules that may apply.
Stay calm but firm. Send the invoice immediately, follow up in 2–3 days, and reference the contract terms. If payment remains late past your grace period, use your stop-work clause. Clear rules prevent drawn-out disputes.
Not always. For 1–2 day jobs, a simple 50% deposit and 50% on completion can work. If materials are expensive or custom, add a material delivery milestone to protect your cash.
Use a written change order. Price the extra clearly and set its own payment timing, like 50% on approval and 50% on completion. Don’t roll extras into the next milestone without documentation.
Right away. Ideally within 24–48 hours of hitting the milestone. Faster invoicing means faster payment. Add photos and a short note to show the milestone is done.
A clear payment schedule keeps cash flowing and fights friction. Tie payments to visible milestones, include any required holdback, and invoice the moment work is done. Next steps: 1) List your typical milestones by job type. 2) Set fair percentages. 3) Add the schedule to every contract and get it signed. Platforms such as Donizo make proposals, e-signatures, and invoicing quick, so you get paid on time. Put this system in place once, and every job gets easier.
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