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Progress Payments

7K views 9 replies 8 participants last post by  tedrin 
#1 ·
How do you word your payment schedule for progress payments in your contracts?

Do you require progress payments after a certain number of workdays, or upon completion of a certain phase of the job?
 
#2 ·
1/3 to start, 1/3 at half way point, and final at completion. (final 1/3 unless ad ons) If i'm doing a decorative finish though, and it may only take a week, I take 50% to start. 50% at finish. And if its straight paint and under $2000 I take 50% to start. Has always worked for me.
Saying that though, you should check state laws as they are not the same. Some states it is illegal to take more than 10% to start and or deposit.
I love those one week decorative jobs that are around $8-$10,000.....Nice pay on Monday and Friday!!
 
#3 ·
PAYMENT SCHEDULE:

1. A DEPOSIT OF 1/3 TOTAL PRICE DUE UPON SIGNING OF AGREEMENT: $

2. A DRAW AGAINST REMAINING BALANCE (NOT TO EXCEED 1/3 OF TOTAL PRICE) DUE AFTER 7 WORKING DAYS: $

3. REMAINING BALANCE DUE BY THE END OF BUSINESS ON THE DAY OF COMPLETION: $

LEGAL NOTICE: UNLESS OTHERWISE AGREED TO IN WRITING PRIOR TO START UP OF WORK: PAYMENTS RECEIVED LATER THAN 48 HOURS FROM COMPLETION OR STOPPED WORK DATE TO BE CHARGED A $50.00 LATE FEE, AND ADDED TO BALANCE DUE. ALL BALANCES DUE, AFTER THIRTY (30) DAYS TO BE LEVIED A SERVICE CHARGE OF 1.5% PER MONTH AND ADDED TO BALANCE TOTAL. PLEASE PAY PROMPTLY. WE ADHERE TO MISSOURI LIEN LAW STATUTES AND PROCEDURES. THE UNDERSIGNED AGREE THAT EXCLUSIVE VENUE AND JURISDICTION OF ANY ACTION SHALL BE St. Louis County, Missouri. THE UNDERSIGNED WILL BE RESPONSIBLE FOR THE COSTS OF COLLECTION OF ANY UNPAID BALANCE, INCLUDING A REASONABLE ATTORNEYS FEE.
 
#4 ·
"Draws"
Material draw
Progress draw
Final draw
Retention draw
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Construction accounting is a form of project accounting applied to construction projects. See also production accounting. Construction accounting is a vitally necessary form of accounting, especially when multiple contracts come into play. The construction field uses many terms not used in other forms of accounting, such as draw and progress billing. Construction accounting may also need to account for vehicles and equipment, which may or may not be owned by the company as a fixed asset. Construction accounting requires invoicing and vendor payment, more or less as to the amount of business done.

In the United States, the authoritative literature on Construction accounting is AICPA Statement of Position SOP 81-1 (SOP 81-1)..........Wikipedia
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I only do a deposit and final on small ticket.
 
#6 ·
Thanks for the quick response guys. It was helpful for a contract I needed to get signed today. :thumbsup:

Most of my jobs are just a deposit and final. It’s been so long since I needed progress payments I was having a brain fade. :blink:

I like both % of completion and # of days.

On my exterior repaints, I use to put % or $$$ upon completion of preparation phase, but that gets a little fuzzy as we are often still prepping one area while finish coat is being applied in another.
 
#9 ·
I am glad to see others do this. I rarely get a deposit or progress payment on NC resi, I usually get paid at the end by the bank.

Repaints, payment in full upon completion.

Commercial, usually defined in contract, the store we are doing now, could not put in for a draw until 50% completed!
Draws are usually based on work phases done.
 
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