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Protect Your Budget–and Project–with a Payment Schedule

Many homeowners don’t realize until it’s too late that they’ve been paying the contractor ahead of the work, leaving them with no leverage if they run into an issue with the project.

Establishing a payment schedule before any work begins can give you that leverage and a sense of security in your project during a time of change and stress.  An agreed-upon payment schedule protects you from making those “advance payments” and gives contractors an incentive to keep working. So, if they want to get paid, they have to finish their work.  Payment schedules should be based on completion milestones that you can easily see and understand how they affect the status of your project.

I also recommend holding back a percentage of the total payment until a final walk-through has been completed, you’ve checked off every box, and you are satisfied with the results. This is an established industry practice that reputable contractors will not take offense to.  They may even encourage it because it protects them too, by ensuring you’re satisfied with the work and that any concerns have been addressed.

Here are a few milestones you may want to use in your payment schedule. All of these may not apply to your project; however, they’re a good starting point.

Site work – This includes clearing your lot, grading the land, laying pathways for access, and installing temporary fencing.

Foundation – If you’re adding square footage, you’ll need foundation work. Pay for this milestone once it has been laid and passed inspection.

Rough shell – This includes anything that will be concealed in the walls and all supporting structures. You may want to break this into a few milestones as it’s a lot of work.

Finish shell – Insulation, walls, floors, and drywall are all part of the finish shell. Again, you may want to break this into a few milestones.

Cabinets and countertops – Once the correct cabinets and countertops are installed correctly, pay this milestone.

If you’re tackling a larger remodel, there are plenty more opportunities for milestones to further break down your payments. As long as you and the contractor have agreed upon the milestones in writing, in advance, this part of the process should go smoothly. And, hopefully, even relieve a little bit of stress when you sign those big checks!