Progress payments are common in the contracting world — but they can be a blessing or a curse depending on how you structure them.

Too many contractors accept lopsided payment terms. They front-load labor and material without securing enough cash early. If you’re billing 50% after 50% of the work is done — but you’ve already incurred 80% of the costs — you’re funding the job with your own money.

You should never be in a position where you’re out of pocket halfway through a job. Payment schedules should be tied to cash outflows, not just project milestones. Think about the flow of labor, materials, and subs. Then reverse-engineer your billing structure to keep cash ahead of costs.

Otherwise, you’re playing the bank — and that always ends badly.

Real World Mistake & Lesson:

A contractor who did kitchen remodels billed 40% at job start, 30% at halfway, and 30% at the end. Problem was, 70% of his labor and materials were spent before he hit the halfway mark. We restructured his payment terms: 50% up front, 30% after cabinet install, and 20% at final punch. That flipped his cash flow from negative to positive and allowed him to start two more jobs without borrowing.

 Pick up your free copy of my new book, “The 7 Minute Conversation-How to Hear the Story Your Small Business Financial Statements Are Telling You-CONTRACTOR EDITION”.  Go to www.7MinuteConversationBook.com

Ready to find out where your cash and profits are really going? Book your free 15-minute Profit and Cash Flow Call with me. No pressure. Just real clarity. I’ll help you see where your money’s hiding — and what to do about it. Schedule at www.CashFlowCallWithLarry.com