When it comes to making payments, being on time sets a good example. Whether you are making loan repayments or paying for a construction contactor, you’ll need a payment schedule to keep you reminded of your obligations. And if you’re conducting business, make sure that you have a contract payment schedule included in your agreement document. This payment schedule is a big deal when doing business, and you’re about to find out why in this article. Payment schedule samples are also provided for you to browse through and use as reference.
FREE 15+ Contract Payment Schedule Samples
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16. Sample Construction Contract
What Is a Contract Payment Schedule?
A contract payment schedule is a payment arrangement that usually takes place between a business owner and a contractor. It is a formal agreement contract that provides a payment breakdown based on the estimated amount of responsibility that is agreed upon by the two parties. The terms and conditions in a contract payment schedule explains the details on how to pay a contractor for a building or construction project.
How to Make a Contract Payment Schedule
Here are a few tips on how you can make a fair contract payment schedule and ensure that you don’t get caught in a shady business transaction.
1. Look for a Trusted Contractor
Regardless of how well-written your contractor contract is, if you work with an unreliable contractor, then you’ll have a lot of problems before you can even say that it’s a deal. That is why selecting a trusted contractor is a crucial first step. Make sure to look only for registered contractors with good ratings and reviews. Doing a background check also works.
2. Don’t Pay in Cash
It’s not a good idea to pay contractors in cash, even if you have cash on hand. Paying with a cheque or a credit card are much better options because of the security they provide. They also leave records of your payment transactions, which you can use as proof or keep for documentation. You can also schedule automatic or recurring payments using your credit card.
3. Stagger Payments
Stagger payments based on the contractor’s work progress. Never make it an option to pay the full contract amount up front. This way, you can make sure that you’re only paying for the actual work done. Some contractors just don’t work properly once they get paid in full. Some even leave without doing anything, and that is the kind of business that you must avoid.
4. Use a Reliable Payment Schedule Template
A payment schedule template will help you make a neat and organized schedule of payments for your contract. There are a lot of templates that you can choose from, so make sure to select the template that is appropriate for your needs.
Why is a contract payment schedule important?
Contractors don’t need to wait for the entire job or project to be completed before they get paid. A contract payment schedule is important because it allows contractors to get paid while they shoulder the cost of labor and materials. The payment arrangement agreed in the contract provides the fixed dates when payment will be made. This ensures that contractors have a continuous amount of cash for their operations. The same thing is true with independent contractor agreements.
What should I include in a contract payment schedule?
A good contract payment schedule is detailed and complete. However, project payment terms will always vary in every contract. The list of information that must be included in a legal contract is provided below:
How much should I pay a contractor up front?
It’s not advisable to pay a lump sum at the beginning of a contract because it could be a sign that you’re dealing with a shady business. However, if you’re required to pay contractors up front, your payment shouldn’t be more than 10 percent of the estimated contract price. Pay contractors based on their progress with work.
What is the best method to pay a contractor?
The payment methods that you can use to pay contractors include cash, cheque, debit card, or credit card. It all depends on what has been agreed upon and stated in the general contract. But among the four options, the best method is payment through a credit card. That is because it is the safest and most effective option. It also provides solid proof that you paid the contractor for the job, and allows you to schedule regular payments conveniently.
It’s almost impossible to keep track of a lot of things altogether, especially if you’re running a business. But you’ll always be reminded of your payment responsibilities if you have a contract payment schedule in your agreement document. It’s probably one of the good things that you can find in a contract.
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