A contract can be profitable on paper and still put you out of business. Profit is measured at the end; cash is measured every Friday when the masons expect to be paid. A payment schedule is the instrument that reconciles the two, and most are drafted in about four minutes.
Match the money to the spending curve
Construction spending is front-loaded. Foundation and superstructure consume cement, blocks, sand and reinforcement early, while finishing which the client can see and values most happens late and costs comparatively less per week.
| Milestone | Typical share | What it funds |
|---|---|---|
| Mobilisation | 20% | site setup, first material delivery, hoarding, security |
| Foundation complete | 15% | excavation, concrete, reinforcement, below-ground blockwork |
| Superstructure complete | 20% | blockwork, columns, lintels, slab |
| Roofing complete | 15% | timber, sheets, fascia, roofing labour |
| MEP first fix | 10% | electrical and plumbing subcontractors |
| Finishing | 15% | plaster, tiling, painting, ceiling |
| Practical completion | 5% | snagging, clean-up, handover |
Rules worth holding
- 1.Mobilisation must cover the first material order plus site setup. If it does not, you are lending the client money at 0% while paying your suppliers cash.
- 2.Tie every milestone to something observable. “Superstructure complete” is checkable; “50% complete” is an argument waiting to happen.
- 3.Invoice the day the milestone is met, not the day you remember. Every week of delay is a week of your own capital in the client’s wall.
- 4.Keep the final payment small enough that the client releases it, and large enough that you will return to fix the snags.
Retention, and how it bites
A 5% retention on a GHS 850,000 contract is GHS 42,500 held back typically half released at practical completion and half after the defects period. That is often more than the profit on the job. It is not a problem as long as you knew, priced it, and did not spend it in advance.
When the client pays late anyway
Late payment is a fact of the trade, so build the response into the contract rather than the argument. State the payment period in days. State what happens after it a pause in works is more effective and more professional than an interest clause nobody enforces. Keep a record of every invoice date, every reminder and every part-payment, because the contractor with dated records is the one who gets paid first when money is tight.
None of this is adversarial. Clients generally pay what they understand. A schedule tied to visible milestones, invoiced promptly and recorded properly, is easier to honour than a lump sum that arrives with no explanation.