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.