A payment milestone needs to match the work you must fund
The first payment comes after the expensive part
Suppose a proposed contract pays a substantial amount after installation, but the materials must be purchased and prepared beforehand. The percentage sounds attractive. The business still needs to fund the work that happens before that milestone is reached.
Put the payment stages beside the actual cost sequence. A useful arrangement depends on when money is needed and received, not only the percentage written beside each stage.
Describe the work required for each milestone
Identify the deliverable, approval process and supporting records for the proposed payment. Separate the date work is expected to finish from the date a claim can be made and the expected receipt date.
Check whether the stage depends on work outside your control. An unclear completion trigger can make the first receipt difficult to forecast even when your own tasks are finished.
Map the costs before each receipt
List the materials, labour, subcontractors and other commitments that fall before the stage payment is expected. Keep estimates labelled and avoid counting an order again when its invoice is later entered.
business.gov.au discusses instalment and milestone triggers in contract payment terms. Use the actual proposed trigger when assessing the funding requirement, rather than assuming a progress payment arrives as soon as work starts.
Discuss a different structure where appropriate
Before acceptance, a commercial discussion might involve a different milestone or delivery sequence. Assess whether it is lawful, clear and workable for the job. Get construction-specific advice where deposits or progress payments are regulated.
Do not create an invoice for unperformed work merely to bring cash forward. The agreed claim requirements and applicable rules still need to be satisfied.
Check the effect on the remaining stages
Moving a payment earlier changes later receipts too. Compare the full schedule so the last stage does not become underfunded. Consider how any retention or disputed extra work affects the amount actually expected.
Keep the agreed schedule with the project handover. The delivery and accounts teams need to know what evidence is required and who confirms that the milestone has been reached.
Review the arrangement before committing
If the business cannot fund the proposed sequence, resolve that question before relying on the job to improve cash. A strong expected margin does not make the early payments disappear.
If an existing milestone arrangement is already causing debt pressure, bring the contract and cash dates to CRP. Explain whether the issue is an unachieved milestone, a rejected claim or a late payment. Each calls for a different next discussion.