Payment Schedule

Definition

A payment schedule is a document, usually attached to a construction contract, that specifies the times for, and amounts of, payments for construction services.

Purpose

The payment schedule outlines when payments will be made to the contractor and subcontractors, ensuring that cash flow is managed effectively throughout the project. It helps to prevent disputes and delays by providing a clear timeline for financial transactions.

Examples of Use

• Construction Contracts: Attached to contracts to detail the payment terms and milestones for project completion.
• Project Management: Used by project managers to plan and track financial expenditures and ensure timely payments.
• Budgeting: Helps in budgeting and forecasting by providing a detailed timeline of when funds will be disbursed.

Related Terms

• Milestone Payment: Payments made at specific stages of project completion.
• Progress Payment: Payments made based on the progress of the work completed.
• Retention: A portion of the contract sum retained by the client until the project is completed satisfactorily.

Notes

• Clarity: A well-defined payment schedule prevents misunderstandings and disputes between the project owner and contractor.
• Cash Flow Management: Helps contractors manage their cash flow by knowing when they will receive payments.