An interim payment is a partial payment made throughout the duration of a construction project as work is completed. These payments help contractors maintain cash flow and fund ongoing operations without having to wait for full project completion.

How Interim Payments Help Contractors Manage Cash Flow

Interim payments provide contractors with regular income, allowing them to cover costs like labour, materials, and overhead as the project progresses. This ensures that the project can move forward without financial strain, while also providing the client with reassurance that payment is linked to tangible progress.

Best Practices for Managing Interim Payments

Contractors should establish clear milestones and payment schedules upfront with the client, tying payments to specific project achievements. Regular invoicing at agreed intervals helps ensure that cash flow remains steady. It’s important to document the progress for each phase to justify the release of funds. Related Terms: Progress Payment, Valuation

FAQs

How are interim payments calculated?

A: Interim payments are typically based on the percentage of work completed, as outlined in the contract, or tied to specific project milestones.

Why are interim payments important for contractors?

A: Interim payments help contractors maintain cash flow, ensuring they can fund ongoing work without financial disruption throughout the project.

Interim Payment Definition

How Interim Payments Help Contractors Manage Cash Flow

Best Practices for Managing Interim Payments

FAQs

How are interim payments calculated?

Why are interim payments important for contractors?

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