Getting paid late is a cost. A $14,850 final draw paid five weeks late is $14,850 you financed for five weeks, plus the hours spent asking. Most late payments aren't clients refusing to pay; they're clients who were given a reason to wait: an invoice that arrived late, a number they couldn't check, an extra they didn't remember approving. Fix those and the rest is a phone call.
The terms that belong in the contract
Clients pay what they agreed to and argue about what they didn't. Put these in the contract, in plain words, before the first day on site:
- Deposit: amount, when it's due, and what it funds.
- Draw schedule: each payment, the milestone that triggers it, and the share of the price.
- Change orders: priced with markup, signed before the work, due on approval or with the next draw.
- Allowances: what they include, how overages and credits are handled.
- Payment terms: days to pay after each invoice (net 7 is common on residential work), the methods you accept, and any fee for cards.
- Late payment: interest or a fee after the due date, at a rate your state allows.
- Stop-work: your right to pause work when a draw is unpaid past the due date, with notice.
- Substantial completion: defined, so "done" isn't decided by a paint touch-up.
None of that is aggressive. It's the client's map of what they'll be asked for and when, and a client who has the map pays from it.
What a deposit can be
A deposit funds materials and proves the client is serious. It's also the payment states regulate most. California caps a home improvement deposit at 10% of the contract price or $1,000, whichever is less. Other states set different caps or none, and some require the deposit to be held separately. Check your state's contractor board before you write the number. Where the deposit is capped, a materials draw due when the major order is delivered to the site brings the cash forward. Not when it's ordered: California limits progress payments to the value of work completed or materials delivered to the site (CSLB guidance), so a draw for cabinets that are still at the factory isn't collectable there.
Whatever the deposit is, it isn't earned until work is done. Spend it on another job's payroll and this job finishes short.
The invoice that gets paid in days
The fastest invoices share three habits.
They arrive the day the milestone is hit. A draw invoice sent the afternoon the rough-in passes gets paid while the client is pleased. The same invoice sent ten days later competes with the client's other bills and the question of why it took so long.
They can be checked against the contract without a phone call. The schedule from the contract, this milestone named as written, contract and adjusted contract value, previously billed, amount due, due date. Change orders on their own lines with their signed dates. A client who can verify the number in thirty seconds pays it; one who can't, asks.
They carry no surprises. Every extra on the invoice was signed before the work happened. The change order guide is how that stays true, and the progress billing guide sets the schedule so the draws follow the cost curve.
The week a payment goes late
Day one after the due date: a short message, assuming the best, with the invoice attached again. Day five: a call. Day ten: written notice under the contract's stop-work and late-fee terms, still polite. After that: your state's mechanic's lien process has deadlines, often counted from the last day of work, and a preliminary notice may have been due at the start of the job. Know the dates before you need them; the lien waiver and mechanic's lien entries cover the basics, and a construction attorney in your state has the forms.
What not to do: keep working on an unpaid draw because the schedule is tight. Every day of work after a missed payment is money you're lending to someone who has already declined to pay you.
Know what you're owed, every day
Late payments hide in businesses that don't know what's outstanding. The cure is a per-job view of contract plus change orders, collected, and left to collect, kept current as payments clear. Obra shows exactly that on every project, with each draw recorded as income on the day it arrives and each change order adjusting the contract it's measured against, so "who owes me what" is a page, not a Sunday-night reconstruction.
Questions people ask
What payment terms are normal for a contractor invoice? On residential work, due on receipt or net 7 for draws; net 30 is a commercial habit that small contractors adopt by accident. State the terms in the contract and on the invoice.
Can I charge a late fee? In most states yes, if the contract states it and the rate is within the state's limit. A fee that isn't in the contract can't be added later.
Should I take credit cards? If it gets you paid in a day instead of a month, the processing fee is cheap. Many contractors accept cards for deposits and small change orders and require check or transfer for large draws; say which in the contract.
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