You finish the job. The site is clean. The client is happy. Then you wait. Two weeks. A month. Sometimes longer. Meanwhile your subs are calling, materials are overdue, and the next job needs deposits you do not have yet.
Contractors are chronically last in the payment queue, and most accept it as if it is just how the industry works. It is not. It is what happens when you build a business without payment systems - and the fix is not chasing harder. This is a conversation about construction arbitrage: the operating model where you sit in the middle as the general contractor (main contractor in the UK), manage the margin, and keep the profit. In that model, cash flow is not a nice-to-have. It is the engine. Get paid slowly and the whole machine stalls.
(Figures in USD - the model and the math are identical in any currency.)
Invoice the moment the milestone is done
Most contractors batch invoices. They wait until Friday. Or end of month. Or until they remember. Every day between completing the work and sending the invoice is free credit you are extending to your client, and they did not ask for it - you just handed it over.
Set one rule and stick to it: the moment a stage is complete, the invoice goes out the same day. Not tomorrow. Not at the end of the week. Today. If you finished groundworks on a Tuesday, the invoice is in their inbox Tuesday evening.
On a $50,000 job paid in four stages, getting each stage invoice out a week earlier - compounded across a full year of jobs - can be worth months of extra working capital. Do not underestimate the value of the timing.
Require a deposit before work starts
A deposit is not aggressive. It is professional. It signals that you run a real business, not a favour service. And it tells you something critical about your client before you have spent a day on their job.
The client who has no objection to a deposit is the client who plans to pay. The client who argues, delays, or invents reasons not to pay a deposit before work starts is showing you exactly how the final invoice is going to go.
- 20-30% upfront is standard for residential and small commercial work. It covers your mobilisation costs, initial materials, and labour for the first week.
- Do not start without it. Build it into your quote process as a non-negotiable. When you confirm the job, you confirm the start date and the deposit at the same time.
- Use the deposit to filter. A client who does not respect your deposit requirement will not respect your invoice. Learn this early, not after six weeks of work.
Structure stage payments into every contract
The single biggest thing that separates operators who get paid from operators who chase money is what they put in the contract at the start. A payment schedule tied to construction milestones - not calendar dates - limits your maximum cash exposure to one stage of work at any given time.
| Stage | Trigger | % of contract |
|---|---|---|
| Deposit | Contract signed | 25% |
| Stage 1 | Groundworks / frame complete | 25% |
| Stage 2 | Second fix / plastering complete | 25% |
| Completion | Sign-off / handover | 25% |
This structure means the most you can ever be owed is one stage of work - roughly 25% of the job. Compare that to the operator who does the whole job and invoices at the end: 100% of the job value at risk for the entire duration. Build the milestones into the signed contract before a spade hits the ground.
Follow up on overdue invoices like it is a system
Chasing money feels personal. It should not. The moment a client misses a payment date, the follow-up system activates - not because you are having a conversation, but because the calendar says it is time.
- 01Due date: Automated reminder sent by your invoicing software. Friendly, factual. 'Invoice [number] is due today - payment details below.'
- 027 days overdue: Phone call. Not email. A real conversation. 'I see invoice [number] has not been settled - is there an issue I can help resolve?' Most overdue invoices get paid at this stage.
- 0314 days overdue: Written notice. Email or letter. State the invoice, the original due date, and that you intend to apply statutory late payment interest or escalate further if payment is not received within 7 days.
- 0421 days overdue: Formal letter before action - or hand to a collections solicitor if the amount justifies it. This is not personal. It is the system.
Every invoice has a follow-up schedule attached to it before it is sent. Not after it is overdue - before. That is the difference between an operator and a labourer with a van.
@mointhemarket
Your legal backstop for persistent late payers
Every country in our audience gives contractors statutory protection on late payment. Most contractors do not use it because they do not know it exists. Knowing the law - and letting the client know you know it - changes how quickly invoices get settled.
| Country | Key legislation | Core protection | Late payment remedy |
|---|---|---|---|
| USA | Federal Prompt Payment Act (government contracts). State prompt payment laws for public projects. | Federal: government must pay within 30 days of proper invoice (14 days for construction progress payments). Private commercial: varies by state. | Automatic interest penalty on late federal payments. Check your state law for private contracts. |
| UK | Late Payment of Commercial Debts (Interest) Act 1998 | Applies automatically to all B2B commercial contracts. No contract clause needed. | Statutory interest at 8% above Bank of England base rate (currently approx. 11.75% as of mid-2026) plus fixed compensation of £40-£100 per invoice. |
| Canada | Ontario Construction Act (most developed). BC's Construction Prompt Payment Act (2025/2026). Other provinces vary. | Ontario: payment within 28 days of proper invoice. 10% statutory holdback on all payments. BC: similar framework. | Adjudication process to resolve payment disputes. Holdback release governed by strict timelines. |
| Australia | Building and Construction Industry Security of Payment Acts (state legislation in all states and territories). Victoria reformed April 2026. | Right to make a formal payment claim. Respondent must pay or dispute within statutory timeframe. | Adjudication: fast, low-cost process to enforce a payment claim. Unpaid claims become enforceable debts. |
| New Zealand | Construction Contracts Act 2002 | Payment claims trigger a mandatory 20-working-day response window from the client. | If no payment schedule is provided, the full claimed amount becomes a debt due immediately. Adjudication available. |
For the full picture on how the law applies in your jurisdiction, check your country or state's official government source - these laws change and the specifics matter. For general legality and compliance questions across markets, the post on whether construction arbitrage is legal covers the framework by country.
Invoice financing as a cash flow bridge
If you are growing fast, have solid clients, and regularly find yourself waiting on big invoices while a new job needs funding, invoice financing (also called factoring) can bridge the gap. You sell an unpaid invoice to a lender, receive 70-90% of the face value upfront, and the lender collects the balance from your client when they pay.
The lender charges a fee - typically 1-5% of the invoice value depending on the facility, your client's creditworthiness, and the invoice age. That is a real cost. But it is a predictable, manageable cost - unlike stopping a job because the cash is not there.
The operators who run a real cash flow system - deposits, stage payments, immediate invoicing, and a follow-up process that does not require them to be personally chasing - are in Contractor Club. If you think you belong in the room, the circle will decide.
Request entry to Contractor Club⟶The bottom line
Getting paid faster is not about being pushy. It is about building the right structure before the job starts - a deposit, a payment schedule tied to milestones, invoices sent the same day the work is done, and a follow-up system that runs automatically. Most clients pay late not because they plan to, but because the contractor made it easy to. Build systems that make it hard to forget, and you will spend less time chasing and more time running the operation. That is what construction arbitrage operators do - the margin is in the management, and the management starts with getting paid on time.
Frequently asked questions
How long should a contractor's payment terms be?+
Most operators work to 14-day or 30-day payment terms for B2B invoices. Shorter is better for your cash flow. For residential clients (homeowners), 7-14 days from invoice is reasonable and common. For commercial clients, 30 days is standard but negotiable - push for 14 if you can. The key is to state clear terms in the signed contract before work starts, so there is no ambiguity later.
Is it professional to ask for a deposit as a contractor?+
Yes. A 20-30% deposit before work starts is standard practice across the construction industry. It is not aggressive - it is professional. Any legitimate client who plans to pay will have no objection to a deposit. The client who pushes back hard on a deposit is telling you something important about how they will behave when the final invoice lands.
What can I do if a client does not pay my invoice?+
Start with a documented follow-up process: a reminder on the due date, a call at 7 days overdue, a written letter before action at 14 days. After that, your options are statutory interest (automatic in the UK under the Late Payment of Commercial Debts Act, available in most jurisdictions), formal adjudication (Australia, New Zealand, Canada, some US states), small claims court for smaller amounts, or a solicitor's letter for larger debts. Most overdue invoices are resolved before legal action - the system matters more than the law.
How much deposit should a contractor charge?+
Typically 20-30% of the contract value is standard for residential and small commercial work. For larger commercial projects, smaller deposits are common but stage payment schedules tied to milestones replace them. The deposit covers your mobilisation costs and material purchases, so size it to cover your real upfront outlay plus a buffer. Never start a job with zero deposit from a client you have not worked with before.
What is the Late Payment of Commercial Debts Act?+
It is a UK law (the Late Payment of Commercial Debts (Interest) Act 1998) that gives businesses the automatic right to charge statutory interest on overdue commercial invoices - currently 8 percentage points above the Bank of England base rate (around 11.75% in mid-2026) - plus fixed compensation of £40, £70, or £100 per unpaid invoice depending on the debt size. You do not need a contract clause to use it. It applies to B2B contracts by default.
Does invoice financing make sense for a contractor?+
It can. Invoice financing (also called factoring) lets you access most of the value of an unpaid invoice from a lender before your client pays. The lender takes a fee (typically 1-5% of the invoice value depending on the arrangement). It works best as a bridge when you are growing fast and have good invoices against solid clients but a cash flow gap to close. It is not a substitute for fixing your payment terms - but it can be a useful tool while you do.
The human behind The Playbook
mointhemarket Managing construction businesses across continents - with full location freedom. Running several at once. Bought and sold many more.
Go deeper
Learn the model, then get in the room
The full breakdown of construction arbitrage lives on our sister site, constructionarbitrage.com. When you want the operators who actually run it, join the Construction Arbitrage Players community.
My listening book THE EDGE is out now - 24 chapters on how the money really moves through a contracting business, made to be listened to on the drive. Free to start. See what is inside.
My book The Family Secret - how construction arbitrage really works - is coming soon.
Only Players Know
The game is real. The room is closed.
Contractor Club is a private, application-only circle of construction arbitrage operators. If you think you belong inside, apply and the circle will decide.
More from the Playbook
View all ⟶
Team & OperationsBest Software to Run a Construction Business
Your van won't lose you a client. Bad admin will. Late quotes, missing invoices, a subcontractor who didn't get the schedule - these kill more jobs than price. Here is the software that actually fixes it.
Team & OperationsHow to Fund a Growing Construction Business
Most contractors who struggle to grow are not failing - they are underfunded. Every new job needs money before the client pays. Here is how operators find the capital to take on bigger work without gambling the business.