set of hurdlesThe hurdles represent the hurdles you have to jump over to get paid.

Often in bigger projects, to ensure that payments only occur when progress has been made, a customer may wish to link interim payments to specific milestones. This is a good idea from both sides, as it enables the supplier to take some revenue during the project, and enables the customer to spread payments, and to seek some concrete deliverables throughout the project.

We’re using the phrase “delivery and payment milestones” here, because that is how they are usually described in contracts. In practice, however, they are usually “invoicing milestones”, since they describe the circumstances under which the supplier may raise its invoice against the customer. The due date for payment of this invoice will depend on the agreed payment terms.

Delivery and payment milestones should be very clearly documented, to ensure that both parties understand exactly when the right to invoice will arise. As a supplier, you might wish to specify that you have the right to invoice “on or after” the date when the criteria for invoicing have been met. This will prevent an unscrupulous customer from refusing your invoice because it was raised a few days after the date when the criteria were met!

Want to know more? Contact Devant for contract assistance!