Four terms, in this order. A deposit sized to what you spend before day one, inside your state's cap. Progress draws tied to completed milestones and never to calendar dates. Payment due on receipt of a written payment request, not net-30. And a final payment released at substantial completion, with the punch-list holdback written as a dollar figure rather than a percentage. Carry a $9,000 material package for 40 days because the terms said net-30 and the homeowner used every one of them, and at the 22.15 percent the Federal Reserve reported for card accounts assessed interest in Q2 2026, the gap costs you about $218. Against the 6.3 percent net margin NAHB found for remodelers, $218 is the profit on roughly $3,460 of work.
What payment schedule should you put on a residential job?
Five stages, each one attached to something that either happened or did not. No stage is a date. The moment a draw is written as "30% at 30 days" you have agreed to be paid for the passage of time, and time is the one thing on a job site nobody controls.
| Stage | What triggers it | What it covers |
|---|---|---|
| Deposit | Contract signed - inside the statutory cap in your state | Mobilisation plus material you must order now |
| Draw 1 | Named material package delivered to the site | The supplier invoice you have already paid |
| Draw 2 | Rough-in inspections passed, green tags on the wall | Labour to that point |
| Draw 3 | Substantial completion - fixtures set, space usable | Everything except the holdback |
| Final | Punch list signed off | A named dollar holdback |
Two things about that table are worth more than the rest of this article.
The first is the word "rough-in." Every draw fight starts with a phase name nobody defined. You think rough-in means the inspector signed it off; the homeowner's brother-in-law told him rough-in means the wire is in the wall. Write the inspection into the line: "Draw 2, $7,400, due on passing electrical and plumbing rough-in inspection. Copies of both green tags attached." Now there is nothing to argue about, because a third party with no stake in the job decided it.
The second is the size of the last draw. Make it larger than what the remaining work costs you to finish. If your final payment is $6,000 and the punch list is a day of trim and a light fixture, you will finish the job and get paid. Reverse those numbers and you are the one who has to decide whether it is worth driving back, which is precisely the position the schedule exists to keep you out of.
Should you offer net-30 to a homeowner?
No. Net-30 came out of corporate accounts payable, where invoices sit in a queue and get cut on a cycle. A homeowner has no cycle. What net-30 tells them is that the money is not urgent, and an unurgent invoice becomes net-45 without anyone deciding to be difficult about it.
Due on receipt. That is the term, and it is not aggressive - it is the same term the tile shop gave you.
Here is the arithmetic the habit costs. You front $9,000 in cabinets and tile on the business card. The homeowner pays on day 40. The Federal Reserve put the average rate on credit card accounts assessed interest at 22.15 percent in the second quarter of 2026, so 40 days of that balance is about $218. NAHB's Cost of Doing Business Study puts the average remodeler's net profit margin at 6.3 percent, its highest since 1996. At that margin, the $218 you just paid your card issuer is the entire profit on about $3,460 of revenue. You did not lose it on the price. You lost it on the terms.
When does the clock on a late payment actually start?
On the written payment request, not on the finished work. This is the detail that decides whether you have a claim or a grievance.
Texas is worth reading even if you do not work there, because the structure is typical. Once an owner receives a written payment request for work properly performed, they have until the 35th day to pay (Property Code 28.002(a)). Unpaid amounts then accrue interest at 1.5 percent a month - 18 percent a year - and it accrues by statute, with no clause required in your contract (28.004(b)). A court may award costs and reasonable attorney's fees on top (28.005(b)).
None of that starts from a text message saying "that's 7400 when you get a chance." Put it on paper: date, contract reference, the milestone it is tied to, the scope it covers, the amount. Then keep proof that it went out.
One Texas trap, because it is aimed straight at residential. Section 28.006(b) lets a written contract for a single-family residence move the payment date out to any date before the 61st day. So a 60-day payment term on a house is enforceable in Texas, and if you signed a homeowner's contract or a template you never read past page two, that is the term you have. The 35 days is a default, not a floor.
How much can a homeowner hold back when they are unhappy?
Far less than they think, and far less than most contractors concede. In Texas, on a detached single-family residence, duplex, triplex or quadruplex, an owner with a good-faith dispute may withhold no more than 110 percent of the difference between the amount you say is due and the amount they say is due (28.003(a)).
Work it through. Draw is $9,000. The homeowner says $400 of tile was set badly. The difference between your number and theirs is $400, so the ceiling on what they may hold is $440. The other $8,560 is due on the same schedule it was always due on.
That single sentence is the most useful thing in the statute and almost nobody quotes it at the kitchen table. Not as a threat - as a way to shrink the argument down to the thing actually in dispute, which is a $400 tile question and not a $9,000 relationship question.
The same chapter picked up a new section in 2023. Under 28.0091, you may decline to proceed with owner-directed additional work once the aggregate value of extras without a fully executed written change order passes 10 percent of your original contract amount. That is a floor under the most expensive habit in residential work, which is doing the extra because the homeowner is standing right there. It does not replace getting the change order signed before the work. It just means the drift has a documented limit.
Does your state's prompt payment act actually cover you?
Probably not, if what you do is houses. This is the part the payment-act articles skip.
Pennsylvania's CASPA gives a contractor 1 percent a month interest, a further 1 percent a month penalty on amounts wrongfully withheld, and attorney's fees. It also excludes improvements to real property consisting of six or fewer residential units under construction simultaneously (73 P.S. 503(a)). A Pennsylvania kitchen remodeler is outside the act entirely. Texas is friendlier but carves residential out of the best remedy: section 28.009(e) removes the right to suspend work for nonpayment on a detached single-family residence, duplex, triplex or quadruplex. You keep the interest. You lose the leverage.
So here is the position. For a residential contractor, the prompt payment act is a backstop you may not have, and the contract is the only payment law you can count on. Write the schedule as if no statute exists, because on a single-family house that is close to true. Then check the two places where a statute overrides what you wrote anyway: what you may take as a deposit, which several states cap by law, and whether your state requires the payment schedule to appear in dollars on the contract itself - which is also part of what belongs on the estimate.
What this misses
Two states is not fifty. Texas and Pennsylvania are here because they are shaped differently from each other, not because they are representative. Prompt payment acts vary in deadline, interest rate and residential carve-out, and several have been amended in the last three years. Read your own.
This is not legal advice, and the text moves. The unsigned-change-order section above is from 2023. Read the current statute rather than an article about it before you change a contract template.
Terms cannot fix a homeowner who has no money yet. If the job is funded by a HELOC that has not closed, your schedule is downstream of a bank and no clause changes that. Ask how the work is being paid for during the walkthrough, and believe the answer you get in writing rather than the one you get in the driveway.
A schedule cannot rescue a wrong price. Getting paid on time for a number that was short from the start only means you reach the loss sooner. BidWalk prices the job line by line while you are still standing in the house, so the draws you write afterwards are attached to a total that holds.
