How to Get Paid as a Contractor (Complete Collections Guide)

Get paid faster as a contractor by requiring deposits (25-50% upfront), invoicing on completion day, following up on day 8 and 14, and exercising lien rights when necessary. The contractors who get paid fastest set clear expectations upfront, document everything, and follow a systematic collections process.

Payment Problems: The Reality

Why Contractors Don't Get Paid

The Cash Flow Impact

Average payment delay for contractors: 45-60 days Effect: Paying materials and labor before receiving payment

Before the Job: Set Terms

Essential Contract Terms

Getting the Deposit

Why deposits matter:

• Cash on hand for materials
• Client commitment
• Filters out bad clients
• Reduces non-payment risk

How to frame it:

"We require 50% deposit to schedule your project and order materials. The balance is due on completion."

If they resist:

"I understand. The deposit covers our material costs and secures your slot in our schedule. We've found it works best for everyone."

Clients who refuse deposits often become collection problems.

During the Job: Progress Payments

Progress Payment Schedule

Milestone Payments

Tie payments to completed work:

• Demo complete: 20%
• Rough-in complete: 30%
• Finish complete: 40%
• Final walkthrough: 10%

Don't Get Ahead

Rule: Never have more work completed than you've been paid for.

If you're 60% done but only 40% paid, stop work until you catch up.

Invoice Immediately

Same-Day Invoicing

• Complete work Monday → Invoice Monday
• Client's memory is fresh
• Starts the payment clock
• Shows professionalism

What to Include

Sample Invoice Note

"Payment is due within 7 days of invoice date. We accept check, credit card, or bank transfer. A late fee of 1.5% per month applies to overdue balances."

The Follow-Up System

Collection Timeline

Communication Templates

Day 3 Confirmation:

"Hi [Client], just confirming you received our invoice #[X] for $[amount]. Payment is due [date]. Let me know if you have any questions. Thanks!"

Day 8 Overdue:

"Hi [Client], our invoice #[X] for $[amount] was due yesterday. Please arrange payment at your earliest convenience. Reply if there are any issues. Thanks!"

Day 14 Call + Follow-up:

"Hi [Client], I'm following up on our overdue invoice #[X] for $[amount]. Please call me today to discuss payment. If I don't hear back, I'll need to take additional steps."

Day 21 Formal Letter: [Send certified mail with return receipt]

"FINAL NOTICE: Invoice #[X] in the amount of $[amount] is now 21 days overdue. Payment must be received within 10 days to avoid further collection action, including filing a mechanic's lien."

Mechanics Liens: Your Rights

What Is a Mechanic's Lien?

A legal claim against property for unpaid work. It:

• Attaches to the property title
• Must be satisfied before property can be sold/refinanced
• Gives you priority in payment

Lien Timeline (Varies by State)

Important: Deadlines vary significantly by state. Know your state's requirements.

When to Use Liens

• Final payment withheld without cause
• Significant amount ($5,000+)
• Communication has failed
• Client is unresponsive

When Not to Use Liens

• Small amounts (cost of filing may exceed recovery)
• Valid dispute exists (resolve first)
• First late payment (escalates too fast)

Dealing with Disputes

"The Work Isn't Complete"

Response:

1. Ask for specific list of incomplete items
2. Offer to complete items promptly
3. Don't wait for payment to address legitimate issues
4. Document your response

"The Work Was Done Wrong"

Response:

1. Inspect the issue
2. If valid: Fix it, then collect
3. If invalid: Document why, provide explanation
4. Consider partial payment while resolving

"We Never Agreed to That Price"

Response:

1. Reference signed contract or estimate
2. Provide change order documentation
3. "Here's the written approval from [date]"

This is why documentation matters.

Preventing Payment Problems

Before Signing

• Check client's property records
• Google their name + "lawsuit"
• Get references for large projects
• Trust your gut on red flags

Red Flags

• Resistance to deposits
• Vague about budget
• Previous contractor complaints
• Unreasonable demands
• Poor communication

Contract Protection

When to Walk Away

Sometimes the cost of collection exceeds the recovery:

Consider:

• Time value (your time has cost)
• Likelihood of collection
• Impact on reputation
• Stress level

FAQ

How do contractors get paid on time?

Require deposits, invoice immediately on completion, follow up systematically, and set clear payment terms upfront. The contractors who get paid fastest set expectations before starting work.

What percentage should a contractor get upfront?

25-50% is standard. Materials-heavy jobs warrant higher deposits. Never start work without at least 25% unless you know and trust the client.

How long should a contractor wait to get paid?

Terms should be Net 7-15 for residential, Net 30 maximum for commercial. Start follow-up immediately when invoices become past due.

Can a contractor sue for non-payment?

Yes. Options include small claims court (typically under $10,000), mechanic's lien, or civil lawsuit. The best option depends on amount owed and state laws.

What can a contractor do if a customer doesn't pay?

Follow escalating steps: reminder, phone call, formal letter, file lien, small claims court, or collections agency. Document everything.

How do contractors protect themselves from non-payment?

Deposits, progress payments, clear contracts, documentation, and knowing lien rights. The protection happens before the job, not after.

The Bottom Line

Getting paid requires:

1. Prevention — Deposits, clear terms, documentation
2. Speed — Invoice same day, follow up quickly
3. Consistency — Systematic follow-up process
4. Leverage — Know and use your lien rights
5. Boundaries — Know when to escalate or walk away

The contractors who get paid are the ones who treat collections as a system, not an afterthought.

Related: How to Bill for Change Orders | Common Contractor Accounting Mistakes