What does it mean when a customer withholds payment?
What does it mean when a customer withholds payment?
The payment that the customer withholds is called the customer retention. The terms of the customer retention are typically expressed as either a specific amount or as a percentage of a contract or invoice amount.
When do you withhold payment for a project?
When your organization is working on a project for a customer, the customer may want to withhold payment for part of an invoice until certain terms are met. The customer may retain amounts until the project is completed, or until the project reaches a specified stage of completion.
How is customer payment retained for a project?
You create a customer invoice for the retained amount. The following example shows how a percentage of the invoice amount is retained for a project until the project is completed. Your organization creates a project to provide consulting services to install software for a customer.
When to expect final payment from a contractor?
Most contractors will provide customers with a general but open-ended completion date in their contract to make their client aware of when work will be performed. Unfortunately many customers do not take time to read the contract and believe these dates are hard and final.
What should I do if a customer withholds payment?
A customer is withholding payment over a small issue with some of the landscaping work I carried out. I need to pay for materials, what rights do I have? What should I do?
Most contractors will provide customers with a general but open-ended completion date in their contract to make their client aware of when work will be performed. Unfortunately many customers do not take time to read the contract and believe these dates are hard and final.
When do you get paid for substantial completion?
SUBSTANTIAL COMPLETION. Most contracts require full payment for the job, minus any money held back for punch list items, at substantial completion or at the issuance of a Certificate of Occupancy (CO). Substantial completion means that the project is complete and usable, except for a few minor loose ends.
What can I do to make my customers pay their bills on time?
You can never guarantee that every single customer will pay a bill on time, but there are things you can do to keep late or missed payments to a minimum in the future. 1. Discuss all costs and payment terms before you begin a project.