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Time and materials billing bases the contract price on an hourly or daily labor rate plus the cost of materials used. Under this method, you'll generally need to apply a standard markup for both the labor and materials/equipment components to account for overhead costs and build in a profit percentage.

Payments are typically based on a percentage of completed work, like when a project reaches 25%, 50%, and 75% completion, or when certain parts of the project are done. For instance, a payment could occur when the below-grade waterproofing work is completed or when the exterior is dried in.

Net 10, Net 30, or Net 60 (found on the invoice) simply indicates that the contractor's payment is due 10, 30, or 60 days from the date of the invoice, respectively. Risks: This is the most common payment term for independent contractors, and there are few risks associated with it.

When you first engage with a 1099 worker, you'll also need to consider some additional payment agreements, such as: How often is payment due? Upon receipt of the invoice, net 15, and net 30 days are the most common payment terms.

Wire transfers are one of the best options when speed is paramount. If you need to make a payment quickly, a wire transfer is one of the quickest ways to make the funds available. While international transfers can take a few days, domestic transfers usually process within 24 hours.

Establishing a Payment Schedule Create a timeline for when payments should be made. Specify details such as the payment type, payment amount, and due date. Communicate the payment schedule to both parties. Establish a plan for the consequences of late payments. Keep a record of the payment schedule for reference.

The most common type of construction payment is a net payment, meaning the invoice is due a set amount of days from the issue date. For longer projects, it's typical to pay an upfront deposit and then to pay the contractor monthly until the job is finished.