My contractor has suggested an advance payment. Should I agree?
As the term suggests, an advance payment is a payment which is made “up front”, typically before work starts in earnest. There may be a number of reasons for this; either to purchase materials and secure orders for them, to help with the project’s start-up costs, or perhaps to help with cash flow, where credit is not readily available.
Traditionally in the construction industry, payment is made in arrears, usually in the form of stage payments, once work has been completed. The Housing Grants, Construction and Regeneration Act, (as amended), normally requires payment to be made within 30 days of application, but most standard construction contracts include provision for retention of a small percentage of that payment, so final payment of all money due may not take place until several months after the work has been completed.
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