It is a villa in Gachibowli, Hyderabad, and the payment plan in the proposal looks perfectly reasonable. Forty percent on signing. Thirty percent on completion of carpentry. Twenty percent on completion of finishes. Ten percent on handover.
In week ten, Arjun, the PM, messages the owner: carpentry is done. The owner asks Anita, the accountant, to send the invoice for the second instalment, ₹7.2 lakh. She is closing the month, and it goes out four days later.
The client replies politely. He visited the site on Sunday, and the wardrobe in the kids' room has no shutters yet. The kitchen loft is open. So is carpentry really complete? He will pay once it is. Arjun explains that shutters are waiting for laminate that is on the way, and everything else is done. The client says he understands, and that he will pay when he sees it finished.
The laminate arrives a week later. The shutters go on. Arjun sends photos. The client is travelling. When he returns, he wants to see it himself. The instalment lands in the firm's account three weeks after Arjun first said 'done'.
Nobody lied. Nobody was difficult. The client was being careful with his money, which is what clients should do. The problem was the milestone itself.
Why instalments drift
Most client payment plans in interior firms are tied to one of two things: dates, or descriptions of progress. Both drift, for different reasons.
- Date-based instalments ignore the work. 'Second instalment on 15 March' is clear, until the site is behind and the client feels he is paying ahead of progress. Or the site is ahead, and the firm waits for a date while funding work already done.
- Description-based instalments invite debate. 'On completion of carpentry' sounds precise, but it means different things to the PM, who thinks of carcasses, and the client, who thinks of a finished wardrobe with handles.
- There is no proof the client can see. The PM says done on WhatsApp. The client has to take his word, or visit. Careful clients visit, and visits take time.
- The invoice is late. Even when the milestone is reached, the invoice goes out days later, with the month-end close or when someone remembers. Every day before the invoice is a day the client cannot pay.
- Feelings decide. In the end, the instalment gets paid when the client feels the work is complete. Feelings move slowly, especially for a large amount.
What three weeks really costs
Three weeks does not sound like much. But the firm kept paying vendors and suppliers through those three weeks, so it was effectively lending the client ₹7.2 lakh.
| Instalment amount | ₹7,20,000 |
|---|---|
| Days late | 21 |
| Cost of funding the gap at an assumed 12% a year (overdraft or similar) | 12% |
| Interest cost: ₹7,20,000 × 12% × 21 ÷ 365 | ₹4,971 |
| Vendor stage delayed to manage cash | ₹3,40,000 |
| Interest alone, on one instalment, on one project | ₹4,971 |
Illustrative example. The amount, days, interest rate and vendor stage are assumptions to show the arithmetic, not figures from any real firm or lender.
Five thousand rupees is not going to sink a firm. But it is one instalment on one project. Multiply by every stage across every live project, and drift becomes a permanent loan from the firm to its clients. And the bigger cost is not the interest. It is the carpenter who waited for his stage because the firm was waiting for its instalment. Drift travels down the chain, all the way to the people who do the work.
Drift travels down the chain: the firm waits for the client, so the carpenter waits for the firm.
Events with proof, not dates and feelings
The firms that collect well tie each instalment to an event that is clear, checkable and visible to the client. Not 'carpentry complete', but something that either happened or did not.
- Acceptance of the proposal: the signed quote.
- Design complete: the client has approved the final drawings for construction.
- Phase start: carpentry or civil work has begun on site, with a dated report.
- QC pass: a phase has been checked against a checklist, with photos and measurements.
- Handover: the handover pack is delivered, with snags closed.
Look at the difference. 'Carpentry complete' is a feeling. 'Carpentry QC passed, with photos of every room' is an event. The client does not have to visit to know it happened. The PM does not have to argue. And when the event happens, the instalment is due. Not when someone remembers.
How to change your payment plans
- Rewrite each milestone as an event. Go through your standard payment plan and replace every description with an event that has proof. If you cannot say what the proof is, it is not a milestone yet.
- Explain it at signing. Walk the client through the plan in the proposal meeting. Show them what proof they will receive at each stage. Clients like knowing exactly when they will be asked for money, and why.
- Share the proof, not just the claim. When the event happens, send the evidence with the invoice: the QC checklist, the photos, the approved drawings. The client pays the proof, not the PM's word.
- Invoice the same day. The day the event happens, the invoice goes out. Not at month end. Not when the accountant has time. A same-day invoice is the cheapest collections improvement most firms can make.
- Record receipts properly. When the money arrives, record it against the right instalment, including any TDS the client deducted, so your receivables stay accurate and the client's account matches yours.
- Follow up on a rhythm. If an instalment is not paid in the agreed number of days, follow up politely on a fixed schedule. Because the event and proof are clear, the follow-up is a reminder, not a negotiation.
One caution: event-based milestones only work if the events are honest. If QC is passed casually to unlock a payment, the client will notice at handover, and every future proof will be doubted. The discipline protects the firm only if the firm protects the discipline.
Talking to clients about money, without the awkwardness
Many owners hesitate to tighten payment terms because it feels like it will put clients off. In practice, the opposite tends to happen. Clients are spending a large sum, often the biggest purchase after the flat itself. What makes them nervous is not paying. It is paying without knowing what they are paying for.
Event-based milestones give the firm a calm, confident way to talk about money. At signing, the conversation is no longer 'we will ask for thirty percent around week ten'. It is 'when carpentry has passed our quality check, you will get the checklist and photos of every room, and the next instalment becomes due'. That sounds like a firm with a process, because it is one.
It also takes the PM out of the awkward middle. He is no longer the person asking the client for money on a site visit. The event happens, the proof goes out, the invoice follows, and the conversation stays about the home.
What changes when you do this
Firms that move to event-based instalments describe the change in practical terms. Fewer awkward calls. Fewer site visits made just to inspect before paying. Cash forecasts that are closer to reality, because the expected receipt sits in the week the event will happen. And clients who trust the firm more, because they can see what they are paying for.
It also changes the conversation inside the firm. The PM is no longer asked 'is it done?' He is asked 'has QC passed?' That is a question with an answer.
How Pakka handles it
In Pakka, a won quote's total and payment plan become the client's instalment plan automatically. On the Money Desk, instalments are released by events: acceptance, design complete, phase start, QC pass or handover. A QC pass on the Ops Desk, with photo and measurement evidence, is what makes the stage due, and design milestones like GFC drawings issued can release a stage too.
Tax invoices and proformas come from the same place, and receipts recorded with TDS settle the right instalment on their own. The client sees what they have paid on their portal, and gets an evening update from site on WhatsApp, so the proof is in front of them before the invoice arrives.