A payment milestone makes part of the contract price due when a defined event or deliverable is completed and accepted. Common triggers include design approval, tooling completion, test acceptance and shipment.
The operating decision
Use evidence-based triggers rather than calendar dates alone. State the amount, acceptance criteria, reviewer, invoice requirement and remedy for partial completion.
What to keep
Retain the milestone schedule, deliverable, acceptance record, invoice, approval, payment reference and any holdback.
| Area | What the record should show |
|---|---|
| Control | Use evidence-based triggers rather than calendar dates alone. State the amount, acceptance criteria, reviewer, invoice requirement and remedy for partial completion. |
| Evidence | Retain the milestone schedule, deliverable, acceptance record, invoice, approval, payment reference and any holdback. |
| Tradeoff | Paying against supplier activity instead of accepted output reduces the buyer’s leverage when work is incomplete. |
A practical limitation
Paying against supplier activity instead of accepted output reduces the buyer’s leverage when work is incomplete.
Related definitions: supplier qualification, strategic sourcing, landed cost.
