In a firm fixed priced contract from the government, when do you get compensated?

Question by deflagg: In a firm fixed priced contract from the government, when do you get compensated?
I’m starting up my own IT company that will be going after government contracts. I’m currently going after a firm fixed-priced contract but since this is my first contract, I’m worried about quitting my job before I see any money. When do you get paid from a firm fixed-priced government contract?

Best answer:

Answer by Lauren F
Normally, the payment terms are negotiated in the contract. It can take multiple forms, but with IT, it is usually based on milestones. Such as:
Delivery of requirements = 10% of contract paid.
Delivery of system design proposal = 15% of contract paid
Delivery of system for user testing = 30% of contract paid.

Also, the contract will have the amount of time for payment. Usually, you invoice monthly and are paid 30 days after that. So, if you do work in June, you send an invoice July 1st for June’s work, and are paid for that in early August.

If this worries you, you could see if you could get hired as an employee with a government contractor.

Of, stay with your day job for a while longer and do this work weekend/nights on the side until you save up enough money to cover you through the delays for payment.

Know better? Leave your own answer in the comments!