# Substep 25: Build Section 4 - Our Commitment & Payment Terms

**Purpose**: Build payment terms section tailored to business model

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## Instruction

**Section 4: Our Commitment & Payment Terms**

**Background**: Financial commitment needed and payment structure - tailored to business model

**What it does**: States costs, payment schedule, and payment terms based on selected business model

**Purpose**: Clear financial expectations - transparency builds trust

**Why this matters**: 
- Protects supplier from non-payment risk
- Ensures client commits financially to the project
- Provides cash flow for supplier to deliver quality work
- Prevents disputes about payment timing

**Adapt based on business model**:

**If Fixed-Price Project**:
- **User options for payment structure**:
  - **Upfront payment** (recommended):
    - **50% upfront, 50% on completion**: Fair split, supplier gets commitment, client retains leverage
    - **100% upfront**: Full commitment, supplier assumes all risk, client gets best price
    - **30% upfront, 70% on completion**: Lower upfront, more risk for supplier
  - **Milestone payments**: Payments tied to specific deliverables or project phases
  - **Payment on completion**: All payment at end (risky for supplier, not recommended)
- **Why upfront payment is fair**:
  - **Supplier assumes risk**: In fixed-price contracts, supplier commits to deliver for a set price regardless of actual costs
  - **Cost overruns are supplier's problem**: If work takes longer or costs more, supplier absorbs the loss
  - **Client gets price certainty**: Client knows exact cost upfront
  - **Upfront payment shows commitment**: Demonstrates client is serious about the project
  - **Enables quality delivery**: Supplier can invest in resources, tools, and team needed to deliver
- **What to ask user**:
  - "For fixed-price contracts, upfront payment is fair since you're assuming the risk. Would you like 50% upfront and 50% on completion, or 100% upfront?"
  - "Upfront payment protects both parties - you show commitment, and I can deliver quality work without cash flow worries."
- **Content**: Total project price, payment schedule, payment method, due dates, late payment terms

**If Hourly/Time-Based**:
- **Payment structure**:
  - **Billing frequency**: {{billing_frequency}} (e.g., weekly, bi-weekly, monthly)
  - **Payment terms**: {{payment_terms}} (e.g., Net 15, Net 30)
  - **Time tracking**: {{time_tracking_method}} (detailed timesheets required)
  - **Invoice format**: {{invoice_format}} (itemized by date, hours, description)
- **What to ask user**:
  - "How often would you like to be invoiced? Weekly, bi-weekly, or monthly?"
  - "What payment terms work for you? Net 15 or Net 30?"
- **Content**: Hourly rate, billing frequency, payment terms, time tracking requirements

**If Retainer**:
- **Payment structure**:
  - **Monthly retainer**: {{monthly_retainer_amount}} due {{retainer_due_date}} (e.g., "on the 1st of each month")
  - **Minimum hours**: {{minimum_hours_per_month}} hours included
  - **Overage billing**: {{overage_billing}} (e.g., "billed monthly for hours beyond minimum")
  - **Hour rollover**: {{hour_rollover_policy}}
- **What to ask user**:
  - "When should the retainer be due each month? (e.g., 1st of the month)"
  - "How should we handle unused hours? Do they expire or can some roll over?"
  - "How should overage hours be billed? Monthly or as they occur?"
- **Content**: Monthly retainer amount, due date, minimum hours, overage rate, rollover policy

**If Hybrid**:
- **Payment structure**: Combine payment terms from each component
- **Content**: Payment terms for each component clearly separated

**Content**: Pull from alignment document (our_commitment), add payment schedule and terms based on business model

**Fairness note**: Tailor to business model - for fixed-price emphasize upfront payment fairness, for retainer emphasize commitment and availability

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## Next Step

After building payment terms:
→ `26-build-section-05-timeline.md` (same folder)

