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probably this is a question not about project management, but I would like to hear your experience or you could suggest where should I look (googling did not help)

So IT service providers use to have a monthly payment for their services since most projects were T&M. Now since they stepped in Fixed Price projects area, some clients want payment is linked to the milestones, which means that in the best case scenario payments will come every 2-3 months (2-3 months is time enough to build something which can be delivered). This is hard to accept for the service provider's CFO, since it may influence the cash-flows.

Anyway, it seems that this (payments by milestones) is the most acceptable and suitable way to both (service provider and client) to control the project and pay accordingly.

  1. What is your experience with payment terms around FPP ?
  2. Is there any best practices to read on this topic?
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  • 1) Not about project management, 2) explicit solicitation for opinion, 3) impossible to provide an authoritative answer. Vote to Close.
    – MCW
    Jun 29 at 13:52
  • Best practice for fixed price: don't do it!
    – nvogel
    Jun 29 at 14:07
  • This is most certainly about project management and is a great question. Jun 29 at 14:49
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I would not make an argument that milestone payments on a FFP contract is "most acceptable and suitable" of all methods of reimbursement. What is most acceptable is what is doable for both parties involved and what protects the interests of both parties involved. There are several other mitigating payment methods you can combine with milestone payments, including payment on lower level milestones, or a hybrid approach between both time and milestone payments, i.e., reimbursing 75% on time and 25% against a major milestone. There are plenty of alternatives from which to choose. If your firm as a cash flow issue, then you need to propose and negotiate an alternative that will help you with that issue and, if your client wants your firm, then your client needs to sit at the table and talk it through.

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