Milestone Payments for AI Projects: Why Work Should Wait for the Deposit

AI projects can run for weeks and involve several systems, several people and several rounds of testing. If the money arrives all at the end, the delivery team carries the cost the whole time. If all the money arrives at the start, the client carries the risk until the work is done. Milestone payments split the difference. Each payment matches a stage of the work, so both sides see progress and both sides are protected.

Key takeaways

• Work should start only after the first payment has cleared.
• Each later payment should match a defined milestone, such as handover or sign-off.
• Late payments should pause work, and the agreement should say so.
• Keep the number of payments small, so the schedule is easy to follow.

Why the deposit comes first

A deposit tells the delivery team that the client is serious. It covers the first hours of design and setup, which are often the most uncertain. Starting work before the deposit arrives puts the delivery team in the position of funding the client's project, and makes it hard to stop if the client changes their mind.

A simple milestone schedule

1. Advance: paid when the contract is signed, before work begins. Often 30 to 50 percent of the project value.
2. Handover: paid when the system is delivered and documented.
3. Final payment: paid when the client accepts the result, or after a fixed period if the client does not respond.

Three payments are usually enough for a project of a few weeks. Longer projects can use more milestones, but each one needs a clear definition.

Define the milestones clearly

A milestone is only useful if both sides agree what it means. "Handover" should describe the documents, the test results and the walkthrough. "Acceptance" should describe how the client signs off, and what happens if the client finds an issue. A short, written definition for each milestone prevents most arguments.

What to do when a payment is late

Write the consequence into the agreement. A common approach is to pause work until the payment clears, and to restart on a new date. The client knows what to expect, and the delivery team is not left waiting without a plan.

Why this helps the client too

A clear schedule shows the client what they will pay and when. It also means they only pay for work that has been delivered. A client who can see progress at each milestone is more likely to stay engaged and approve the next stage.

Growmerz works this way for partner-led projects: the first share of the payment arrives before work starts, and the rest follows the schedule in the agreement. The details are on the become a partner page.

Frequently asked questions

How much should the deposit be?

It depends on the project and the risk. Many projects use 30 to 50 percent. The right amount covers the early work and makes both sides serious.

Should a client ever pay the full amount upfront?

Only for very small projects, or where the client wants that arrangement and the delivery team agrees. Large upfront payments raise the client's risk.

What happens if the client stops responding?

Pause the work, send a written reminder, and set a date after which the agreement ends and the work done so far is paid.

Do milestone payments apply to repeat work?

They can. Use the same schedule for follow-on projects so both sides know what to expect.