What is a front-loaded payment schedule, and why is it dangerous?

The mechanism

Value should track effort and deliverable weight, so that at any point in the engagement the money you have paid is roughly the value you have received.

A front-loaded curve breaks that. Pay 40% at mobilisation and, three months in, you may be 70% paid and 40% delivered. If the relationship then goes wrong — the consultant is underperforming, or has taken on too much work, or simply stops answering — your remaining 30% of fee is not enough leverage to compel the remaining 60% of work.

Why it happens, which is not usually cynicism

Suppliers genuinely do incur cost at mobilisation — team assembly, systems, initial work. Some front-loading is legitimate and refusing all of it is naive.

But the request is easy to make and hard to refuse at signature, when everyone is optimistic and the relationship is new. And it is a request whose consequences arrive much later, to someone who was not in the room.

Check the curve at setup — it is the only moment that counts

Plot cumulative payment against cumulative expected deliverable weight. If the payment line sits materially above the delivery line at any point, you are carrying risk, and you should know how much and for how long.

And note that this is not a thing you can remediate afterwards. By the time you notice, the money has moved. So has the leverage. Neither is coming back.

Terms

• Front-Loading