3 Steps to Take Before the Next Progress Payment Gets Swept
Contractors With Stacked MCAs

The next progress payment already belongs to several parties at once.

A contractor carrying stacked advances should identify the work the payment covers and the claims attached to it before treating the deposit as available money for a settlement. Three steps taken in order protect the project, the business, and the negotiation, while a single misdirected transfer can injure all three, so the sequence below runs from documents through restrictions to the full stack.

Match the Payment to the Project Documents

The first step is retrieval. Pull and assemble the contract, the approved payment application, and the correspondence establishing what the customer has accepted, then distinguish the amount requested from the amount approved and identify deductions or conditions still under discussion. A payment application can include work performed, stored materials, and sums subject to further approval, and the contractor needs the actual calculation rather than the figure entered into a general cash forecast.

A deposit in the operating account answers nothing about who owns it.

Keep change orders separate until their status is known, since an owner who expects a disputed extra to fund next week obligation is making a different proposal from one based on an approved receivable. The accounting record should show the project involved and the commitments tied to the receipt, though a transfer between accounts never settles the underlying rights, and commingled funds have a way of looking available right up until counsel asks which project earned them.

Restrictions and Competing Claims

The second step is a restrictions review with construction counsel before directing money away from project obligations. Payment restrictions, trust requirements, and competing claims may attach to the funds under the law of the controlling state (a question this article does not answer for any particular state, since the trust provisions of New York were not among the sources examined and other states vary further). Never assume every construction receipt is unrestricted cash, and never infer a particular trust rule from the fact that another state projects receive different treatment under their own statutes.

New York filing windows for mechanics liens illustrate why contractor receivables live inside their own statutory regime, with eight months for most work, four months for single family dwellings, and ninety days for retainage. That is a New York rule offered as context, not as the law of the job site in question, and lienable work, content, service, and enforcement deadlines each need their own review. List unpaid subcontractors, material suppliers, any lien already asserted against the payment, and the work remaining before completion, since that information matters to legal review and to the practical cost of finishing the job. The payment has arrived. None of it is available until counsel says otherwise.

The Full Stack Before the Next Debit

The third step is laying every advance on the table at once. Delancey Street offers a free confidential initial review of MCA concerns, and a contractor can present each agreement with a project schedule showing the receipts expected after the costs of continued performance. The company provides debt settlement services and coordinates legal matters with independent counsel, and it is not a law firm, so construction payment rights, litigation, and collateral disputes require the appropriate legal engagement.

The loudest creditor in the file is rarely the one with the strongest claim on the payment.

Ask the adviser to ensure that the proposed budget includes every active draw, because negotiating a smaller payment with one funder while another withdrawal continues unchanged leaves the business unable to complete the project that funds both (an arrangement that stacking brokers will describe as standard practice, as if frequency created authority). Settlement capacity should never be calculated from funds the contractor cannot devote to that purpose, and counsel should ensure that proposed terms respect the restrictions identified in the project review. Review and confirm the service fees and who communicates with each claimant, and simply confirm the engagement in writing before assuming one conversation covers every dispute, along with what silence, or delay, will cost if the next debit posts first.

Nacha explanation of ACH return reasons keeps bank mechanics in a separate column from contract default and legal remedies, and that separation is extremely important where several debits strike the same account in one week. In most stacked files we have seen, though the sample is not scientific, the bank papers arrive first and the contract papers decide last.

Security Interests and Reconciliation

Months after the final inspection, the security agreement still describes the receivable. New York law on security interests in disposed collateral provides that such interests can continue in collateral and identifiable proceeds after disposition, subject to authorization and exceptions, so any assignment of the payment needs agreement and filing review first. The New York appellate decision in LG Funding weighed reconciliation among the features relevant to whether an advance required absolute repayment, and the adjustment clauses in each stacked agreement deserve the same reading. That is a project question, not a banking question, and whether it holds outside New York is a question I cannot answer from this desk.

Most contractors call after the payment is promised twice. I understand why. Resist the urge to move the funds first and reconcile later, since any transfer, even casually routed through a second account, can alter the posture of the case against the company. The receivable was never yours to promise alone.

The Job Funds the Plan

Stacked debt turns each progress payment into a contested fund, and the contractor who protects the project first preserves the source that every settlement depends on. Rarely does a funder volunteer to stand behind payroll, suppliers, and completion costs, since the advance was priced in order to avoid that queue, so the ordering must come from the owner with counsel at the table. A singular feature of construction work is that the money and the obligation arrive together, and an extremely disciplined sequence is what keeps them from parting too soon.