Utah Contractor Practice Exam

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What payment method must a contractor use for delivery materials?

30 days after delivery
C.O.D.
Before delivery
After the materials are installed

The correct answer is: C.O.D.

Using C.O.D. (Cash on Delivery) as a payment method for materials ensures that the contractor pays for the materials at the time of delivery. This method is particularly favorable in construction for several reasons. It safeguards suppliers by ensuring they receive payment before the materials leave their possession, thus reducing the risk of non-payment. This approach can also help contractors manage their finances more effectively by providing a clear point at which expenses are incurred, making budgeting and cash flow management easier. Additionally, paying at the time of delivery can facilitate smoother transactions and help maintain good relationships with suppliers, as it shows a commitment to fulfilling financial obligations promptly. Other payment methods, like paying after delivery or before delivery, might complicate the financial arrangements or delay the procurement of necessary materials.