For most DIY projects we recommend final wood floor finishing last. Paint spills are one reason, but more important are scuffs and dents that can be caused by dropping things. Your contractors have no problems with what phase goes first and can back that up by accepting liability for damages. I think finish the floors by all means. Since in your case floor finishing includes sanding, their recommmendation means that you won't get wood dust on freshly painted surfaces.
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