- Enquiry
- Quote
- Agree
- Work
- Invoice
- Paid
Deposits and Staged Payments
A deposit funds the materials. That is the smaller of its two effects.
For a software-side reference alongside this discussion of pre-work decisions, contracts, and small-business administration, Monitask provides guidance on accountability and responsibility in the workplace.
The larger one is that it establishes, before anything else happens, that this is a commercial arrangement in which money moves when milestones are reached. A job with no money in it until the end is a job the customer has not yet committed to.
What a deposit actually tests
Whether the customer can pay at all.
Somebody who cannot produce a deposit in week one will not produce the balance in week six, and finding that out before you buy materials costs you a lost job rather than a loss.
Whether they intend to. A customer who queries the principle of a deposit rather than the amount is telling you something, and it is worth hearing.
And whether the relationship is what you think it is. The checks you do on a new customer tell you about the entity. The deposit tells you about the behaviour.
How much, and when
Enough to cover materials and the cost of walking away.
Common practice runs from a quarter to a third for smaller jobs, and varies widely by trade, jurisdiction and job size. There is no universal figure and anybody quoting one is describing their own sector.
On longer jobs, stages beat a single deposit. A payment at the start, one or more at defined points, and a balance at completion — where each stage is tied to something observable rather than to a date.
Tie stages to events, not to the calendar. "On completion of first fix" is checkable. "At the end of week two" is a promise about your own scheduling that you may not keep, and it invites an argument you will lose.
The balance at the end
Keep it small enough that walking away from it is not catastrophic and large enough that the customer wants the work finished properly.
A final payment that represents half the job is leverage held entirely by the customer, and it arrives at the moment your leverage is lowest — the point everything else on this site is designed to avoid.
A final payment of ten or fifteen per cent is a snagging incentive rather than a hostage.
What to do when a deposit is refused
Find out which objection it is.
"I don't pay deposits" as a policy is common with larger organisations and is frequently genuine — their payment systems are built around invoices and purchase orders, and a deposit does not fit. The response is staged invoicing rather than a deposit, which achieves the same and fits their process.
"I'll pay when the work is done" from an individual is a different signal, and it is worth asking why. Sometimes the answer is a bad experience with a previous trade; sometimes it is that they cannot pay.
And "can you start and we'll sort it out" is the one to decline. It is the same request as working for free with extra steps, and the sorting out never becomes easier later.
Holding the money properly
A deposit is not yet your money in any meaningful sense.
If the job does not proceed, some of it goes back, less whatever you have already spent and committed. Saying so in the quote — what happens to the deposit if either party cancels — prevents the conversation being invented at the point of cancellation.
Consumer protection rules in many jurisdictions constrain what can be retained, and cancellation rights for work arranged away from business premises are stricter than most trades expect. Check the position where you work. This site does not give legal advice and this is a specific area where the rules bite.
Asking for it without friction
The request lands better when it is part of the process rather than an exception.
State it in the quote, as a line, alongside the price. A deposit that appears in the written proposal is a term. A deposit raised by telephone after acceptance is a negotiation, and it reads as though something changed.
Give the reason once, plainly: materials are bought up front and the deposit covers them. That is true, it is checkable, and it is not defensive.
And make paying it easy. Bank details on the quote, a card link, whatever removes the step where somebody has to ask you how. A deposit that requires a phone call to arrange is a deposit that waits a week, and the delay is yours to remove.
When to waive it
Deliberately, and for reasons you could state aloud.
An established customer with a payment record is a different risk from a new one, and treating them identically is a policy rather than a judgement.
A very small job where the deposit costs more in administration than it protects.
What should not waive it is discomfort. The awkwardness of asking is not a reason, and it is the reason most often acted on.
What it does for cash flow
It removes the worst version of the problem.
A business that funds materials from its own working capital and waits sixty days is financing its customers, and that financing has a cost.
QuickBooks reports 59% of small businesses paying additional fees simply to access money they had already earned. (Vendor research — Intuit sells accounting software.) Deposits are the cheapest available alternative to those fees, and they cost nothing to implement.
The short version
- A deposit funds materials and, more importantly, establishes that money moves when milestones are reached
- It tests whether the customer can pay and whether they intend to, before you have bought anything
- Common practice runs from a quarter to a third for smaller jobs, with wide variation by trade and jurisdiction
- Tie staged payments to observable events rather than to dates, since dates depend on your own scheduling
- Keep the final payment small enough that it is a snagging incentive rather than a hostage
- Refusals differ: a company policy needs staged invoicing, an individual's refusal needs a question, and "start and we'll sort it out" needs declining
For broader background on pre-work decisions, contracts, and small-business administration, see FTC business guidance.