deposits and payment terms
Deposits and Payment Terms: How to Get Paid On Time as a Tradesperson
Right then, let's talk about the bit of the job nobody enjoys but everyone needs to get right — getting paid. In fifteen-odd years on the tools I've learnt that the work itself is rarely the hard part. It's the money side that catches good tradespeople out. You can wire a consumer unit beautifully and still end up out of pocket if your deposits and payment terms aren't sorted before you start.
To my mind, sorting this out properly is the difference between a business that runs smooth and one that's forever chasing its tail. So here's how I handle it, plain and simple.
Why take a deposit at all
A deposit does two jobs. First, it covers your materials so you're not funding the customer's job out of your own pocket — cable, accessories and the like add up fast. Second, and just as important, it shows the customer is serious. Someone who's happy to pay a deposit is far more likely to be a good payer at the end. Someone who hums and haws about it? Mind you, that can tell you a lot before you've even lifted a floorboard.
No two ways about it, a deposit also protects you if a job falls through. If you've ordered a special-order part and the customer changes their mind, you're not left swallowing the cost.
How much is reasonable to ask for
There's no fixed rule, but here's roughly how I think about it depending on the job:
- Small jobs (a day or less): often no deposit needed, or just enough to cover materials.
- Typical domestic jobs: somewhere around 25 to 30 per cent up front is fair and rarely raises an eyebrow.
- Larger jobs with expensive materials: enough to cover what you're ordering in, sometimes more.
The figures above are illustrative — set yours to fit the work. The key is that the deposit feels proportionate. Ask for too much and a careful customer gets nervous; ask for nothing on a big job and you're carrying all the risk yourself. Fair play to the customer, they want to feel protected too, so keep it balanced.
Staged and interim payments on bigger jobs
For anything that runs more than a few days — a rewire, a big extension first fix and second fix — don't wait until the end to get paid. Break it into stages. That way the money comes in as the work goes out, and neither of you is ever badly exposed.
A typical staged setup might look like a deposit to start, an interim payment at a clear milestone (say, on completion of first fix), and the balance on completion and sign-off. Tie each stage to something the customer can actually see has been done. It keeps everyone honest and it keeps your cashflow ticking over nicely.
Wording your payment terms clearly
Vague terms cause disputes. Spell it out in plain English on every quote and invoice so there's no room for misunderstanding. I always make sure mine cover:
- The deposit amount and that work starts once it's received.
- Any staged payments and exactly what triggers each one.
- The final balance and when it's due — for example, within 7 or 14 days of the invoice date.
- How you accept payment (bank transfer is cleanest — keep cash to a minimum and always receipt it).
- What happens if payment is late.
This is one place a decent quoting tool earns its keep. I use Quotato to drop my standard terms onto every quote automatically, so I'm never sending something out with the money side left fuzzy. Whatever you use, the point is consistency — same clear terms, every single time.
Due dates and chasing late payment
Set a clear due date and a clear payment window. 'On completion' on its own is too loose — give an actual number of days. When that date passes, don't sit on it hoping. A polite reminder the day after it's due works wonders, because honestly most late payments are forgetfulness, not malice.
If it drags on, you've options. Commercial customers fall under the late payment legislation, which lets you add statutory interest and a fixed recovery charge to overdue invoices. For domestic work it's more about a firm, professional follow-up and, as a last resort, the small claims route. Either way, keep your tone calm and your paperwork tidy — a clear quote, a signed acceptance and a dated invoice make any dispute far easier to win.
Reducing the risk of not getting paid
Most of getting paid on time is just good habits stacked up: take a sensible deposit, stage the big ones, write terms anyone can understand, invoice promptly and chase early. Do that consistently and the awkward conversations all but disappear. Get your terms watertight before the job, and the getting-paid bit looks after itself. Give us a shout to your accountant if a customer ever turns properly difficult — but nine times out of ten, tidy paperwork is all the protection you need.