Deposit Invoices: How to Collect a Deposit Before You Start Work
The short answer: Collect a deposit by sending a deposit invoice for a percentage of the total, commonly 25% to 50%, right after the customer accepts your quote and before you buy materials or schedule the crew. The deposit funds your upfront costs and proves the customer is committed. Put the deposit terms in the quote so no one is surprised, then subtract it from the final invoice. CRMb lets you create a deposit invoice from the accepted quote, share it as a link, and record the deposit against the job so your balance due is always correct.
Doing work first and asking for money later is how service businesses end up funding their customers' projects with their own cash, and occasionally eating the whole cost when a customer disappears. A deposit flips that. It is standard practice in the trades, and customers expect it on any job with real material cost.
Why a deposit protects you
A deposit does three things at once:
- Funds your materials. You should not be floating hundreds or thousands in plants, fixtures, or custom parts on the customer's behalf. The deposit pays for what you buy to do their job.
- Filters out tire-kickers. A customer who will not put money down is a customer who has not really decided. The deposit is a commitment test that costs you nothing to ask for.
- Caps your downside. If a job goes wrong or a customer ghosts mid-project, a deposit means you are not fully exposed for the labor and materials already spent.
The cost of not taking a deposit shows up as a cash-flow squeeze, you are always a job behind, paying for this week's materials out of last month's payment, and as the occasional total loss when someone walks. Neither is worth avoiding an awkward ask that your customers already expect.
How much deposit to ask for
The right deposit covers your upfront cost with a margin of safety. The more you have to spend before you can collect, the larger the deposit should be. Rough guidance by job type:
| Job type | Typical deposit | Why |
|---|---|---|
| Small service call | 0% to 25% | Low material cost, fast turnaround |
| Standard install or project | 25% to 35% | Covers materials and mobilization |
| Material-heavy job (custom, special order) | 40% to 50% | You are buying expensive, non-returnable parts |
| Long multi-week project | 25% to 33% + milestones | Deposit plus progress billing (see below) |
Two practical rules. First, the deposit should at least cover your material cost for the job, otherwise you are still floating the parts. Second, do not ask for so much that the customer feels exposed, a 90% deposit reads as a scam and kills trust. The sweet spot for most trades is a third down.
Some jurisdictions cap the deposit a contractor can require on certain work (a few places limit it to 10% or a fixed dollar amount on home-improvement contracts). Check your local rules before you set a standard percentage.
When to send the deposit invoice
Timing matters as much as amount. The sequence:
- Quote accepted. The customer says yes to your quote. This is the trigger, not a handshake or a "sounds good" text.
- Deposit invoice sent. Immediately. The invoice references the accepted quote and shows the deposit amount, the total, and the remaining balance.
- Deposit received. You record it against the job.
- Then you buy materials and put the job on the schedule.
The order is deliberate: nothing gets bought and no crew gets booked until the deposit is in. Doing it the other way, scheduling first, invoicing later, is exactly how the deposit becomes optional and then forgotten.
How to structure a deposit invoice
A deposit invoice is a normal invoice with a few specific lines so the math is unambiguous:
- Reference to the quote it is drawn from (quote number or job name).
- Total contract amount, so the customer sees the deposit in context.
- Deposit amount, clearly labeled ("50% deposit due to schedule").
- Balance remaining, so there is no confusion about what is still owed.
- A due date, "due before work begins" is the point of the whole exercise.
Then, on the final invoice, you list the full job total and subtract the deposit already paid, leaving the true balance due. If you skip that subtraction you will double-bill, and a double-billed customer is a customer you argue with instead of one who pays.
CRMb builds the deposit invoice from the accepted quote, so the total and line items carry over without re-typing, and it records the deposit against the job so the final invoice shows the balance automatically. The deposit invoice goes out as a public share link the customer opens without an account, and the paid deposit is tracked on your reports view so you always know what is collected and what is still open. CRMb records and tracks the money; it does not process card payments or move funds, the customer pays by whatever method you have agreed.
Progress billing for bigger jobs
On a job that runs weeks or months, one deposit is not enough, you would still be floating most of the cost until the end. Progress billing (milestone billing) splits the total into staged invoices tied to points in the work:
A worked example on a $30,000 project:
| Milestone | % of total | Invoice |
|---|---|---|
| Deposit (on acceptance) | 30% | $9,000 |
| Rough-in complete | 30% | $9,000 |
| Substantial completion | 30% | $9,000 |
| Final walkthrough / punch list | 10% | $3,000 |
| Total | 100% | $30,000 |
Each milestone invoice bills a slice of the accepted quote, so your cash keeps pace with your spend instead of everything landing at the end. The final 10% held to the walkthrough gives the customer confidence you will finish the punch list, and gives you a clean close. Every one of these invoices still traces back to the single quote total, which is what keeps you from accidentally billing more than the customer approved.
Making the ask without friction
The deposit conversation is easy when it is not a conversation, when it is simply how you work. Two habits remove the friction:
- Put it in the quote. State the deposit terms as a line on the quote itself: "A 35% deposit is required to schedule this work; balance due on completion." Now the customer agrees to the deposit when they accept the quote. You are not asking twice.
- Tie it to the schedule. Frame the deposit as what reserves their spot: "Once the deposit is in, I will get you on the calendar for the 14th." That makes the deposit the customer's move, not an obstacle you are putting in their way.
Done this way, collecting a deposit stops feeling like haggling and becomes a normal step every customer walks through. For the full document it lives on, see how to create a professional quote.
Frequently Asked Questions
How much of a deposit should I ask for before starting work?
A common range is 25% to 50% of the job total, scaled to your upfront material cost. A standard install runs about a third down; a material-heavy or custom job justifies up to half. The deposit should at least cover the materials you have to buy, but asking for 80% or more reads as a red flag and hurts trust.
When should I send a deposit invoice?
Send it immediately after the customer accepts your quote, and before you buy materials or schedule the crew. The accepted quote is the trigger. Recording the deposit before you spend anything is the entire point, it keeps you from floating the customer's project on your own cash.
Is a deposit the same as a down payment?
Yes, in the trades the terms are used interchangeably. Both mean an upfront portion of the total paid before the work begins. The remainder is billed as a final invoice on completion, or as staged progress invoices on a longer job.
How do I make sure the deposit is subtracted from the final bill?
List the full job total on the final invoice and subtract the deposit already paid, showing the true remaining balance. Software that records the deposit against the job does this for you, so the final invoice reflects the balance automatically and you never double-bill.
What is progress billing?
Progress billing splits a large job into milestone invoices, for example a deposit, a rough-in payment, and a completion payment, each billing a slice of the accepted quote. It keeps your cash flow in step with your spending on jobs that run for weeks instead of leaving everything to collect at the end.
Getting started
Set a standard deposit policy this week: a percentage that covers your materials, stated as a line on every quote, invoiced the moment the quote is accepted, and subtracted from the final bill. Customers expect it, and your cash flow will thank you.
CRMb builds the deposit invoice from your accepted quote, records the deposit against the job, and keeps the balance due correct through to the final invoice, on Mac, iPad, and the web. Start free and stop funding other people's projects.