Educational pricing guidance for residential contractors — from the Contractor Authority™ system by P4 One LLC
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Deposits and Progress Payments: Don't Finance Your Clients' Jobs

Your money shouldn't be tied up in someone else's materials. A payment schedule keeps cash flowing and risk balanced.

Without a deposit and progress draws, you're floating the client's materials and labor out of your own pocket — and carrying the risk if they stop paying. A clear schedule fixes both.

A common structure ties payments to milestones: a deposit to schedule and order materials, draws at defined stages (rough-in, substantial completion), and a final payment at punch-list completion. Match the draws to your cash outlay so you're never far underwater on a job. Check your state's limits on deposit amounts for home-improvement work.

Put the schedule in the contract, tie each draw to a visible milestone, and don't let the work get ahead of the payments. A job that's 80% done and 50% paid is a cash-flow problem waiting to become a collection problem.

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FAQ

How big a deposit can I ask for?

Some states cap deposits on home-improvement contracts, so confirm your local limit. Within that, size the deposit to cover your upfront material and scheduling commitment, not the whole job.

What if a client won't pay a deposit?

A client unwilling to commit a reasonable deposit is a cash-flow and trust risk. A fair, milestone-based schedule is standard professional practice — explain it as how you protect both sides.

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