Getting Paid Faster: Deposits, Progress Payments and Due on Completion

Chasing money costs time no estimate pays for, and cash-flow trouble is common. In the Federal Reserve Banks' survey of small employer firms published in March 2026, half (50%) named uneven cash flow as a financial challenge in the prior twelve months, and the survey counts collecting on receivables as part of that.

The cushion most small businesses have against a slow payer is thin. The JPMorgan Chase Institute, looking at the transactions of 597,000 small businesses in 2015, found the median one held enough cash to cover 27 days of outflows if money stopped coming in, and a quarter held fewer than 13 days. For construction firms the median was 20 days. Two late invoices can eat that.

A lot of chasing does not start with a bad customer. It starts with a schedule nobody wrote down: "pay me when it's done," with "done" undefined, billed whenever the owner gets to the paperwork. Fix the schedule and there is far less to chase.

The three pieces of a payment schedule

The deposit. Money at signing. It commits the customer, holds the date on your calendar and, on jobs with special-order material, keeps you from fronting the cost of windows or cabinets that only fit one house. Some states cap it. California's home improvement contract law, for one, requires the contract to state that the downpayment may not exceed $1,000 or 10 percent of the contract price, whichever is less. The other states' caps are in how big a deposit you can legally ask for.

Progress payments. Money as the work moves. The rule that keeps these fair is simple: bill for work that is done, never ahead of it. California writes that into the contract itself; the progress-payment section must state, in bold type, that it is against the law for a contractor to collect payment for work not yet completed or for materials not yet delivered. Even where the law is quieter, a schedule that stays behind the work is one the customer has no reason to fight.

The final payment. Money on completion. The trouble word is "completion." Define it in the contract as an event you can both see: the final walkthrough, the inspection passed, the punch list signed. Then the last payment is due that day, not "net 30."

Match the schedule to the job

One schedule does not fit a two-hour repair and a six-week addition. A starting point, to adjust for your trade and your state's rules:

A worked example

Say a remodeler signs an $18,000 basement finish that will take about three weeks, in a state with no deposit cap. Each payment is tied to a milestone, and each milestone is something the homeowner can walk downstairs and look at:

Notice what that does. The remodeler is never more than one stage of work ahead of the money, the biggest check comes when the basement looks like a finished room, and the last payment is small enough that a customer has no reason to sit on it over a missing outlet cover. The same job in California would start with a downpayment of no more than $1,000, and no later payment could run ahead of the work completed and the materials delivered.

Bill the day the milestone is hit

A payment schedule only works if the invoice goes out when the milestone happens. An invoice sent on Friday night for work finished on Tuesday tells the customer the money is not urgent. Make it a habit: the milestone is done, the invoice goes from the truck before you leave the driveway, with the amount, the milestone it covers, and "due on receipt" or a due date a few days out.

• Name the milestone on the invoice in the same words as the contract, so there is nothing to discuss.
• Number every invoice and keep a running list of what is open and since when.
• Send a reminder the morning after the due date, short and friendly, with the invoice attached again.
• Talk before the next stage starts. If a progress payment is late, sort it out before the crew does more work on credit.

Take the ways people actually pay

A customer who has to go find a checkbook has one more reason to put the payment off. The Federal Reserve's payment surveys show how people pay:

• Cards are most payments. In October 2025, US consumers made about two-thirds of their payments by card, 34% by credit card and 31% by debit (Atlanta Fed survey).
• Big payments go electronic. Electronic payments were 43% of payment value, and their average size was $459, against $58 for cash.
• Checks are rare but large. Checks were 2% of payments by number and 9% by value.
• Better-off households lean to credit. For in-person payments, 38% of consumers most preferred credit cards and 40% debit; in households earning more than $150,000, 60% preferred credit (Federal Reserve Financial Services, 2026 Diary findings).

So take cards and bank payments, and keep accepting checks for the customers who want them. Card fees are real money on a big invoice; whether you may pass them on depends on your state, and that is covered in can you add a credit card surcharge.

Put it all in the estimate

The schedule belongs in the estimate the customer accepts, not in a conversation at the end. Write down the deposit, each milestone and its amount, what "complete" means, the payment methods you take and when each payment is due. When the invoice arrives it repeats something the customer already agreed to, which leaves nothing new to argue about.

This is the part the office in our tools is built for: estimates go by email and the customer accepts from the link, an accepted estimate becomes a numbered invoice with a due date in one click, invoices go by email, and with your own Stripe key saved, one paid online is marked paid on its own.

General information, not legal or tax advice. Rules change and vary by state; check with the agency named above or a professional for your situation.