Imagine you’re the captain of a boat ready to set sail—but you forgot to bring a life jacket. While you reach your destination without trouble, that nagging safety concern stays with you throughout the journey.
That’s what it can feel like to take on a contracting job without asking for a deposit.
For contractors, a deposit is like that life jacket. It provides a sense of security and shows that both you and your client are committed to the project.
Here’s a contractor deposit guide, plus answers to questions like “How does a contractor get paid?” and “Does a deposit go towards payment?”
Local Considerations When Asking for a Deposit
There are laws governing contractor down payment terms by state. Before you start asking for deposits, you need to understand them, since you’re responsible for knowing what they are and following them.
For example, if you’re working in New York, you’ll need to use escrow accounts, which are a type of bank account that holds the money safely until the work is completed. Or in California, there’s a limit to how much you can ask for. It can’t be more than 10% of the total job cost or $10,000—whichever is less.
These are just two examples. Check the rules in your area before setting a deposit amount.
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How Big of a Deposit Should I Ask For?
Knowing your local contractor deposit laws can actually make deciding on a deposit amount easier. They give you a clear starting point or limit to work with.
Aside from local legislation, there are some common rules of thumb for how much to pay a contractor up front. Most contractors ask for somewhere between 10% and 25% of the total job cost as an initial deposit. This amount is usually enough to get the ball rolling and show that the client is committed to the project.
Another common way to break it down is into thirds: 33% paid upfront, another 33% when you reach a certain point in the job, and the final 33% when everything is over. This method can work well for longer projects.
It’s rare to ask for more than half the total cost upfront. But you might do it occasionally for very large or complex jobs, like ones that require lots of expensive equipment.
Remember: A deposit goes toward the overall payment. It’s a percentage of your total estimated cost, not an extra payment on top of your total estimate.
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When Is the Right Time To Ask for a Deposit?
The best time to bring up a deposit is when you’re first talking about the job with your client. It’s part of setting up how the whole project will work. The deposit should never be a surprise.
For complete transparency, include the deposit as a separate item in your quote. This way, the client can see exactly what they’re paying for and when.
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Deposit Invoicing
Once you’ve agreed on a deposit, decide how to bill for it. This is an important step in making sure you get paid on time and keeping the process friction-free for both you and your clients.
How Do You Write a Deposit Invoice?
When it comes to deposit invoices, simpler is usually better. You want to make it easy to create and easy for your clients to understand. Using software like Joist can help you achieve this and avoid mistakes that could cause problems down the line.
Your deposit invoice should include at least:
- The date
- An invoice number
- The total amount due
- The terms of the deposit
The terms should be in plain language and explain what both you and the client are responsible for once the deposit is paid.
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Sample Invoice Deposit Request
Here’s an example of what deposit terms might look like:
Terms: Full payment of this deposit is required before work can begin. Payments are due 30 days from the invoice date. A 2% processing fee will be charged for all credit card transactions. Overdue payments are subject to a late fee of 1% for each month they go unpaid.
How To Ask for a Deposit (Politely) in Person
Knowing how to ask for payment politely starts with a face-to-face interaction. But that can be nerve-wracking. Here are some tips to make it easier:
1. Leave Time for Conversation
Don’t rush it. Give your client time to ask questions and really understand why you need a deposit. This shows you value their input and helps build trust.
2. Be Ready To Answer Questions
Clients might want to know more about how you’ll use the deposit or what will happen if the job changes. Having clear answers ready makes you look professional and well-prepared.
3. Explain Why You’re Asking for a Deposit
Help your client understand that the deposit isn’t just about money. It’s about commitment from both sides. It helps you plan your time and resources better, which means a smoother project for everyone.
4. Have Your Deposit and Invoice System Ready
Be prepared to take the deposit right away if the client agrees. Having a quick, easy system in place shows you’re organized and makes the whole process feel more legitimate and professional.
How To Ask for a Deposit (Politely) in Writing
You might find yourself asking for a deposit through email or in a contract rather than in person. Here’s how to do it well:
1. Asking via Email
These basic guidelines keep your deposit request emails on point:
- Personalize It. Use the client’s name and mention specific details about the project.
- Stick to the Point. Keep your email clear and focused on the deposit request. Use plain language so there’s no confusion.
- Make It Easy To Pay. Make it easy to spot the amount owed and the contract payment schedule. Include a link to your online payment system if you have one.
Sample Email Deposit Request
Here’s a sample deposit for contractors request email:
Dear [Client Name],
I hope you’re doing well! I wanted to discuss an important step to ensure a smooth start to our collaboration. Before we begin providing our services, I kindly request a deposit to be paid.
To facilitate a seamless workflow and allocate necessary resources, we require a deposit of [amount or percentage] by [due date]. This enables us to initiate the project promptly and deliver exceptional results.
Deposit payments can be made by [payment method and instructions].
Upon receiving your deposit, we’ll promptly confirm and acknowledge its receipt. Your trust in our services is valued, and I’m available to address any questions or concerns you may have.
Thank you for your cooperation. We look forward to a successful collaboration.
Best regards,
[Your Name]
[Your Position]
[Company Name]
[Contact Information]
2. Asking via Contract
Regardless of how you ask for it, the deposit terms need to go in the deposit contract. Here’s how to do it:
- Keep Your Wording Consistent. Use the same terms and language throughout your contract. If you’ve discussed terms already, make sure the terms reflect what you’ve talked about.
- Offer a Digital Signature. This makes it easier and faster for clients to agree to the terms.
- Consult a Legal Professional. Lawyers can make sure your contract follows all the rules and regulations.
Sample Contract Deposit Request
Here’s a sample of how to ask for a deposit politely in a contract:
The Client agrees to pay a non-refundable deposit of [amount or percentage] of the total project cost to initiate the work. The deposit can be made via [payment method and instructions]. The Client is required to submit the deposit within [number of days] days from contract signing. Electronic signatures are accepted as legally binding. The deposit is non-refundable, and in case of cancellation, it serves as compensation for the Contractor’s reserved time and resources.
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Making the Deposit Process (and Getting Paid) Easier
Here are some tips to make the whole deposit process smoother:
1. Use an All-in-One Contractor Solution
There are software tools, like Joist, designed specifically for contractors. They can handle everything from quotes to invoices to payments. Using one saves you time and minimizes errors.
2. Clear and Consistent Communication
Always be upfront about deposit requirements. Set expectations early and lay out the construction project payment schedule in advance. Clients should understand why you need a deposit and how it benefits the project.
3. Progress Payments (Or Financing)
For bigger jobs, consider breaking payments into a progress payment schedule based on project milestones. Some contractors on payment schedules also offer financing options to make it easier for clients to pay.
4. Follow Up on Deposit Request
If you don’t hear back about a deposit, don’t be afraid to send a friendly, no-pressure reminder. Sometimes, the client simply forgets.
Collecting Deposits Made Painless With Joist
Need a better way to collect deposits? Joist can help. With Joist’s easy payment systems, clients can give you the deposit right from the invoice you send them—no more waiting for cash.
Accept Deposits With Ease
