Cash flow kills more trade businesses than bad work does. You can be profitable on paper and still be unable to pay the supply house, purely because of when money arrives. Payment terms are the lever that fixes that, and they cost nothing to change.
Deposits
A deposit does three things: it funds materials, it confirms the customer is real, and it makes the job harder to walk away from. Common ranges are 25–50% for equipment-heavy work and smaller or none for straightforward service calls.
Check your state rules before setting a number — several cap residential deposits by percentage or dollar amount, and a few require the funds to be handled in specific ways.
Progress payments
On anything running more than a few days, do not finance the job yourself. Tie payments to milestones a customer can see: materials delivered, rough-in complete, final inspection passed. Milestones that are visible get paid without argument; milestones measured in percentages invite debate.
Net 15 vs net 30 vs due on receipt
- Due on receipt — right for residential service work. Most homeowners will pay the same day if paying is easy.
- Net 15 — a sensible default for small commercial. Long enough to be professional, short enough to matter.
- Net 30 — often non-negotiable with larger GCs and property managers. Price for it. Thirty days of float has a cost and it belongs in the number.
Whatever you pick, put a date on the invoice. “Net 30” requires the reader to do arithmetic, and people do not pay things they have to calculate.
Late fees
State them up front, in the estimate, not for the first time on an overdue invoice. 1–1.5% per month is typical and generally enforceable where disclosed in advance. Their real value is not the revenue — it is that they give you a reason to follow up that is not personal.
Retainage
On commercial work, expect 5–10% withheld until final completion. It is normal. What is not normal is forgetting to invoice for it. Put the release date in your calendar the day the job closes, because nobody will remind you.
Say it before the work, in writing
Every term should appear on the estimate the customer signs:
50% deposit due on acceptance. Balance due on completion, payable by card or bank transfer. Invoices unpaid after 15 days carry a 1.5% monthly service charge.
Three sentences, agreed before anyone picked up a tool, resolve almost every payment argument that would otherwise happen later.
Terms the customer can act on
Toolbelt puts the deposit button on the estimate itself — accepted and part-paid in the same moment — then carries the deposit through to the invoice automatically and nudges overdue ones for you. Three free estimates, no card.
See also how much deposit to ask for, how to get paid faster, and what to do when a customer won’t pay.