There are still a lot of tradespeople out there that don’t take a deposit for the work they carry out however a deposit should be one of the first things you discuss when talking prices, and should be something you insist upon, here’s why.

Funding a project

By paying for a project a client is agreeing to pay for a project, it generally means they’ve got the funds in place. Asking them to pay for a deposit allows you to start the project without funding it yourself in a manner that means both parties are committed to completion.

Growing your business

When you are constantly paying for financing other people’s projects your business isn’t able to concentrate on one of the most important projects any business can undertake: Growth! Cashflow allows you to grow and scale your business and getting paid a proportion upfront represents a huge part of making this happen.

Being professional

If you’re going to ask for a deposit you’re probably going to have to leave something with your customer and that means getting a decent quote together that looks the part. This in turns raises the perception of the business and can actually make it easier for you to charge more. Simple things but they all have a positive knock on impact for the tradesperson.

Structuring payments

So you’re taking an upfront deposit, probably something in the region of 20%, but you could still be in a vulnerable position, so you need to be clear about how you’re going to request payments at various points of the process. Then you want to be looking at taking a percentage before the project starts, a larger one at an agreed point before the project ends and then one when then a final payment after handover. Of course the complexity of the job at hand should determine how you take those payments and the amounts you need to take.