Deposits and stage payments

Getting paid before or during the work rather than after it.

What it means

A deposit is paid at order; stage payments are made at defined milestones through a job.

Why it matters

They shift the funding of the work from you to the customer, which is the single largest improvement most small businesses can make to working capital.

What it looks like in practice

Define the stages by objective milestones rather than by dates, and invoice each on completion.\n\nA deposit taken from a consumer must be handled fairly; unreasonable non-refundable deposit terms can be unfair contract terms.

What to watch out for

VAT tax points. A deposit generally creates a tax point when received, so VAT is due before the work is done.

Where to get proper advice

Your accountant.