Whether you’re running a plumbing company, electrical service, landscaping business, or any other home service operation, a well-structured deposit policy can really improve your cash flow and make your business more stable.
This guide will show you what makes a good deposit collection process, professional ways to ask customers for deposits, and how to figure out the right amount to ask for different jobs.
You’ll also learn how to create deposit invoices, see example templates you can use, and discover ways to make the whole process—from asking for money to getting paid—easier for everyone.
What is a Deposit?
A deposit is a partial upfront payment (typically 25-50% of the total cost) collected before beginning work on a home service project. This financial arrangement serves several critical functions in the service provider-client relationship:
- Material funding: Provides immediate capital for purchasing necessary supplies without depleting your business accounts
- Commitment verification: Significantly reduces cancellations by confirming client seriousness and project readiness
- Risk mitigation: Protects against financial losses if clients cancel after you’ve invested in preparation
- Cash flow management: Creates working capital stability between major payment cycles
Example: For a $6,000 HVAC installation, a standard industry deposit might be $2,000 (33%), enabling equipment procurement while establishing mutual commitment to the project timeline.
How Big of a Deposit Should I Ask For?
Finding the right balance requires considering both your financial needs and client comfort levels:
Standard Industry Percentages
- Small jobs ($500-$2,000): 30-50% deposit
- Medium jobs ($2,000-$10,000): 25-40% deposit
- Large jobs ($10,000+): 20-30% deposit
Tip! According to the American Institute of Contractors, 25-40% is a standard deposit range depending on project size, with material-heavy projects trending toward higher percentages.
How to Calculate the Deposit Amount
Finding the perfect deposit amount involves more than just picking a standard percentage. Here are three practical approaches to calculate deposits that protect your business while being fair to customers:
Material Cost-Based Calculation
Calculate all material costs and add 10-20% for procurement and handling expenses. For a deck project requiring $3,200 in materials, a $3,800 deposit (materials plus 19%) provides necessary coverage while remaining fair to clients.
Risk-Based Calculation
Assess specific project risks and potential losses if canceled. Non-returnable custom materials (like imported tiles) justify higher deposits—consider 40% instead of 30% when specialized materials create greater financial exposure.
Value-Based Calculation
Apply a sliding scale based on project size. Smaller jobs ($2,000 painting project) might require 50% upfront, while larger projects ($20,000 kitchen remodel) might need only 25% to secure commitment and cover initial expenses.
Tip! Using tools like InvoiceFly’s estimate generator can help you create professional estimates with clearly calculated deposit amounts based on your itemized costs.
When Is the Right Time To Ask for a Deposit?
Timing is everything when asking for deposits! Request too early, and customers might get scared off. Wait too long, and you risk not getting paid. Here are the perfect moments to ask for your deposit:
After the Estimate is Approved
Once a client approves your detailed estimate, they’ve reached an ideal psychological moment for a deposit request because:
- They’ve acknowledged the project’s value and scope
- They’ve mentally committed to moving forward
- They’ve developed trust in your expertise
- They’re at a natural decision point in the process
Example: “Great news! Since you’ve approved the bathroom remodel estimate, our next step is collecting our standard 30% deposit ($2,550) to secure your spot on our schedule and order those special tiles.”
During Contract Signing
Incorporating deposit requirements directly into your contract normalizes the payment as part of the formal agreement:
- The deposit becomes integrated with other contractual terms
- It creates a natural payment progression after signature
- It establishes the deposit as a standard business procedure
Invoice Fly’s invoice maker helps create professional contracts with clear deposit terms that streamline this process.
Before Ordering Materials
If there’s a gap between project approval and material ordering, connect the deposit to the procurement timeline:
- Explain how the deposit initiates material ordering
- Clarify how payment timing affects project scheduling
- Establish clear expectations about workflow dependencies
Example: “Once we receive your 40% deposit ($3,200), we’ll immediately order your custom cabinets, which typically take 3-4 weeks to arrive. We’ve tentatively scheduled installation for May 15th, assuming deposit receipt by April 10th.”
Requesting Deposits: Professional Ways to Ask Clients for a Deposit
Requesting Deposits via Invoice
A professional deposit invoice sets clear expectations and creates a streamlined payment process. Your invoice should include:
- Clear “DEPOSIT INVOICE” labeling at the top
- Your complete business information (name, address, license number)
- Client details and project location
- Unique invoice number and date
- Project description or estimate reference
- Deposit amount with calculation method clearly explained
- Payment options with specific instructions
- Due date for payment
- Terms and conditions related to the deposit
- Remaining payment schedule
A well-structured invoice serves as both a payment request and a reference document that establishes professional expectations from the start. Invoice Fly’s invoice templates provide ready-to-use formats with all these essential elements.
Requesting Deposits via Email
When communicating deposit requirements via email, professional presentation is key. Start with an action-oriented subject line that clearly communicates purpose:
- “Your Kitchen Renovation: Deposit Information and Next Steps”
- “Bathroom Remodel – Deposit Request to Secure Your April 15th Start Date”
- “Important: Deposit Information for Your Deck Installation (#1234)”
Include the same core information as your invoice, attaching a detailed invoice PDF while summarizing key points in your message. This provides comprehensive documentation while keeping your message concise and actionable.
Pro tip: According to digital communication research, emails with clear subject lines and attached invoices receive responses 40% faster than generic payment requests.
Before Ordering Materials
Face-to-face deposit requests require a balanced approach that feels professional rather than uncomfortable. Follow these streamlined best practices:
- Time it right: Request after the client sees project value but before finalizing schedules
- Normalize the process: Present deposits matter-of-factly as your standard procedure
- Focus on benefits: Emphasize how deposits secure materials and timeline
- Be solution-oriented: Offer convenient payment options that simplify the process
Example language: “Now that we’ve agreed on the details, the next step is securing your spot with a 30% deposit ($2,400). This allows us to order your materials and reserve our crew. Would you prefer card payment today or our online payment link?”
Requesting Deposits via Contract
Incorporating deposit requirements directly into your contract provides clarity and legal protection. A well-structured contract section includes:
- The specific deposit amount or percentage
- Payment timeline (typically 7 days from signing)
- Deposit allocation details (how it applies to total cost)
- Refund conditions (if any)
- Complete payment schedule for project duration
Using standardized contract language creates consistency in your deposit process while clearly communicating expectations to clients.
Sample Deposit Request Template (Works for Multiple Formats)
This versatile template works for both invoices and emails. Copy:
DEPOSIT INVOICE #1234
ABC Home Services
123 Business Lane
Cityville, ST 12345
License #: HIC-12345
Phone: (555) 123-4567
Email: info@abchomeservices.com
BILL TO:
John & Sarah Smith
123 Main Street
Hometown, ST 12345
Project Location: 123 Main Street
Date Issued: March 1, 2025
Payment Due: March 15, 2025
Project: Bathroom Renovation at 123 Main Street
Reference: Estimate #567 (approved on March 1, 2025)
Deposit Amount: $4,250
(Representing 30% of the total project cost of $14,165)
This deposit secures your place in our schedule beginning April 15, 2025, and allows us to order your custom materials. The remaining balance of $9,915 will be due upon project completion, estimated for May 10, 2025.
Payment methods accepted:
– Credit card (link: abchomeservices.com/pay)
– ACH transfer (account details provided separately)
– Check (payable to ABC Home Services)
Terms & Conditions:
– This deposit is non-refundable if cancellation occurs within 7 days of scheduled start date
– Materials will be ordered within 3 business days of deposit receipt
– Schedule confirmation will be provided upon payment processing
– Any project modifications after deposit payment may affect final pricing
Questions? Contact your project manager, [Name], at (555) 123-4567 ext. 2
For contracts, this structured language establishes clear terms:
PAYMENT TERMS
4.1 Deposit Requirement
Client agrees to pay a project deposit of [Amount] ($____) or [Percentage] (___%) of the total project cost upon contract signing. This deposit is required to secure the project start date, order necessary materials, and allocate resources.
4.2 Deposit Payment Timeline
The deposit specified in Section 4.1 is due within seven (7) business days of contract signing. Project preparation will begin upon receipt of the deposit.
4.3 Deposit Allocation
The deposit will be applied to the total project cost and is non-refundable except under the specific circumstances outlined in Section 8.2 (Cancellation Policy).
4.4 Remaining Payment Schedule
Following the initial deposit, remaining payments will be collected according to the following schedule:
– Progress Payment 1: [Amount/Percentage] due upon [Milestone]
– Progress Payment 2: [Amount/Percentage] due upon [Milestone]
– Final Payment: Remaining balance due upon project completion
Making the Deposit Process Easier
Streamlining your deposit collection benefits both your business and your clients. Here are four practical approaches to simplify this critical process:
Diversify Payment Options
Offer multiple convenient payment methods:
- Online payments through Invoice Fly’s payment system
- Credit card processing for immediate collection
- Mobile payment platforms for tech-savvy clients
- Traditional check options for those who prefer them
According to payment processing research, businesses offering 3+ payment options receive deposits 40% faster than those with limited options.
Implement Digital Tools
Leverage technology to simplify management:
- Invoicing software for automatic tracking
- Automated payment reminders
- Client portals for document access
- E-signature tools for remote approvals
Invoice Fly’s client portal creates a professional experience for accessing all project documentation.
Establish Clear Policies
Create consistent, documented procedures:
- Standardized deposit percentages
- Formal internal guidelines
- Team training on communication
- Client-facing deposit FAQs
Leverage Automation
Reduce administrative work with:
- Automated invoice generation
- Instant payment confirmations
- Scheduled follow-up reminders
- Accounting system integration
Invoice Fly’s notifications feature automates these tasks, ensuring consistent client communication while saving valuable time.
Handling Deposit Objections
Even with a professional approach, some clients may resist paying deposits. Here’s how to address common objections effectively:
"I Don't Pay Until Work is Done"
Response approach: Focus on material costs and industry comparisons.
Example: “I understand your concern. Your project requires $3,000 in materials upfront. We’re simply asking for enough to cover these direct costs to get started. Would a deposit covering just the materials work better for you?”
"Your Competitor Doesn't Require a Deposit"
Response approach: Emphasize quality assurance without criticizing competitors.
Example: “Our deposit policy ensures we can dedicate resources specifically to your project and deliver exceptional results. Our long-standing clients appreciate this approach because it leads to better outcomes.”
"Can You Reduce the Deposit Amount?"
Response approach: Consider flexible alternatives based on project specifics.
Example: “While our standard deposit is 30%, we could accept a 20% initial deposit followed by a progress payment after demolition. Would that structure work better for your situation?”
Final Thoughts
A good deposit system is the foundation that helps your home service business thrive! When you communicate clearly about deposits and make them easy to pay, you’re building something valuable for both you and your customers.
Deposits give you the cash you need to buy materials without stressing about your bank account. They show which customers are truly serious (not just shopping around). And they create that important shared commitment to getting the project done right.
Many home service pros struggle with feast-or-famine cash flow or waste precious hours chasing down payments. A clear deposit system fixes these problems before they start.
Tools like Invoice Fly’s invoice maker can make your life so much easier by helping you create professional deposit invoices and collect payments smoothly. No more awkward money conversations or confusing payment terms.
Implement a solid deposit system today and watch how quickly it creates more stability, fewer headaches, and happier client relationships.
Ready to transform your business?
Download Invoice Fly today!
