Should I take a deposit before I start a job?

Yes, in almost every case. A deposit protects your cash flow, confirms the customer is committed, and covers your material costs before you pick up a tool. Without one, you are funding the job out of your own pocket and hoping the invoice gets paid on time. Most experienced tradies will not start without a deposit, and most customers expect to pay one.

Updated 02/09/2026

Why does a deposit matter for a trade business?

Cash flow is the lifeblood of a trade business. You pay for materials up front, you pay your subbies on time, and you carry fuel, insurance, and tool costs every week whether a customer pays quickly or not. A deposit closes that gap at the start of the job rather than the end.

• Materials coverage. Timber, pipe, cable, concrete, tiles: most suppliers want payment within 7 to 30 days. A deposit means you are not funding the customer's materials from your own float.
• Commitment signal. A customer who pays a deposit has skin in the game. They are far less likely to cancel, delay, or ghost you on the day. (Quoting speed tips)
• No-show protection. If you have blocked out a day and ordered materials, a cancellation without a deposit leaves you with dead time and stock you may not be able to return. For more on reducing no-shows, see our guide to stopping no-shows.
• Dispute buffer. A deposit gives you a financial position if a dispute arises mid-job. Without one, you are entirely exposed until the final invoice is paid. If a customer does refuse to pay, see what to do when a customer refuses to pay the final invoice.

How much deposit can I legally take in each state?

Every state sets a statutory cap on the deposit you can collect for domestic building work. Going over the cap is an offence, so it is worth knowing the number for your state before you quote.

Under NSW home building law, the maximum deposit a contractor can ask for is 10% of the contract price for residential building work. In Victoria, the Domestic Building Contracts Act 1995 (s11) caps the deposit at 10% for contracts under $20,000 and 5% for contracts of $20,000 or more. In Queensland, the QBCC caps deposits at 10% for contracts between $3,301 and $19,999 and 5% for contracts of $20,000 or more, with up to 20% allowed where more than half the contract value involves off-site prefabrication. As the Queensland Building and Construction Commission puts it: \"The maximum deposit a contractor is allowed to request is based on the value of the works undertaken.\"

For the smaller states and territories (TAS, NT, ACT), check with your state regulator or industry body before setting a deposit figure. The caps change with legislative updates, so verify the current rate before you quote. These are statutory maxima for context, not legal advice for your business.

When do I need a written contract before taking a deposit?

Most states require a written contract once the job value crosses a threshold. In NSW, a written contract is required for residential building work over $5,000. In Queensland, the QBCC requires it for work over $3,300. In Victoria, the threshold is $10,000 for major domestic building work.

The contract should include the total price, the scope of work, the deposit amount, the progress payment schedule, the start date, the expected completion date, and any cooling-off period that applies. You should not take any money, including a deposit, before the contract is signed. Doing so can expose you to complaints to your state's licensing authority.

How should I structure progress payments?

For larger jobs, a deposit alone is not enough. You need a progress payment schedule that ties each claim to a completed stage of work. This protects both you and the customer: you get paid as you go, and they only pay for work that is done.

• Stage-based claims. The standard residential build stages are base, frame, lock-up, fixing, and completion (sometimes called practical completion). Each stage triggers a progress claim for an agreed percentage of the contract price.
• Security of payment legislation. Every state has a security of payment act that gives contractors a statutory right to progress payments and fast-track adjudication if a payment claim goes unanswered. If a customer does not respond to a payment claim within the statutory window (typically 10 to 15 business days), you can refer it to adjudication without going to court.
• Variation handling. Scope changes are the biggest source of payment disputes. Get every variation in writing and signed by both parties before doing the extra work. A verbal "yeah, go ahead" is not enforceable if the customer later disputes the charge.

For a deeper look at chasing payments once the invoice has gone out, see our guide to chasing unpaid invoices without being rude.

What about small jobs and call-out work?

The statutory deposit caps above apply to domestic building contracts above a certain value. For smaller maintenance, repair, and call-out work, there is usually no statutory cap, but the principle still applies: covering your costs before you start is good practice.

• Call-out fee. Many tradies charge a flat call-out fee that covers the first 30 to 60 minutes of diagnosis or work. This is not technically a deposit, it is a fee for your time, and it protects you against no-shows and time-wasters.
• Materials deposit. If the job requires you to order specific materials (a hot water system, a switchboard, custom tiles), ask for a deposit that covers the material cost before you order. This is standard, reasonable, and rarely questioned.
• Invoice on completion. For genuinely small jobs (a tap washer, a single power point, a gutter clean), invoicing on completion is fine. The risk is low and the admin overhead of chasing a deposit is not worth it.

How do I actually ask for a deposit?

The tradies who collect deposits consistently are the ones who build it into their quoting process so it is never a negotiation. Here is how:

1. Include the deposit line in your written quote. "A deposit of [your state's cap percentage] is due on acceptance to confirm your dates and order materials." The customer agrees to it when they accept the quote, not when you ask for it on the morning of the job.
2. Send a deposit invoice as soon as the quote is accepted. Most job management apps (ServiceM8, Tradify, Fergus, simPRO, AroFlo) let you generate a deposit invoice automatically when a quote is accepted. For a walkthrough of automating that sequence, see our guide to automating invoices and reminders from your phone.
3. Make it easy to pay. Bank transfer, card payment through your app, or a payment link in the invoice. The fewer steps, the faster the deposit lands.
4. Do not start until the deposit clears. This is the discipline. If you start work before the deposit hits your account, you have lost the protection it provides. "We lock in your start date once the deposit clears" is a professional way to hold the line.

What are the risks of not taking a deposit?

Going without a deposit is not illegal, but it shifts all the financial risk onto you. The common failure modes are predictable and expensive:

• Customer cancels after you have ordered materials. Non-returnable materials (cut to size, custom colours, special orders) sit in your shed. You eat the cost.
• Customer ghosts after the job is done. With no deposit, your entire invoiced amount is outstanding from day one. If they do not pay, you are chasing the full amount instead of the balance.
• Cash flow crunch. You are paying suppliers on 7-day terms, paying subbies weekly, and your customer has not paid their invoice at 30 days. A deposit narrows the gap.
• No-show on the day. You have blocked out the day, turned down other work, and driven to the site. A customer who has paid a deposit almost never no-shows. One who has not is a different story.

Can a customer refuse to pay a deposit?

Yes, and that is their right. But a refusal tells you something useful: either they have had a bad experience with a previous tradie, or they are not fully committed to the job. Both are worth knowing before you start.

If a customer pushes back, explain what the deposit covers (materials, locking in their dates) and point out that the deposit is deducted from the final invoice, it is not an extra charge. Most resistance dissolves when the customer understands the deposit is simply an advance on the total price, not a fee.

If they still refuse, weigh the job against the risk. Use your judgement, but know that the tradies who consistently collect deposits rarely regret it.

What does this look like with automation?

The deposit, progress claims, reminders, and final invoice are a chain. If any link breaks (a reminder does not go out, a progress claim is late, the final invoice sits unsent for a week), you lose money or time. The most reliable version of this chain is one that runs automatically through your job management app, triggered by the job's status changing rather than by you remembering to send it.

If you want to see how the full invoicing and reminder chain works end to end, our guide to automating invoices and payment reminders walks through the setup in the major Australian trade apps.

The deposit is the first step. Getting it right means you never start a job out of pocket, and automating the chain means you never miss a follow-up. That is the kind of system that compounds: fewer late payments, better cash flow, and less time spent chasing money you have already earned.

If you want to talk through how this fits your business, book a free 15-minute discovery call and we will map it out.