A deposit changes who is carrying the project

Three separate jobs

A deposit is usually explained in terms of cash, and that is the smallest of the things it does. It funds the early costs of a job, which matters. It also demonstrates commitment, and it establishes the terms of the relationship at the point where both parties are most agreeable.

Those second and third functions are where the real value sits, and they explain why suppliers who take deposits report different client behaviour rather than merely different balances.

Commitment is what actually changes

A client who has paid something behaves differently from one who has not. They provide the material you asked for. They keep the appointment. They tell you promptly if something changes, because a change now affects money they have already committed.

Nothing about that’s manipulation. It is the ordinary consequence of a decision having been made rather than deferred. Until money moves, a project exists as an intention, and intentions compete with every other intention on the client list without any of them having to be resolved.

The same mechanism explains a familiar frustration. Work agreed enthusiastically and then repeatedly postponed is usually not work that was declined, it is work that was never really started, and a deposit is the cheapest way to find out which situation you are in before you have reserved a fortnight for it.

It filters, and the filtering is the point

Some clients will not pay a deposit. A few have policies against it, which is a legitimate constraint worth handling on its own terms. Others hesitate because they’re not certain about the project, or about you, or about whether they can pay at all.

Finding that out before you begin is worth a great deal more than finding out at the invoice. A supplier who has never lost a client over a deposit request is probably carrying several clients who should have been declined, and the cost of that is paid later in chasing, in cancellations and in work delivered to somebody who cannot settle.

Sizing it against what you are exposed to

The sensible principle is that the deposit should cover what you cannot recover if the job stops. Materials bought specifically for this client, time booked out that can’t be resold at short notice, anything paid to a third party on their behalf.

That produces very different figures in different trades. Work with heavy up-front purchasing needs a substantial deposit; work that is purely your own time and could be reallocated needs less. Conventions vary by industry, and matching what is normal in your field avoids an argument that has nothing to do with the merits.

What matters more than the exact proportion is that the figure has a reason behind it. A deposit you can explain in one sentence is easy to agree; one that appears to be an arbitrary fraction invites negotiation.

Say what it is, in writing, before anybody pays it

The critical detail is what happens if the project does not proceed. A deposit may be refundable, partly refundable, or held against costs already incurred, and each is defensible — but only one can be true, and it has to be stated before the money is taken rather than argued afterwards.

The treatment of client money paid in advance is not the same everywhere, and in some sectors and countries there are specific requirements about how it is held or accounted for. That is worth checking with an accountant for your trade, particularly if the amounts are large or the gap between payment and delivery is long.

Whatever the arrangement, it belongs in the quote in plain language: how much, when it is due, what it covers, and what happens if things change. Two sentences prevent most disputes.

Where a deposit is not the right instrument

For long projects, a single deposit at the start leaves a large balance outstanding for months, and staged payments do the job better. For very small jobs, the administration of collecting a deposit can exceed its value, and payment on completion is simpler for everybody.

And in a few trades it would be strange enough to cost you the work. Where that’s the case, the underlying need — not funding a client indefinitely for work already done — has to be met another way, usually through short terms and prompt invoicing rather than through a fight against convention.

One last observation, which surprises people who have never asked. A great many clients expect to pay something up front and are mildly puzzled when nobody requests it, because that is how they deal with every other trade in their lives. The reluctance is very often entirely on the supplier’s side, built out of an imagined objection that the client was never going to raise.