Stage payments, and how to structure them

What you are actually protecting against

Two different risks, and they need different answers. The first is materials: money you have already spent with a merchant before anyone has paid you anything. A deposit covers that.

The second is abandonment, which is the customer stopping, running out of money, or falling out with you halfway through. Stage payments cover that, by capping how much completed work is sitting unpaid at any moment.

A job with no deposit and no stages puts both risks entirely on you, and on a bathroom or a rewire that can be several thousand pounds of exposure carried for a month by a business with one person in it.

Milestones have to be things a customer can see

The most common mistake is percentage milestones. "50% at halfway" invites an argument about whether it is halfway, and you will lose that argument because the customer is standing in an unfinished room.

Tie each stage to something physically visible and unarguable. First fix complete. Boarded and plastered. Units in. Tested and certified. The customer can walk in and see whether it has happened, which means the payment either falls due or obviously does not.

Write the milestone into the quote in the same words you will use on the invoice, and put the amount next to it. Then the stage invoice is not a request, it is the thing they already agreed to.

• Deposit on acceptance, covering materials.
• Stage on a visible physical milestone, named in the quote.
• Further stages on longer jobs, one per major phase rather than one per week.
• Balance on completion, due within your normal payment term.

A structure that customers agree to

There is no universal split, but there is a shape that reads as fair and gets accepted. For a two to three week job with substantial materials, something like a materials deposit up front, a stage at the main visible milestone, and the balance on completion covers you without asking anyone to pay for work not yet done.

Keep the final payment meaningful. A balance of a few hundred pounds on a large job gives the customer no reason to sign off promptly and gives you almost nothing to bargain with when the snagging conversation starts. A final payment that is worth having gets the job finished and closed.

Explain it in one sentence when you send the quote. Something like: the deposit covers the materials I order for you, the stage payment covers the first phase of labour, and the balance is due when the work is signed off. Customers object to stage payments far less than tradespeople expect, and almost never when they understand what each one is for.

On construction contracts you may have a statutory right to them

If you are working under a construction contract covered by the Housing Grants, Construction and Regeneration Act 1996, and the work is to last 45 days or more, you have a statutory right to periodic payments. It is not something you have to negotiate.

That right does not extend to a contract with a residential occupier, so it does not apply to a homeowner job you are doing directly. On domestic work stage payments are a commercial arrangement you agree, not an entitlement.

If you are subcontracting on a site, the whole payment notice regime applies to your stage applications, which is worth reading properly because it is what makes them enforceable.

Invoice each stage properly

A stage payment is an invoice, not a text message asking for some money. Give it its own number, its own date, its own due date, and a line describing the milestone it relates to. Show what has been paid so far and what remains on the job.

That does two things. It puts the payment into the customer's process rather than into their intentions, and it means that if the job goes wrong later you have a numbered document for every stage rather than a reconstruction from a bank statement.

It also makes the final invoice easy, because the balance is arithmetic both of you can already see rather than a number that arrives at the end.

When a stage payment does not arrive

Deal with it before you do the next phase, not after. This is the entire point of the structure: the moment a stage is unpaid is the moment your exposure stops growing, if you let it stop.

Send the reminder the day after it was due, exactly as you would on a final invoice. Then, if it stays unpaid, say plainly that work will pause until the stage is settled. On a domestic job, whether you can lawfully stop depends on what your contract says, so keep the wording to what you agreed rather than making threats you have not reserved the right to carry out.

The temptation is always to press on, because stopping feels like the aggressive option and the job is nearly there. Pressing on converts a manageable unpaid stage into an unpaid job.

Common questions

How should I split stage payments on a job?

A deposit covering materials, one or more stages tied to visible physical milestones, and a balance on completion. Avoid percentage milestones like halfway, because they create an argument about progress. Keep the final payment large enough to be worth having.

Is it normal to ask a homeowner for stage payments?

On anything running more than about a week, yes, and it is expected on kitchens, bathrooms and extensions. Customers object far less when each payment is tied to something they can see and when the quote explains what each one covers.

Am I legally entitled to stage payments?

On a construction contract covered by the Construction Act where the work is to last 45 days or more, yes, there is a statutory right to periodic payments. That right does not apply to work contracted directly with a residential occupier, where stage payments are something you agree rather than something you are owed.

Can I stop work if a stage payment is not paid?

On a Construction Act contract you can suspend after giving seven days' written notice. On a domestic job it depends on what your contract with the customer says, which is a good reason to put a line in your quote reserving the right to pause work while a stage payment is outstanding.

Do the maths

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