An advance payment can make sense when you are ordering materials, reserving time or committing costs before work starts. Choose the amount from the job, explain what it covers and show how it comes off the total. There is no deposit percentage that is right for every trade job.

A small repair using stock already in the van is different from a refit requiring specially ordered materials. Start with that difference, rather than copying another business’s percentage.

Decide what the payment is for

A booking deposit reserves a date or service. An advance payment funds part of the agreed work. People use the words interchangeably, so write down what you mean.

Explain whether the money covers listed materials, an initial stage or the booking. The label does not decide whether a cancellation charge is fair, and a payment in advance should not disappear from the final balance.

Work out an amount you can explain

1. List the commitments you must make before starting.

2. Check supplier deposits, return conditions and job-specific orders.

3. Consider whether stage payments would fit the work better.

4. Set out what remains payable as the work progresses.

5. Give the customer the schedule before they accept.

If materials account for most of the advance payment, identify them in the quote. If a booking payment also reserves labour, say so. Asking for a large sum without explaining the commitment makes it harder for the customer to assess the arrangement.

Use measurable stage triggers. First fix, installation of named items or completion of an agreed phase are clearer than a percentage of the job being “roughly done”. See payment terms for tradespeople.

Avoid blanket non-refundable terms

Consumer cancellation terms must be fair. The CMA’s cancellation guidance explains that retained payments should reflect the actual loss caused by cancellation, with reasonable steps taken to reduce it.

Keep evidence of supplier commitments and what could be returned or reused. If another job fills the booking, that can affect the loss. Do not treat every cancellation as a right to keep the entire advance payment.

Your terms should also explain what happens if you cannot provide the work. Have consumer terms checked for the way you trade rather than copying a “non-refundable” sentence into every quote.

Check cancellation rights before starting early

Where and how the contract is made can affect consumer cancellation rights. Agreeing work at the customer’s home or remotely can bring information requirements and cancellation procedures into play.

Do not assume an urgent start removes every obligation. Check which rules apply to the particular agreement and any request to begin during a cancellation period. Seek Trading Standards or legal advice if you regularly make such arrangements.

Write the arrangement into the quote

Template: advance payment for specified materials

An advance payment of £[amount] is due before the materials listed in [quote section] are ordered. It forms part of the agreed price and will be deducted from the balance. The remaining payments are due at [milestones]. Please read the cancellation terms supplied with this quote before accepting.

This is wording to adapt, not a complete contract. Add the actual items, total, due dates and fair cancellation arrangements. Keep any revised schedule with the accepted quote so neither side relies on an older version.

Record the payment and its VAT treatment

Record the amount received, date, customer, job reference and remaining balance. Match the record to the actual receipt of money, not just the request for payment.

For a VAT-registered business, an advance payment can create a tax point before the work is finished. Normally it is the earlier of issuing the VAT invoice or receiving payment. VAT cash accounting and other circumstances can affect the treatment. Read HMRC’s deposits and instalments guidance and check your scheme rather than waiting for the final invoice.

The final paperwork should show what has already been paid and the balance still due. Check that the customer is not charged twice for the same advance payment.

TradePilot supports deposit requests and manual part-payment records. It does not collect money automatically or process card payments.

Written by Chris, founder of TradePilot. General information, not legal or tax advice. Last reviewed 16 September 2026 against the official sources linked above.