Staged payments and retentions: getting paid through the job
There's a size of job where "deposit up front, balance on completion" stops working. Somewhere around a couple of weeks on site, you're carrying materials, labour and your own living costs for a month before a penny lands — and if it goes wrong at week three, you're exposed for the whole lot.
Staged payments fix that. They're normal, customers expect them on bigger work, and the only reason more trades don't use them is that nobody explains how to set them up. Here's how.
Why staging is about risk, not cashflow
Cashflow is the obvious reason. The real reason is exposure.
On a fixed price with a deposit and a completion payment, your exposure grows every single day you work. By the last week you're owed nearly the whole job, and your only leverage is that you haven't finished. If the relationship sours, or they run out of money, or they simply decide to argue — that's a lot of money hanging on one conversation.
Staged payments cap the exposure. Done properly, you're never owed more than one stage. That changes the whole shape of a bad job: you stop, you're owed a fortnight rather than two months, and you can walk away without it being catastrophic.
Pick triggers you can prove
The single most important rule: stage payments must be triggered by something visible and undeniable. Not dates, not percentages of time, not "halfway."
Good triggers are physical milestones:
| Job | Sensible stages |
|---|---|
| Bathroom refit | On acceptance (materials) · strip-out and first fix complete · tiling complete · completion |
| Full rewire | On acceptance · first fix complete · second fix complete · testing and certification issued |
| Kitchen fit | On acceptance (units ordered) · units fitted · worktops in · completion and snagging |
| Extension / larger build | Foundations · DPC/oversite · roof watertight · plastered · completion |
| Boiler and system | On acceptance (boiler ordered) · completion and commissioning |
Anyone can stand in the room and see whether first fix is done. Nobody can agree on whether you're "60% through." Date-based stages are worse still — if you're behind for a reason that isn't your fault, you've handed the customer a reason not to pay.
How much at each stage
Two principles:
Front-load the materials. The deposit should cover the stuff you have to buy before you start, and no more. Its job is to stop you funding the customer's tiles out of your overdraft, not to make a profit before you've lifted a tool. How much deposit to take goes into the sizing.
Leave something real at the end. A final payment that's too small means you've got nothing to finish for; too large and you're exposed on snagging. Somewhere around 10–20% of the job at completion is a sensible landing point on domestic work.
A typical domestic shape on a three-week job:
- 30% on acceptance — materials
- 25% at first fix complete
- 25% at the next visible milestone
- 20% on completion
Adjust for how material-heavy the job is. A kitchen where the units are 60% of the value needs more up front than a rewire where it's mostly your labour.
Put the mechanics in the quote
Vague staging is worse than none. The quote should say, in plain words:
- What each stage is — the physical milestone, described so a stranger could judge it
- How much each stage is, in pounds, not just percentages
- When it's due — "on the day the stage is reached" or "within 3 days of invoice." Don't leave it open.
- How to pay — bank transfer details, or a link
- What happens if a stage isn't paid — work pauses until it is. Say it neutrally, once. It isn't a threat, it's a term.
One paragraph. It reads as professional, not aggressive, and it removes every later argument about whether you were entitled to stop.
Invoice each stage properly
Don't just text "that's the first fix done, can you send the next payment." Raise an actual invoice for each stage — dated, numbered, with the stage named and the amount. It takes two minutes and it does three things: it looks professional, it starts the clock on your payment terms, and it's the paper trail if this ever goes further. What goes on it is covered in what to put on an invoice.
And send it the day the stage completes, not at the weekend. Momentum matters — the customer is happiest with you on the day they can see progress.
Retention: what it is and when to accept it
Retention is money the client holds back after completion, released later once any defects are made good. It's standard on commercial and new-build work, where a percentage is typically held at practical completion and released in halves — part at completion, part at the end of a defects period, often 6 or 12 months later.
On domestic work, retention is not normal. If a homeowner asks to hold 5% for six months, that's usually them having read something online rather than a real requirement. You're entitled to say no, and the better answer is:
"I don't hold retention on domestic work, but I do warrant my workmanship for [X] — if anything's wrong, ring me and I'll come and put it right. That gives you better cover than 5% would."
That's a stronger offer for them and no exposure for you.
Where you can't avoid retention — main contractor work, commercial, sub-contract — then:
- Know the amount and the release dates before you start. If it isn't written down, you will never see it.
- Price it in. Money you get twelve months late, if at all, isn't worth the same as money now. Retained work should be priced accordingly.
- Diary the release dates the day you sign. Nobody will remind you. The single biggest reason retention goes unpaid is that the sub never asked.
- Get practical completion confirmed in writing. The clock starts there, and if the date is fuzzy, the release is fuzzy.
- Chase it like an invoice, because it is one.
Retention on sub-contract work sits alongside the other quirks of getting paid by contractors — payment applications, notices and CIS deductions. There's more on that in getting paid as a subbie.
What to do when a stage payment doesn't arrive
Calmly, and immediately. The mistake is carrying on and hoping.
- Day it's due — a friendly nudge. Assume it's an oversight, because usually it is. "Morning — just checking the first-fix invoice landed alright?"
- Two or three days late — a firmer, still-polite chase, in writing, restating the term about work pausing.
- A week late — stop work. Not dramatically; just don't turn up, having told them in writing why. "I've paused on site pending the stage payment. As soon as it clears I'll be back Monday."
The reason to stop early is that continuing to work while unpaid is how a £3,000 problem becomes a £12,000 one. The customer who genuinely can't pay stage two will not magically be able to pay stages two, three and four.
If it goes past a nudge into a real dispute, the escalation path — final demand, letter before action, small claims — is in what to do when a customer won't pay. Chasing tone, so you keep the customer where you can, is in chasing late invoices.
The habit that makes all of it work
Agree the stages before you start, in the same document as the price, and get an explicit "yes" — an email, a text, a signature, anything you could show someone later. A staged payment plan the customer agreed to in writing is almost never argued with. One you mentioned verbally in week one is argued with constantly.
That's the whole trick: it isn't about being tough, it's about the terms being boring, written down, and agreed before anyone had a reason to fall out.
Stage payments only work if the plan is on the quote in the first place. QuoteSnap builds your deposit, stages and payment terms into every quote automatically, so the money conversation is settled before you're on site. Try it free for 14 days.