Guide
Deposits and progress billing
Most small builders who run out of money are not unprofitable. They are funding their clients' jobs out of their own account for six weeks at a time, because of how the payments were arranged at the start.
What a deposit is actually for
A deposit isn't profit taken early and it isn't a loyalty test. It's the money you will spend before you can reasonably send a bill: the first material order, the deposit the cabinet supplier wants, the week of labour before there's anything to show. Size it against that, not against a habit. "We always take ten per cent" is a number from somewhere else's job.
The test is simple. Write down what leaves your account between signing and the first invoice being paid. The deposit covers that, or you are lending the client money at your own risk.
Say what it covers
A deposit with nothing attached to it feels, to a client, like a payment for nothing — which is why people haggle over it. A deposit that names what it buys almost never gets argued with: the window order, the first fortnight of framing, the excavation. Same money, completely different conversation, and it also settles what happens to it if the job doesn't go ahead.
Pick one rhythm and write it down
There are two honest ways to bill a job as it runs, and the trouble comes from mixing them:
- By the calendar. Every two weeks, or monthly, for the work done in that stretch. Good for long jobs, cost-plus work, and anything where progress is steady but hard to point at.
- By milestone. On completing something the client can see: footings in, framed, closed in, drywall, finished. Good for shorter, defined jobs, and much easier for a client to approve because the trigger is visible.
Whichever you choose goes in the contract as a schedule: what triggers each payment, roughly how much, and how long the client has to pay. A schedule everyone agreed to in the kitchen before the work started is the cheapest debt collection there is.
Stay slightly ahead, never behind
On a well-arranged job, at every point in time, the money received is a little more than the money spent. On a badly arranged one, the builder is permanently one payment behind — work done, materials bought, bill not sent yet, and the account funding all of it.
Being behind isn't a cash-flow problem, it's a contract problem, and no amount of chasing fixes it after the fact. Two things prevent it: a deposit sized to real spending, and milestones close enough together that you're never carrying more than a couple of weeks of work.
The three that catch people out
- A deposit that covers the first material order but not the first month of labour. Materials are the visible cost; wages are the one that empties the account.
- Milestones too far apart. "Half at closed-in" on a four-month job means carrying two months of costs. Split it.
- Billing dates that don't match how the job actually runs. If you bill monthly but order materials in big lumps, some months you're miles ahead and others you're underwater. Line the billing up with the spending.
Leave something at the end worth finishing for
The last payment has a job to do: it has to be big enough that finishing properly is worth your time, and big enough that the client wants you back to finish. Too small and the snag list drags on for months because nobody is motivated. Too large and you're financing the tail of the job.
Say plainly what releases it — a walk-through, a list agreed and cleared — and put a date on it. "On completion" is not a date, and it's where small jobs go to die.
How Millo does it
Millo keeps what you've invoiced against what the job is worth and what's been spent on it, so at any moment you can see whether the money is ahead of the work or behind it — the number it calls not billed yet is exactly the work you've done and haven't charged for. It's job-costing software that runs on your own office computer, bought once, with no subscription.