depositsprogress-billingcash-flowcontractorfabrication

Deposits and Progress Billing: Stop Funding Your Customers' Projects

Andrew Jacob · July 25, 2026

There's a quiet assumption baked into how most shops bill: you buy the material, you do the work, and you send one invoice at the end. On a big job, that means the shop floats the entire cost — steel, labor, weeks of work — out of its own pocket, then waits net-30 on top to get paid back. Put plainly, you've become a bank that lends the customer the full project cost and charges zero interest for the privilege.

The cost of being that bank is not small. Per QuickBooks aggregate data, the average small business has roughly $84,000 tied up in unpaid invoices at any moment, and Sage's data shows payment lands 27.5 days past invoice on average — after you've already fronted everything. On a large fabrication or contracting job, single-invoice-at-the-end billing can leave a shop financing tens of thousands of dollars of someone else's project for a month or more, out of working capital it needed for the next job.

Deposits and progress billing fix this without magic. They move the funding back to where it belongs — the customer — by matching when you get paid to when you spend. The reason more shops don't use them isn't that customers refuse. It's that owners are afraid asking will scare the job away. It won't, if you structure it right.

Why end-of-job billing is a hidden loan

Walk the cash of a $40,000 job billed once at the end. You order $15,000 of material up front — that's your cash, gone, on day one. You pay your crew across three weeks of work — more of your cash, gone. The job wraps, you invoice $40,000, and then you wait 27-plus days to be reimbursed for money you spent weeks ago.

For most of that job's life, your bank balance is down by the project cost. You are carrying the customer's project on your own line of credit, and the interest on that credit — or the opportunity cost of the cash you couldn't deploy elsewhere — is a real expense that never shows up as a line item. It just shows up as "we're always tight even though we're busy."

The bigger the job and the longer it runs, the deeper the hole. Which means your most important customers and your largest projects are exactly the ones you're financing hardest. That's backwards.

The deposit: get the material funded before you buy it

The simplest fix is a deposit that covers material, taken before you order anything. If material is $15,000 on a $40,000 job, a deposit in that range means you never dip into your own cash to fund the customer's steel. You buy their material with their money, not yours.

A few structural points that make deposits stick:

Tie the deposit to a real cost, not a vibe. "A deposit covers your material order" is a reason a customer accepts. "I need 40% up front" sounds like you're nervous about getting paid. Same money, very different reception.
Make it a standing term, not a per-job negotiation. Deposits feel awkward when they're a special ask. Put "material deposit due before fabrication begins" on every quote and it's just how the shop works — nobody argues with a printed policy.
Collect it with a link, not a wait. A deposit you have to chase defeats the purpose. Attach a pay link so the deposit clears before you order. Adding Stripe to your invoices makes deposit collection a click.

Progress billing: match payment to the work

For longer jobs, a deposit isn't enough — you're still floating weeks of labor. Progress billing solves that by breaking the job into milestones and invoicing at each one, so payment tracks the work instead of waiting for the finish.

A clean structure for a multi-week job:

Material deposit before you order — covers your biggest up-front outlay.
A progress payment at a visible milestone — material received and cut, or the structure erected. Something the customer can see, so the bill feels earned.
Final balance on completion — now a fraction of the total instead of the whole thing, so the net-30 wait is on a small number rather than the entire job.

Done this way, your cash stays roughly in step with your spending the whole way through. You're never more than one milestone underwater, instead of carrying the full project cost for weeks. The DSO math shows how much working capital that frees on a shop running several large jobs at once.

How to ask without scaring the job away

The real barrier is psychological, so handle it head-on. Deposits and progress billing are completely standard in construction and fabrication — customers who do this kind of work regularly expect them. The owner who's nervous to ask is usually more nervous than the customer, who's signed a dozen contracts with the same terms.

Three moves that keep the job:

Frame it as normal, because it is. "Standard on jobs this size" ends the conversation. You're not asking a favor; you're stating a term.
Attach it to costs, not to trust. Every ask maps to a real expense — material, a completed phase. You're never asking the customer to fund your comfort; you're asking them to fund their own project as it happens.
Put it on the quote, not the phone call. When the terms are printed on the quote the customer already accepted, there's no separate, awkward negotiation. The Cash Cycle Scorecard treats payment structure as one of the dimensions worth scoring — most shops that adopt deposits wonder why they waited.

You do excellent work and you spend real money to do it. There's no reason that money should come out of your account weeks before it comes out of your customer's. Stop being the bank. Take the deposit, bill the progress, and let the project fund itself. If you'd rather deposits and milestone invoices go out on schedule with a pay link attached and QuickBooks kept in sync, Setell handles the billing structure so your cash keeps pace with the work. Free tier is 3 AI quotes a month; paid plans from $49/mo. Start free.

Ready to quote faster?

Start free — no credit card. See your first AI-drafted quote in minutes.