Deposits and Payment Terms: Stop Funding Your Clients' Jobs
How much deposit to ask for, what the rules allow, and how to get paid on time.
Too many electricians buy materials for a job with their own money, do the work, then wait 30 days or more to get paid. That's not a business, it's an interest-free loan to your clients. Clear deposits and payment terms, set out in the quote before the job starts, fix most of the problem.
Why deposits matter
A deposit covers materials, commits the client and filters out people who were never going to go ahead. On bigger jobs like rewires, switchboard upgrades or EV installs, a deposit stops you carrying thousands of dollars in stock while you wait.
What the rules allow in NSW
For residential building work in NSW, including many types of specialist electrical work, the Home Building Act limits the deposit to a maximum of 10 per cent of the contract price. Jobs over certain values also need a written contract and, above a set threshold, home building compensation cover. Other states have their own rules. Check the current thresholds for your state before setting your terms, and talk to your accountant or industry association if you're unsure.
Payment terms that work
- Small jobs: payment on completion, ideally on the day by card or bank transfer.
- Medium jobs: a deposit up to the allowed limit, with the balance on completion.
- Large jobs: progress payments tied to clear stages, such as rough-in and fit-off.
- Commercial work: agreed terms in writing, often 14 or 30 days, with security of payment rights under your state's legislation.
Put it in the quote
Payment terms belong in the quote, not in a phone call after the job is done. State the deposit amount, when the balance is due, how to pay, and what happens if payment is late. When the client accepts the quote, they accept the terms.
Frequently asked questions
How much deposit can a tradie charge in NSW?
For residential building work in NSW, the Home Building Act caps the deposit at 10 per cent of the contract price. Check the current rules for your specific type of work and contract value.
Should electricians ask for a deposit?
For larger jobs, yes. A deposit covers materials, confirms the client is committed and protects your cash flow. Small call-out jobs are usually paid on completion instead.
What payment terms should an electrician use?
Many electricians use payment on completion for small jobs, a deposit plus balance on completion for medium jobs, and progress payments for larger projects. Whatever terms you use, put them in writing in the quote.
What can I do if a client won't pay?
Start with a clear written reminder and a final notice. For commercial work, security of payment legislation in each state gives contractors a fast process to recover payment. Residential disputes can go to your state's fair trading or tribunal process.