Stage payments: how to structure them so you never fund the job

↑ Part of the Getting Paid series · Getting paid on time

Stage payments split a job's price into parts, each paid when a piece of the work is done. Set them up well and the customer's money is always slightly ahead of your costs, so you never pay for their materials and labour out of your own account. The rules are simple: tie each stage to something the customer can see, front-load the materials, and keep a final payment large enough that finishing matters to both of you.

This page sits under our guide to getting paid on time. It covers how to choose the stages, a worked schedule for a typical job, and what to do when a stage goes unpaid.

Part 1Why stages, not one bill at the end

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On a job that runs more than a week or two, one bill at the end means you carry everything until then: the materials on your account, your own wages, any subcontractors. If the customer pays late, or not at all, the whole job's cost is at risk instead of one slice of it.

Stages fix that. Each payment covers the work just done and some of what comes next, so the most you are ever owed is one stage. They also give the customer a rhythm to plan around, which makes paying on time easier for them too.

Part 2Tie each stage to something visible

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The best milestones are events nobody can argue about:

• Acceptance, for the deposit, which covers the materials you have to order.
• A physical stage of the work: strip-out complete, first fix done, plastered, units fitted, roof watertight.
• A delivery: the windows on site, the kitchen delivered.
• On bigger builds, a structural stage: foundations complete, shell watertight. Our guide to pricing an extension shows a full set.
• Completion, for the final balance, agreed at a walk-round with a snag list.

Avoid stages tied to time ("week two") or to a percentage of progress ("50% complete"). A week can pass with little done for reasons that are nobody's fault, and "half done" is an opinion. "Plastering complete" is not.

Part 3Front-load the materials, keep the final worth finishing

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Two pressures pull against each other. You want money in early, because that is when you spend it. The customer wants money held back until the end, because that is their security. A fair schedule gives each side what it needs:

• Early stages carry the materials. The deposit and the first stage should cover what you buy before the work starts or in its first days.
• The middle stages follow the labour. Each one pays for the work just done.
• The final payment is real, but not your profit. Somewhere around 10% to 15% is usual: big enough that the customer feels finished when they pay it, small enough that a dispute over a snag does not leave your whole margin hostage.

Deposit on acceptance, 25%, covering units and worktops	£3,000.00
On first fix of plumbing and electrics	£3,000.00
On units and worktops fitted	£4,200.00
Final balance on completion, 15%	£1,800.00
The job's price	£12,000.00

Each stage is something the customer can walk in and see. The deposit covers the biggest bill you face, and after it the customer's money stays ahead of your costs for the rest of the job.

Part 4Put the schedule on the quote

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A stage schedule only works if the customer agreed to it before you started. Put it on the quote itself, not in a later message: each stage's name, the event that triggers it, the amount, and how long they have to pay once it is invoiced. Then the conversation at each stage is not a request, it is the next step in a plan they have already signed.

Invoice each stage the day it is reached, against that plan. Our guide on how to write an invoice covers what each one should show.

Part 5When a stage isn't paid

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Do not start the next stage while the last one is unpaid. Every day you carry on, the amount at risk grows. Say so politely and early:

• On a domestic job, you rely on your own terms (see domestic vs commercial work), so include a line that work pauses if a stage is unpaid by its due date. Without that line, stopping is a negotiation; with it, it is the agreement.
• On a commercial job covered by the Construction Act, the law gives you two rights that do not depend on your terms. Work expected to last 45 days or more carries a right to be paid in instalments, stages or periodic payments. And if a sum due is not paid, you can suspend work after giving at least seven days’ notice stating why.

The Construction Act does not cover a contract with a homeowner for work on the home they live in or will live in, which is why the pause line in your own terms matters so much on domestic work. Our getting paid guide covers chasing, and late payment interest covers what you can add to an overdue commercial invoice.

Common questionsStage payments: quick FAQ

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How should I structure stage payments?

A deposit on acceptance that covers your materials, middle stages tied to visible pieces of work, and a final balance of around 10% to 15% on completion. Put the whole schedule on the quote before the job starts.

Am I entitled to stage payments?

On a commercial construction contract, work expected to last 45 days or more carries a statutory right to be paid in instalments under the Construction Act. On a homeowner's own home the Act does not apply, so stage payments exist only if your quote and terms set them out.

Can I stop work if a stage isn't paid?

On a commercial contract the Construction Act gives a right to suspend work for non-payment after at least seven days’ notice. On a domestic job you need a clause in your terms saying work pauses if a stage is unpaid.

What percentage should the final payment be?

Around 10% to 15% is common. Large enough that the customer feels the job is finished when they pay it, small enough that a dispute over a snag does not hold your whole margin.

Should stages be based on dates or on work done?

On work done. A date can pass with little progress for reasons nobody controls, and a percentage of progress is an opinion. A visible milestone, such as "units fitted", is a fact.

This guide is general information for UK tradespeople, current to the best of our knowledge in 2026, and is not tax, accounting or legal advice. Rates, thresholds and how they apply to you change, so confirm your position with HMRC, a qualified accountant or a solicitor before relying on it. TradeDraft accepts no liability for decisions made on the basis of this guide. Questions: hello@tradedraft.co.uk.