How to plan deposits and milestone payments around job costs

The useful question is not “What deposit percentage do businesses charge?” It is “What cash must be available before the next reliable receipt?” A deposit percentage without a dated cost schedule cannot answer that.

List payments in date order

Consider a 10,000 project with 1,000 of existing cash assigned to it. A proposed deposit is 3,000. The example assumes that deposit clears before any job payments, and that the assigned cash is not also promised to another job.

Event	Cash movement	Project cash after event
Assigned cash plus collected deposit	+4,000	4,000
Materials paid, week 1	−3,500	500
Labour and other payments, week 2	−2,000	−1,500
Milestone collected, week 3	+4,000	2,500
Remaining delivery payments, week 4	−1,500	1,000
Final payment collected	+3,000	4,000

The project generates 3,000 above its 7,000 cash outflows, but it still requires 1,500 of temporary funding in week 2. The final balance includes the original 1,000; it is not all profit.

Calculate the deposit needed for this schedule

Payments before the first milestone total 5,500. With 1,000 assigned cash and no buffer, the opening receipt needed is 5,500 − 1,000 = 4,500, or 45% of the contract amount. If the deposit rises to 4,500 while the milestone stays at 4,000, the final payment must fall to 1,500 to keep total receipts at 10,000.

This is a funding requirement under the stated schedule, not a recommended or legally permissible deposit. Sector and location rules may limit deposits; payment rights and refund obligations depend on applicable terms. Another approach is to move an agreed milestone earlier or negotiate a later supplier payment.

Use cash before the next milestone with assigned cash 1,000, deposit 3,000, materials 3,500, labour 2,000 and other payments zero. It returns the 1,500 shortfall. The tool aggregates one interval; the table checks when cash reaches its lowest point.

Test timing, not just totals

If the week-3 milestone arrives after the remaining 1,500 payment, the deficit reaches 3,000 instead. A correct invoice due date is not evidence that the receipt will clear that day. Keep an expected date and a delayed case.

Record milestones by observable completion conditions, with the amount and payment timing made clear. The government payment-terms reference explains the role of clear timing and payment methods; it does not endorse this example’s percentages. Transfer the schedule into your cash forecast before using available cash elsewhere.

Method and scope

All amounts above are hypothetical teaching figures in one currency, excluding tax unless stated otherwise. These are original scenarios, not market prices, benchmark targets or professional recommendations. The references support the underlying concepts, not the example assumptions. This AI-assisted explanation has not had independent professional review. Calculation methods and limitations.