How to Handle Partial Payments Without Getting Burned
Customer wants to pay in installments. The exact payment plan templates, contract clauses, and protection strategies that prevent partial payment disasters.
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Quote approved. Customer loves the plan. One problem: "Can I pay half now and half when you finish?"
Sounds reasonable. You want the job. You say yes. Three weeks later you're done, customer ghosts, and you're £3,500 out of pocket with a half-finished invoice and a lien you'll never enforce.
This guide gives you the exact framework to offer payment plans that protect your cash flow while keeping conversion high.
When to Say Yes to Partial Payments
Not all payment plans are bad. Say yes when:
- Job value exceeds £5,000 – Large projects naturally split into phases.
- Customer has verifiable history – Repeat client with clean payment record.
- You control materials release – You can pause work if payment stops.
- Job duration is 2+ weeks – Milestones align with natural work phases.
- Customer offers 50%+ upfront – Covers materials and first-week labor.
When to Say No (Or Require Full Deposit)
Walk away or demand full payment upfront when:
- New customer with no references – You have zero leverage if they ghost.
- Job under £2,000 – Admin overhead of payment plans eats profit.
- One-day or emergency work – Get paid same day or don't do it.
- Customer haggles on deposit amount – Red flag for payment issues later.
- Residential landlord – Notorious for "tenant hasn't paid me" excuses.
- Customer mentions cash flow issues – Their problem becomes yours.
Red Flag Script: When Customer Pushes Back on Deposit
Customer: "Can I just pay £500 now and the rest later?"
Your response: "I need 50% upfront to cover materials and schedule your job. That's £[amount]. If that doesn't work, I can refer you to [competitor] who might have different terms."
The Only Payment Plan Structure You Should Use
If you're offering a payment plan, use this milestone-based structure:
Standard 3-Stage Payment Plan (£10,000 Job Example)
- Stage 1: Booking Deposit (50%)£5,000 upfront – Covers materials, labor, and secures your calendar
- Stage 2: Mid-Project Payment (30%)£3,000 when 60% of work complete – Triggered by photo evidence and client sign-off
- Stage 3: Final Payment (20%)£2,000 on completion – Due same day as final inspection before you leave site
Why this works: You're never more than 20% exposed. If they ghost at stage 3, you've already been paid £8,000 on a £10,000 job. Walk away with minimal loss.
Alternative: Weekly Payment Structure (Long Projects)
For multi-week jobs (extensions, renovations), use weekly billing:
- Week 0: 50% deposit (materials + first week labor)
- Week 1: Invoice for actual hours worked, due Friday
- Week 2: Invoice for actual hours worked, due Friday
- Final week: Invoice for completion + retainage, due same day
Rule: Work stops if any invoice goes 3 days overdue. No exceptions.
Contract Clauses That Protect You
Your payment plan means nothing without these clauses in writing:
Clause 1: Payment Milestones
"Payment is due as follows: 50% (£[amount]) upon contract signing, 30% (£[amount]) upon [specific milestone], and 20% (£[amount]) upon project completion. Work will not proceed to the next phase until the prior payment is received in full."
Clause 2: Late Payment Terms
"Payments overdue by more than 3 days will incur a £50 late fee plus 2% per week interest. Work will be suspended until payment is received. Materials remain the property of [Your Company] until final payment."
Clause 3: Work Stoppage Rights
"[Your Company] reserves the right to stop work immediately if any payment is overdue. Resumption of work requires full payment of outstanding invoices plus a restart fee of £[amount]."
Clause 4: Materials Ownership
"All materials supplied remain the property of [Your Company] until final payment is made in full. [Your Company] may remove installed materials if payment terms are breached."
Enforcement note: Removing installed materials is legally complex and rarely worth it. But the clause itself discourages ghosting.
When They Miss a Payment: Your 7-Day Protocol
Day 0 (Payment Due Date)
- Automated reminder sent via SMS + email at 9am
- "Your payment of £[amount] is due today. Please confirm when sent."
Day 1 (Payment Overdue)
- Call them directly – "Just checking in, your £[amount] payment was due yesterday. When can I expect it?"
- Send follow-up text: "Hi [name], payment was due yesterday. Please send by end of today to avoid late fees and work stoppage."
Day 3 (Still Not Paid)
- Stop all work immediately
- Send formal notice: "Per our contract, work has been suspended due to non-payment. Late fee of £50 now applies. Work resumes when payment is received."
- Remove tools and equipment from site
Day 7 (Final Warning)
- Letter before action: Formal demand letter stating 7-day deadline before legal action
- Include full balance owed (original invoice + late fees + interest)
- CC your solicitor (or at least say you did)
Critical: Don't Resume Work Without Payment
67% of contractors who resume work after a missed payment never collect the outstanding balance. Once you continue working, you've shown them non-payment has no consequences.
Real Examples: What Works and What Doesn't
Success Story: Kitchen Renovation
Job: £18,000 kitchen refit, 4 weeks
Payment plan: £9,000 deposit, £6,000 at week 2, £3,000 on completion
What happened: Week 2 payment came 2 days late. Contractor stopped work immediately. Customer paid within 4 hours plus £50 late fee. Final payment collected same day as completion.
Why it worked: Large deposit covered materials. Work stoppage clause enforced early. Customer learned payment deadlines were real.
Failure Story: Bathroom Job Gone Wrong
Job: £4,500 bathroom, 1 week
Payment plan: £1,000 deposit, £2,000 mid-job, £1,500 on completion
What happened: Mid-job payment never came. Contractor kept working "to stay on schedule." Job finished, customer claimed quality issues, refused final payment. Contractor lost £3,500.
Why it failed: Deposit too small (22% instead of 50%). Contractor didn't stop work when payment missed. Once job complete, all leverage gone.
The Bottom Line
Payment plans can work—but only with 50% deposits, written milestones, and zero tolerance for late payments.
The moment you let one payment slide "just this once," you've trained the customer that deadlines don't matter. Stop work immediately, charge late fees, and don't restart until paid in full.
Better to lose a job upfront than finish it unpaid.
Collect every invoice without chasing
- •Card-on-file + deposit requests built into every quote and invoice
- •SMS/email reminders fire day 0, 2, 5 until the job is paid
- •Escalate overdue accounts with late fees in a single click
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Customer Won
Invoice 90+ days overdue. Customer not responding. Here