Getting paid
Payment terms for tradies: what to set and how to word them
What payment terms should a tradie use?
Short terms get you paid sooner. For homeowners, payment on completion or within 7 days is common and reasonable. For builders, property managers and commercial clients, 14 or 30 days is more typical, and their purchase order or contract may set the terms.
How should payment terms be worded?
Keep them short and specific. For example:
Payment due within 7 days of invoice. Pay by bank transfer or card using the link on your invoice. Jobs over $5,000 require a deposit to book, up to your state's legal maximum for home building work. Variations are priced and approved in writing before work proceeds.
Put the same wording on your quotes and your invoices, so the customer has agreed to it before the work starts.
Should tradies take deposits?
Yes, for larger jobs or special-order materials, but residential building deposits are capped by state law. New South Wales caps them at 10%, while Victoria and Queensland allow 10% under $20,000 and 5% at $20,000 or more. Always confirm the current limit with your regulator before you set yours.
For larger jobs or when you're ordering special materials, yes. For residential building work, deposits are capped by state law. In New South Wales the cap is 10% of the contract price for residential building work contracts (a written contract is required above $5,000, and contracts above $20,000 need extra detail and a Home Building Compensation certificate before you can take a deposit). In Victoria it's 10% for contracts under $20,000 and 5% for contracts of $20,000 or more. Queensland allows 10% for contracts under $20,000 and 5% for contracts of $20,000 or more, or up to 20% where more than half the contract value is work done off site. Check your state's current rules and licensing body before setting your deposit.
When should you use progress payments?
Use progress payments for any job that runs longer than a couple of weeks or where your material costs are high. Agree the stages upfront, such as after demolition, after rough-in and at completion, and invoice each stage as soon as it's done.
How do you make sure customers stick to the terms?
- Invoice the same day the work is finished.
- Include a card payment option.
- Send automatic reminders before and after the due date.
- Call early when something's wrong. Disputes get harder the longer they wait.
General information only. Check your state's home building laws and get advice for your contracts.