Should contractors require a deposit before starting work?

One contractor who answered our 2026 vendor survey didn't hedge on this question at all:

"90% of initial estimates should require a deposit up front to schedule and begin the work."

That's a strong position, not a universal rule. But it points to a real decision every contractor eventually has to make: when is it worth asking a new client to pay something before any work has happened?

There's no single right answer. There is a real case on both sides.

The case for requiring a deposit

A deposit does three things at once, and all three matter more than they get credit for.

It protects cash flow before the job even starts. Materials often have to be purchased before a contractor earns a dollar, and fronting that cost with no money down puts the contractor's cash flow at risk before the work is even underway. That risk compounds later, too: late payment is the single biggest complaint contractors report about getting paid at all, and a deposit is one of the few tools that puts some money in hand before a client has all the leverage.

It filters serious clients from the ones who are still comparison-shopping. A client unwilling to commit any money to a job they've already agreed to isn't fully committed to the job.

It reduces disputes later. A deposit tied to a signed estimate creates a paper trail of exactly what was agreed to, which makes it harder for either side to argue about scope after the fact.

The case against

None of that makes a deposit the right call every time.

New client relationships run on trust that hasn't been built yet, and asking a first-time client for money before they've seen any work can read as a red flag rather than standard practice, especially for smaller residential jobs where a deposit isn't the local norm.

Requiring one also means having the conversation, and that conversation is exactly the part of onboarding vendors report as hardest: negotiating terms, not paperwork, tops the list. A deposit policy is only as good as a contractor's ability to explain it without sounding like they don't trust the client.

State rules matter here too. A number of states cap or regulate how much a contractor can collect upfront on certain kinds of jobs, particularly residential home improvement work. This isn't legal advice, and the rules vary enough by state and job type that a blanket number isn't responsible to publish here. Check your state's contractor licensing requirements, or talk to a lawyer, before setting a formal deposit policy.

Finding a policy that fits the job

Most contractors land somewhere between "always" and "never." A few things worth weighing before deciding where:

• Material cost as a share of the job. A remodel with $8,000 of materials on order justifies a deposit far more than a one-day labor job.
• Client history. A repeat client with a clean payment record is a different risk than someone you've never worked with.
• Local and trade norms. What's standard in commercial construction isn't always standard in residential service work, and going against the norm without explaining why can cost you the job.
• What the deposit is actually for. Contractors who tie the deposit explicitly to materials or scheduling, and say so, tend to get less pushback than contractors who ask for a percentage with no stated reason.

Put whatever you land on in writing. A verbal understanding about a deposit is the fastest way to turn a minor disagreement into a dispute neither side can prove.

If you're still working out where you land, you're in good company. The contractor quoted above was one voice among many in our 2026 Vendor Payment & Portal Report, and not everyone in it agreed. For a broader look at how vendors are handling payments right now, including why negotiating terms trips up more contractors than paperwork does, the report recap, is worth a read.