Key takeaways

• Without deposits, you are lending your customer the cost of their own system.
• A deposit on installs covers your equipment order so your cash is not tied up.
• Progress billing turns one slow payment into several faster ones.
• This is a pricing and contract habit, not a software feature. You just have to ask.

Why fronting the cost is so dangerous

Picture a system changeout. You order the equipment, pay the supplier, and pay the techs who install it. Days or weeks later, the customer pays you. In that gap you have funded the entire job out of your own account. Do that on three or four big jobs in the same week during summer and your bank balance drops even though business is booming. This is the timing trap that puts profitable contractors in a cash crunch.

Deposits and progress billing close that gap.

How to use deposits on installs

For any job with real equipment cost, collect a deposit before you order. A common approach is a deposit large enough to cover the equipment and materials, with the balance due at completion. Now your customer's money buys their equipment, and your cash stays in your account where it belongs. Put it in writing in the proposal so there is no awkward conversation at the door.

How progress billing works on bigger jobs

On larger or multi-day jobs, bill in stages tied to milestones.

Instead of waiting until the end to collect one big check, you collect along the way. Your cash flow tracks the work instead of trailing it by weeks.

Will customers push back?

Some will ask, and that is fine. Deposits are standard in the trades, and most customers expect them on a system that costs thousands of dollars. The key is to set the expectation in writing up front, state it plainly, and treat it as normal, because it is. Contractors who do not collect deposits are not being generous. They are quietly financing other people's air conditioners.

Frequently asked questions

Should HVAC contractors collect a deposit on installs?

For jobs with significant equipment cost, yes. A deposit that covers the equipment order keeps your cash from being tied up while you wait to be paid.

What is progress billing?

Billing a job in stages tied to milestones rather than one payment at the end, so your cash comes in as the work progresses.

How big should a deposit be?

A common approach is enough to cover equipment and materials, with the balance at completion. The right number depends on your job size and supplier terms.

Stop funding jobs out of your own pocket

Jeremy Brewer is the founder of 911 Bookkeepers LLC in Baton Rouge, Louisiana. He came up through the HVAC trade and works as a licensed paramedic in EMS. He is a Xero Certified Advisor. 911 Bookkeepers is built for the trades.