Contractor Cash Flow Guide

Most contractors don't have a revenue problem. They have a cash flow problem. Money's coming, just not fast enough to cover payroll. This guide fixes that.

Deposit strategy

• Jobs under $1,000: due on completion (small enough to absorb)
• $1,000–$5,000: 50% deposit on signing, 50% on completion
• $5,000–$20,000: 1/3 deposit, 1/3 at midpoint, 1/3 on completion
• $20,000+: deposit + weekly progress draws

Invoice the same day

Final invoice goes out the day you finish — not Friday, not "when you get around to it." Every day you wait is a day they forget how happy they were.

Payment terms that work

• "Net 7" — payment due 7 days after invoice (not Net 30; you're not a bank)
• Accept payment methods that close fast: ACH, Zelle, Venmo for small jobs, card (with 3% surcharge) if needed
• Late fee of 1.5%/month written into contract — usually triggers payment

When clients don't pay

• Day 8: friendly reminder text + email
• Day 14: phone call, "is everything OK with the work?"
• Day 21: certified letter with late fee added
• Day 30: small claims court or mechanic's lien (state-dependent)

Build a 3-month cash buffer

Once you have 3 months of operating expenses in a separate account, you'll never panic-take a bad job again. Save 10% of every payment until you hit it.