How to Agree a Payment Schedule Before Any Work Starts

When a business spends weeks chasing an overdue invoice, the problem usually began much earlier - on the day the job was agreed. Most businesses send their payment terms on the invoice. But by that point, the customer has already moved on mentally, and no one confirmed when money would change hands or how the payments would be staged. That gap is where most late-payment problems are born, and it is easy to close.

The Agreement Most Businesses Skip

It is common to assume payment terms are implicit. The quote goes out, the customer accepts it, and everyone expects payment to arrive when the invoice lands. Research from the Department for Business and Trade found that UK small businesses spend an average of 86 hours a year chasing overdue invoices. The issue is rarely that customers flatly refuse to pay. It is that no one made an explicit agreement upfront about what the payment structure would look like.

For any job that runs longer than a day, a payment schedule is part of the job specification. It sits alongside the scope of work, the delivery date, and the access arrangements. Getting it agreed before work starts gives you a clear foundation for invoicing and a clear basis for chasing if something goes wrong.

Five Things to Agree Before You Begin

A payment schedule does not need to be complicated. It needs to cover five things clearly.

1. Deposit amount and when it is due. For jobs with significant material costs or lead times, a deposit of 25% to 40% is reasonable. Agree this at the point of order confirmation. If you wait until you have already started buying materials, you have lost your leverage.

2. Stage payment milestones. For jobs that run longer than two weeks, tie payments to project milestones rather than calendar dates. "Payment on practical completion of the first floor" is harder to dispute than "payment due 14 days after start." Milestones describe something that either has or has not happened.

3. Final payment trigger. Define exactly what triggers the final invoice. Is it practical completion? Delivery? Sign-off by the customer? Put the definition in writing. A vague trigger invites delay.

4. When you will raise each invoice. Customers benefit from knowing when to expect an invoice. "I will raise the stage invoice on the day installation completes" sets an expectation. A surprise email at month-end often lands in the middle of someone's payment run.

5. The dispute window. Set a short period - seven to ten days - during which the customer can raise a problem with an invoice. After that, payment falls due regardless. This is increasingly supported by UK legislation. The Commercial Payments Bill, introduced in Parliament in May 2026, is expected to introduce a statutory time limit for disputing invoices - which means this kind of written agreement will carry more legal weight, not less.

Making the Conversation Easier

Most business owners worry that asking for a deposit or structured payments will lose them the job. The opposite is generally true. A customer who pushes back hard on a reasonable deposit on a substantial project is showing you something important about how they will behave when your final invoice arrives.

Frame the conversation around how the project works rather than around trust. "For a job this size we work to a three-stage schedule - 30% on confirmation, 40% on delivery, and 30% on sign-off" is not a demand. It is a professional description of how you operate. Most customers in construction, AV installation, commercial furniture, and renewables expect this kind of structure. They work with other businesses that operate the same way.

According to the Federation of Small Businesses, more than half of UK SMEs experience late payments regularly. A clear payment schedule agreed at the start of a job does not guarantee you will be paid on time - but it removes every reasonable excuse for not paying.

Setting It Down in Writing

Once agreed verbally, confirm the payment schedule in writing before work starts. This does not need to be a formal contract. A clear line in the order confirmation email - "Payment schedule: 30% deposit by [date], balance on completion" - is sufficient. It creates a record, sets an expectation, and gives you something concrete to reference if you need to chase.

The conversation about payment is easier before a job starts than after an invoice is overdue. Agreeing the schedule at the point of order - and getting it into writing - removes the ambiguity that lets delays build. It also makes your invoicing more straightforward, your chasing less uncomfortable, and your cash flow more predictable.

• New Late-Payment Rules: Practical Steps to Protect Your CashflowFairman Keable · accessed 2026-07-07
• Crackdown on Late Payments: Key Changes for Small Business OwnersByteStart · accessed 2026-07-07
• Largest Crackdown on Late Payments in Over 25 Years as Landmark Bill Enters ParliamentGOV.UK · accessed 2026-07-07

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