Deposit & Upfront Payments 2026: Only 23% of Contractors Collect One [Data Study]

Only 23% of contractors always collect a deposit before starting a job, according to Levelset’s 2020 National Construction Payments Report, a survey of more than 540 construction professionals. That figure surprises most small business owners who assume asking for money upfront is standard practice. It isn’t, and the jurisdictions that regulate deposits most closely, California, New South Wales, and Victoria, cap what a business can even ask for.

Figure 1: Fewer than 1 in 4 contractors always collect a deposit before starting work. Source: Levelset, 2020 National Construction Payments Report.

How many businesses actually collect a deposit before starting work?

Fewer than a quarter, and the trend line, such as it is, points up rather than down. Levelset’s 2020 National Construction Payments Report, a survey of more than 540 construction professionals fielded with Fieldwire, found that 23% of contractors said they always get a deposit at the start of a project. A year earlier, Levelset’s 2019 survey of 503 construction professionals asked a slightly different question, whether contractors consistently received an upfront deposit on their jobs at all, and found just 4% did. The two surveys aren’t a strict trend line since the wording differs, but both point the same direction: most contractors start work, buy materials, and pay subcontractors before a client hands over a dollar. That gap is a large part of why cash flow problems compound in construction specifically, since a business without a deposit is financing the client’s project out of its own working capital until the first progress payment lands.

Figure 2: Only 4% of contractors consistently collected any upfront deposit in 2019, before deposit invoicing tools were common. Source: Levelset, 2019 National Construction Payments Report.

How much can a business legally require as a deposit?

In most of the US and UK, whatever the two parties agree to, but three of the jurisdictions BillyPaid’s customers most often ask about draw a hard line. California’s Business and Professions Code Section 7159.5 caps a home improvement contract deposit at $1,000 or 10% of the contract price, whichever amount is less, enforced by the Contractors State License Board. New South Wales takes a flat-percentage approach instead: the Home Building Act 1989 caps a residential building deposit at 10% of the contract price, full stop, regardless of how large the job is. Victoria’s Domestic Building Contracts Act 1995 splits the difference by contract size, capping deposits at 10% for contracts under $20,000 and 5% once the contract reaches $20,000 or more. None of these caps apply to most freelance, consulting, or creative work, only regulated home-building and home-improvement contracts, so a designer or software contractor operating in the same state is free to set its own terms.

Figure 3: California, New South Wales, and Victoria each cap the maximum deposit a licensed contractor can collect. Source: California Business and Professions Code Section 7159.5; NSW Home Building Act 1989; Victoria Domestic Building Contracts Act 1995.

What happens to a capped deposit as the contract gets bigger?

It shrinks, and in California’s case it shrinks fast. Because the state’s cap is $1,000 or 10% of the contract price, whichever is less, the 10% figure only applies up to a $10,000 contract, the point where 10% and $1,000 are equal. Above that, the $1,000 ceiling takes over and the effective percentage falls: a $20,000 contract can only require a $1,000 deposit, an effective 5%; a $50,000 remodel caps out at 2%; a $100,000 project caps out at just 1%. A contractor pricing a large kitchen or whole-home remodel in California is, in practice, financing nearly the entire job before a deposit meaningfully offsets material costs. That’s a sharper version of the same problem New South Wales and Victoria’s flat or tiered percentages are designed to avoid, and it’s one more reason a deposit line on the initial invoice needs to be paired with a realistic progress-payment schedule rather than treated as the only cash flow lever available.

Figure 4: California’s $1,000-or-10%-whichever-is-less rule means the effective deposit cap falls as the contract price rises. Source: California Business and Professions Code Section 7159.5 (calculated).

Is there a standard deposit percentage when there’s no legal cap?

Outside regulated home-improvement work, the number comes down to trade norm rather than statute. UK trade-vetting platform Checkatrade advises consumers to be cautious of paying a tradesperson more than 10% of the project value upfront, a more conservative benchmark than the 10-25% range some UK renovation guides describe as normal before a red flag. Service businesses without material costs to cover, designers, consultants, marketing freelancers, tend to ask for more: 25-50% at signing is common guidance in freelance business advice, since there’s no equipment or supply order to justify a smaller number, only the freelancer’s own time and risk. The same logic applies to converting an accepted estimate or quote into the first invoice: once a client signs off on a price, a deposit invoice for a defined share of it is the natural next document, whether the underlying job is a kitchen remodel or a six-week consulting engagement. A deposit isn’t the only lever for pulling cash forward, either; pairing it with an early payment discount on the remaining balance gives a client two separate reasons to pay sooner rather than later.

Does asking for a deposit actually protect against a client who disappears?

It targets the single riskiest moment in a client relationship, the gap between agreeing to work and starting it. 48.5% of freelancers have been ghosted by a client before a project even began, compared with 26.6% ghosted mid-project and 26.4% who experienced outright non-payment, according to Leapers’ 2025 Mental Health in Freelancing Report, a survey of 1,013 UK self-employed workers. That pre-work window is exactly where a deposit changes the economics: a client weighing whether to actually follow through on a signed estimate faces a real cost to walking away once money has changed hands, instead of simply not replying to a scheduling email. It doesn’t eliminate the risk that a project stalls or a client goes quiet on the remaining balance, which is why a reminder sequence that runs automatically on whatever’s still owed after the deposit still matters, on top of whatever gains come from consistent follow-up itself, but it does convert the highest-risk moment in the relationship from a free option into a commitment.

Figure 5: Nearly half of freelancers who get ghosted are ghosted before a single hour of work happens. Source: Leapers, 2025 Mental Health in Freelancing Report.

Jurisdiction or practice	Maximum or typical deposit	Basis
California (home improvement contracts)	$1,000 or 10%, whichever is less	Business and Professions Code Section 7159.5
New South Wales (residential building)	10%	Home Building Act 1989
Victoria (contracts $20,000 or more)	5%	Domestic Building Contracts Act 1995
Contractors who always collect one	23%	Levelset, 2020 National Construction Payments Report

Table 1: Where a deposit is legally capped, it tends to land well under half the contract price, yet only 23% of contractors collect one at all. Sources: California Business and Professions Code Section 7159.5; NSW Home Building Act 1989; Victoria Domestic Building Contracts Act 1995; Levelset.

The Bottom Line

The 2026 data lands on an uncomfortable pairing: deposits are one of the few tools proven to change how a client relationship starts, yet most businesses still don’t ask for one, and the ones that are legally allowed to are capped well below what most owners assume. Only 23% of contractors always collect a deposit, while 48.5% of freelancers get ghosted specifically in the window a deposit would have covered. Neither of those numbers moves by accident. A BillyPaid deposit invoice turns an accepted estimate into a defined, upfront commitment before a single hour of billable work happens, and a BillyPaid payment reminder picks up the remaining balance once the job is underway, whether that job is a capped-deposit home renovation or an estimate for the kind of quoted work covered elsewhere on this site. Getting a deposit at all, even a small, legally capped one, still beats getting none.

Frequently Asked Questions

How many contractors actually collect a deposit before starting work? Only 23% of contractors say they always get a deposit at the start of a project, according to Levelset’s 2020 National Construction Payments Report, a survey of more than 540 construction professionals. A year earlier, Levelset’s 2019 survey of 503 construction professionals found just 4% consistently received an upfront deposit at all.

How much can a business legally require as a deposit? It depends on the jurisdiction and the trade. California caps a home improvement contract deposit at $1,000 or 10% of the contract price, whichever is less (Business and Professions Code Section 7159.5). New South Wales caps residential building deposits at 10% of the contract price (Home Building Act 1989). Victoria caps deposits at 10% for contracts under $20,000 and 5% for contracts of $20,000 or more (Domestic Building Contracts Act 1995).

Is there a standard deposit percentage for freelancers and creative businesses? There is no legal cap for most freelance and creative work, so the figure comes down to industry norm rather than statute. UK trade-vetting platform Checkatrade advises consumers to be cautious of paying a tradesperson more than 10% of the project value upfront, while service businesses without materials costs, such as designers and consultants, commonly ask for 25-50% at signing.

Does asking for a deposit actually protect against a client who disappears? It targets the single riskiest moment in a client relationship. 48.5% of freelancers have been ghosted by a client before a project even began, compared with 26.6% ghosted mid-project and 26.4% who experienced outright non-payment, according to Leapers’ 2025 Mental Health in Freelancing Report. A deposit converts that pre-work window from a free option for the client into a financial commitment.

Sources and References

1. Levelset: 2020 National Construction Payments Report (540+ construction professionals, surveyed with Fieldwire, Q1 2020), share of contractors who always collect a deposit before starting a project.
2. Levelset: 2019 National Construction Payments Report (503 construction professionals, surveyed August 2019, published October 2019), share of contractors who consistently received an upfront deposit.
3. California Legislative Information: Business and Professions Code Section 7159.5, maximum down payment for a home improvement contract.
4. NSW Legislation: Home Building Act 1989 No 147, maximum deposit for residential building work (Section 8).
5. Consumer Affairs Victoria: Deposits and payments for domestic building, maximum deposit percentages under the Domestic Building Contracts Act 1995.
6. Checkatrade: What To Do When Tradespeople Ask For Larger Deposits, guidance on reasonable deposit percentages for UK tradespeople.
7. Leapers: 2025 Mental Health in Freelancing Report (self-selecting online survey of 1,013 UK self-employed workers, fielded October 1 - November 15, 2025), share of freelancers ghosted before and after a project started.

Note: All figures verified as of August 2026.