Can I Charge a Deposit Before Starting Work?

The short answer

For most goods and services in Australia, you are free to ask for a deposit before you lift a finger. A deposit is simply part of the price paid in advance, and there is no general rule that forces a business to do the work first and invoice later. Tradies, designers, photographers and event suppliers all routinely take a deposit, and customers expect it.

The one firm condition is agreement. The customer must know the deposit is being charged, how much it is, and what it covers, and they must agree before they hand over money. A deposit sprung on someone after the job is booked is a fast way to lose trust and invite a dispute. Spell it out in your quote and your terms.

Why a deposit makes sense

A deposit does three useful things. First, it covers your upfront costs — materials, sub-contractors, hire fees and travel that you have to pay before you see a cent from the customer. Second, it filters out tyre-kickers; a person willing to put money down is far more likely to be a genuine, paying customer. Third, it sets the tone that you run a professional business with clear payment terms.

From a cash-flow view, a deposit narrows the gap between when you spend and when you get paid. That gap is where small businesses get into trouble. If you regularly carry costs for weeks before the final invoice clears, a sensible deposit policy is one of the simplest fixes available. See how to reduce the time it takes to get paid for the bigger picture.

Put it in writing first

The deposit should appear in three places: your quote, your written terms, and the customer's confirmation. A clear line such as "A 30% deposit of $X is payable to confirm your booking; the balance is due on completion" leaves nothing to argue about later. Avoid vague wording like "a deposit may apply".

State the amount

Show the dollar figure, not just a percentage.

State what triggers it

Booking, ordering materials, or scheduling the start date.

State the balance

When the rest is due and how it will be invoiced.

Keep the email or signed quote where the customer agreed. If you ever need to recover an unpaid balance, that written agreement is the foundation of your claim.

Deposits, GST and your invoice

If you are registered for GST, a deposit that forms part of the price is generally treated as a payment for the supply, and GST is usually accounted for when you receive it. The exception is a true security deposit that is fully refundable and not part of the price — that can be treated differently. Because the rules turn on the type of deposit, this is general information only and you should confirm your own position with your accountant or the ATO.

Practically, issue a tax invoice or a receipt that clearly shows the deposit, the GST component and the remaining balance. A tidy invoice generator makes this easy and keeps your records clean for BAS time.

When a deposit is non-refundable

You can make a deposit non-refundable, but only if that term is fair and clearly disclosed before the customer pays. Australian Consumer Law treats deposits that act as a penalty, or that bear no relation to your actual costs, as potentially unfair contract terms. A deposit that genuinely reflects the materials you ordered and the time you set aside is far easier to defend.

If a customer cancels, be reasonable: keep enough to cover what you have already spent or committed, and refund the rest unless your terms clearly say otherwise and the amount is fair. Being heavy-handed over a small deposit can cost you a review and a referral. When a non-refundable deposit is genuinely owed and ignored, that is a debt you can pursue — Merion can help you refer a debt for recovery.