Every service business has taken a job with no advance and regretted it. Most have also lost a job by asking for too much.
The right number is not a rule of thumb. It comes from what the work actually costs you before you get paid.
Start with your own outlay
What do you spend before the first payment is due? Material, subcontractor payments, travel, the salaries of the people doing the work. That figure is what you are lending to the customer.
An advance that does not cover your outlay means you are financing the job. That may be a fine commercial decision, but it should be a decision, not an accident.
What changes the number
- A new customer. No payment history means more risk, and it is reasonable to price that in.
- Custom work. Anything you cannot resell to somebody else deserves a higher advance.
- Long jobs. Milestones matter more than the opening advance.
- Repeat customers who pay on time. A lower advance is a genuine reward and costs you nothing.
Ask for it properly
The request lands very differently depending on when it appears. Written in the quotation, it is a term. Raised after the customer has said yes, it sounds like distrust.
State it plainly and without apology. Something like: work begins on receipt of the advance, with the balance due on completion. No explanation required. Businesses that justify their advance invite negotiation on it.
Remember the tax
For services, GST is due when the advance is received, not when you invoice. Set that portion aside rather than treating the whole amount as working capital.
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