How do I make sure I get paid as a contractor?

Structure the job so you are never financing the customer. Collect a deposit before you start, bill in progress milestones tied to completed work, and never let the amount you are owed get larger than the value of work still in your control. Escrow takes this further by holding the customer's funds up front and releasing them to you on approval.

What is a fair deposit to ask for as a contractor?

A deposit of 10 to 25 percent is standard and reasonable for residential work, and it should cover your initial materials and reserve the schedule. Asking for much more can scare off good customers and may exceed state limits, so the better lever is progress billing, not a huge up-front payment.

Is escrow or a mechanics lien better for getting paid?

They solve the problem at different ends. A mechanics lien is a cure, it helps you recover money after you have already not been paid, and it is slow, legal, and adversarial. Escrow is prevention, the customer's funds are committed before you start and release to you when work is approved, so the non-payment mostly never happens. Use escrow to avoid the fight; keep lien rights as a backstop.

How do I avoid net-30 and chasing checks?

Tie payment to completed milestones and use a system that releases funds on approval instead of on an invoice cycle. With escrow, the money is already funded, so when the customer approves the milestone the funds release to you, often within a day or two, rather than starting a 30-day clock.

What payment terms should be in every contract?

A clear scope, a deposit amount, a milestone payment schedule tied to defined stages, the timeframe for the customer to approve or reject completed work, a late-payment provision, and a reservation of your lien rights. Putting the payment schedule in writing before you start is the single biggest predictor of getting paid without a fight.

How to Get Paid as a Contractor: Deposits, Milestones, Liens, and Escrow

Every contractor has a story about the job that didn’t pay. The remodel where the homeowner kept finding reasons to hold the final check. The builder up the chain who went quiet on net-60. The customer who loved the work right up until the invoice arrived. It feels like bad luck, but it usually isn’t. Getting stiffed is almost always a structural problem, you let the amount you were owed get bigger than the leverage you had to collect it.

Fix the structure and the problem mostly goes away. Here is how to set up your deposits, billing, and payment protection so getting paid stops being the hardest part of the job.

Why Contractors Get Stiffed

It comes down to one thing: at some point you’re owed more than you can easily collect. You finished the work, the customer has it, and now the only thing standing between you and your money is their willingness to write a check. That’s a weak position, and the customer knows it.

The fix is to never be in that position. Keep the value of completed-but-unpaid work small at every stage, and keep your funds tied to progress the customer can see. Do that and you remove the leverage a slow-paying customer relies on.

Get a Deposit, Every Time

Starting a job with zero money down means you’re financing your customer from the first hour. Collect a deposit. For most residential work, 10 to 25 percent is standard and reasonable. It covers your initial materials and confirms the customer is serious.

Resist the urge to ask for much more. A huge up-front payment scares off exactly the well-funded, low-drama customers you want, may run past state deposit limits, and isn’t where your real protection comes from anyway. Your protection comes from how you bill the rest of the job.

Bill in Progress, Not at the End

Progress billing is the core of getting paid. Split the contract into milestones tied to completed, visible stages, and invoice each one as it’s finished:

Deposit to start and order materials
Demolition and rough-in complete
Drywall and substrate complete
Finishes and fixtures complete
Final walkthrough and punch list

The discipline that matters: don’t let the work get far ahead of the payments. If you have completed rough-in and finishes but only collected the deposit, you’re now carrying the customer for most of the job, and you’re exposed. Bill each milestone as you complete it, and confirm the previous payment cleared before you sink labor and materials into the next stage.

This protects your cash flow too. You’re buying materials and making payroll against money that’s coming in along the way, not floating the entire project on your own line of credit and hoping the final check arrives. (On the federal side, where payment timelines are their own animal, see how long it actually takes to get paid on a federal contract.)

Mechanics Liens: the Backstop, Not the Plan

If you don’t get paid, a mechanics lien is your legal claim against the property for the value of the work you performed. It’s a real and powerful right, and you should always preserve it: know your state’s deadlines for preliminary notices and lien filings, and put a reservation of lien rights in your contract.

But understand what a lien is. It’s a cure, not a prevention. By the time you’re filing one, you have already done the work, already not been paid, and you’re now entering a slow, legal, adversarial process to claw money back. Liens recover money. They don’t give you back the months of stress and cash-flow damage in the meantime. Treat your lien rights as the backstop you hope never to use, not as your payment plan.

Escrow: Get Paid the Day the Work Is Approved

The cleanest way to never be in the weak position is to have the customer’s money committed before you start. That’s what escrow does.

With escrow, the customer funds each milestone into a neutral third party up front. You can see the money is there and committed. When you finish the milestone and the customer approves it, the funds release to you, often within a day or two, instead of starting a net-30 clock or waiting on a mailed check. The work-then-chase cycle is gone.

Look at what that changes for you:

You’re no longer financing the customer. Their money is already funded before your crew shows up.
You’re not chasing payment after finishing. Approval triggers release.
Disputes shrink, because both sides agreed to the milestones and the funds are tied to them, not to the customer’s mood when the invoice lands.

This is the model RenovationRoute is built on. Bids, scope, milestones, and payment all live in one place, and every milestone runs on escrow, so the customer’s funds are committed before work starts and release to you on approval. After your first few completed projects you can unlock faster payouts. The point is the same: you do the work and the money is already waiting, not somewhere down a 30-day pipe.

Payment Terms to Put in Every Contract

Before any job, your written agreement should spell out:

The scope in plain terms, so “done” isn’t a matter of opinion
The deposit amount and what it covers
A milestone payment schedule tied to defined, inspectable stages
The time the customer has to approve or reject completed work, so silence can’t stall your payment forever
A late-payment provision with interest or fees
A reservation of lien rights

The contract isn’t paperwork for its own sake. The single biggest predictor of getting paid without a fight is that the payment schedule was written down and agreed to before anyone picked up a tool.

The Short Version

Take a deposit on every job, 10 to 25 percent, and start with money in hand.
Bill in milestones as you complete them; never let unpaid work get ahead of your leverage.
Preserve your lien rights, but treat them as a backstop, not a plan.
Use escrow so the customer’s funds are committed before you start and release on approval.
Put the deposit, milestones, and approval window in every written contract.

Getting paid isn’t about finding honest customers and hoping. It’s about structuring the job so an honest customer pays easily and a slow one runs out of leverage. Keep the money tied to the work, get it committed up front, and collecting stops being the hardest part of running your business.

Want to bid and get paid this way? See how RenovationRoute works for contractors or join as a contractor and run your next job on milestone escrow.