Contractor Payment Terms: Examples by Job Type

Contractor payment terms, in short: residential service and repair is due on receipt; equipment installs take a deposit with the balance due on completion; reroofs and larger jobs use progress payments tied to milestones; and commercial customers usually get net 15 or net 30. Put the same terms on the quote and the invoice, and check state limits first.

More on this topic: Pricing, estimates and getting paid, every guide in one place.

Payment terms decide how long your money sits in someone else's account. Most small HVAC, plumbing, electrical and roofing shops don't need complicated terms; they need the right default for each kind of job, written the same way every time. This guide gives you a table of terms by job type, a progress payment schedule for bigger jobs, wording to paste, and the state rules that cap what you can ask. For the deposit itself, see how much deposit to ask for; for the invoice fields, see what to include on a contractor invoice.

Key takeaways

• Due on receipt is the norm for homeowner service and repair: collect before the truck leaves.
• Installs: deposit at approval, balance on completion, with the deposit shown on the final invoice.
• Progress payments should follow visible milestones and never run ahead of the work; in California, collecting for work not yet done is illegal.
• Net 30 belongs to commercial and property-management accounts with a credit check and a signed agreement.
• Late fees and interest must be agreed in writing up front and stay within state limits.
• Texas's Prompt Pay Act gives owners 35 days to pay a contractor's written payment request, then 1.5% a month interest.

What are standard contractor payment terms?

Standard terms depend on the job and the customer: homeowners pay on completion, and businesses get net terms. These defaults suit most small shops in the four trades:

These are common practice, not law. Where a state sets a rule, the rule wins.

What do due on receipt, net 30 and 2/10 net 30 mean?

They describe when an invoice must be paid, counted from the invoice date unless the contract says otherwise.

• Due on receipt: payable as soon as the customer gets the invoice. Best for homeowner service work.
• Due on completion: payable when the job is finished. Define “complete” (for example, “system running and inspected”) so it can't drift.
• Net 15 / net 30: the full amount is due 15 or 30 days after the invoice date.
• 2/10 net 30: a 2% discount if paid within 10 days; otherwise the full amount in 30. On an $8,000 commercial invoice, that's $160 off for paying by day 10.
• Progress payments: set amounts paid as defined parts of the work are finished.
• Retainage: a percentage held back from each progress payment until the end of the job, seen on some commercial contracts.

Offer net terms only to customers who pass a simple check: a signed account agreement, a billing contact, and a purchase order process if they use one. A homeowner on net 30 is a homeowner you'll be calling in week five.

How should a contractor set up progress payments?

Tie each payment to a milestone the customer can see, and keep every payment at or below the value of the work done so far. That protects the customer and keeps you on the right side of state law. California is the clearest example: on home improvement contracts over $500, the down payment can't exceed $1,000 or 10% of the price, whichever is less; progress payments must be listed under the heading “Schedule of Progress Payments”, each in dollars against specific work or materials; and the contract must state, in bold, that it is against the law to collect payment for work not yet completed or materials not yet delivered.

Worked example: an $18,000 reroof

The numbers below are an illustration, not a standard. Adjust the milestones to your jobs and your state's rules.

Hidden-damage charges, such as extra decking, are added by written change order and usually collected with the final payment. In California, a change order must also state its effect on the progress payment schedule. Our roofing contract template shows where these clauses sit.

What payment terms wording can you paste?

Service and repair

“Payment is due on receipt of invoice when the work is complete. We accept card, ACH and check. Diagnostic fees are credited toward any repair approved the same day.”

Equipment install

“A deposit of [$__] is due when you approve this quote and is credited to your final invoice. The balance of [$__] is due on completion, meaning the new system is installed, started and running.”

Progress payments

“Schedule of payments: [$__] on signing; [$__] when materials are delivered to the site; [$__] when tear-off and dry-in are complete; [$__] on completion and passed final inspection. Approved change orders are added to the next payment.”

Commercial account

“Terms: net 30 from invoice date. Please include our invoice number with payment. Invoices unpaid after 30 days are subject to a late charge of [__]% per month, as agreed in our account agreement, where permitted by law.”

Use the same sentence on the quote, the contract and the invoice. The customer who agreed to it once rarely argues when it shows up again. If you invoice on paper, the free contractor invoice generator offers due on receipt or net 7 to 60 and works out the due date for you.

Can contractors charge late fees or interest?

Usually, if the customer agreed in writing before the work and the rate stays within your state's limits, which vary by state and are often stricter for consumers than for businesses. Our contractor invoice guide covers late fee cautions in more detail. Some states also set interest by statute. Under Texas's Prompt Pay Act (Property Code chapter 28), an owner must pay a contractor's written payment request for properly performed work within 35 days of receiving it, unpaid amounts then accrue interest at 1.5% a month, and a contractor must pay its subcontractors within 7 days of being paid. When there's a good-faith dispute on a single-family home up to a fourplex, the owner may withhold up to 110% of the disputed difference, not the whole payment. The chapter excludes government owners. Other states have their own prompt payment acts, mostly aimed at public and commercial work; check yours before you quote a rate. This isn't legal advice.

What should you do when a customer doesn't pay?

Follow a fixed sequence so nothing depends on how busy you are that week (our guide on how to collect unpaid invoices has the texts and letters for each step):

1. Day after the due date: a friendly reminder with the pay link. Most late invoices are forgotten, not disputed.
2. A week late: call. Ask whether anything on the invoice is wrong, and fix it if so.
3. Two to three weeks late: a written final notice with the amount, the due date and what happens next.
4. Check your lien deadline early. Mechanics lien rights depend on notices and recording deadlines that vary by state and are often short, so look them up the day a large invoice goes late, not month three. See mechanics lien basics.
5. Stop new work on the account until it's current, then small claims court or a collection agency for what's left.

Which payment-term mistakes slow you down?

• Different terms on the quote and the invoice. The customer pays the version they like.
• “Due on completion” with no definition of complete.
• Progress payments that outrun the work, which can be illegal and leave you refunding if the job stops.
• Net 30 for homeowners by default.
• Late fees invented after the fact on an overdue invoice.

Where CrewRobin fits

CrewRobin puts the terms in front of the customer at the two moments that matter. On quotes, you can ask for a deposit (25%, 50%, any percent or a fixed amount) when the customer approves, paid by card through your own Stripe account and taken off the final invoice. Invoices go out from the job by text with a pay link, paid by card through Stripe or by PayPal, so due on receipt really means paid before the truck leaves. It doesn't sync to QuickBooks or other accounting software.

Frequently asked questions

What are normal payment terms for a contractor?

For homeowners, due on receipt for service and repair, and a deposit plus balance on completion for installs. Larger jobs use progress payments tied to milestones. Commercial customers usually get net 15 or net 30.

Is net 30 normal for contractors?

For commercial customers, property managers and work for general contractors, yes. For homeowner service work, no; due on receipt is the norm.

What is a progress payment schedule?

A list of set payments made as defined parts of the work are finished, such as materials delivered, rough-in and completion. Each payment should not exceed the value of the work done; in California it's illegal to collect for work not yet completed.

Can a contractor charge interest on late payments?

Usually, if it was agreed in writing before the work and stays within state limits. Some states set it by law: Texas's Prompt Pay Act charges 1.5% a month on owner payments more than 35 days past a written payment request.

How much can a contractor ask for up front?

It depends on the state. California caps home improvement down payments at $1,000 or 10% of the price, whichever is less. Many states have no cap, but a deposit should cover your up-front costs, not the whole job.

Put it to work this week

Ask for the deposit at approval and send the invoice with a pay link before you leave the driveway. CrewRobin is free until your first 10 booked jobs, no card up front. Start free or see pricing.

Sources

Figures from outside CrewRobin were checked against these pages in October 2026. Most industry benchmarks come from vendors and agencies, so treat them as ranges, not rules.

• Cal. Bus. & Prof. Code 7159 (Public.Law mirror, updated Jan. 1, 2026)
• Texas Property Code 28.001, definitions (Public.Law mirror, May 2025 text)
• Texas Property Code 28.002, prompt pay required (Public.Law mirror, May 2025 text)
• Texas Property Code 28.003, good-faith disputes (Public.Law mirror, May 2025 text)
• Texas Property Code 28.004, interest on overdue payments (Public.Law mirror, May 2025 text)