Should You Ask for a Deposit? Upfront Payments for Small Businesses

You quote ₦1,200,000 for a batch of branded packaging. You buy the board and the ink yourself, run the job, deliver on time, then spend eleven weeks chasing the invoice. The customer eventually pays. You have just funded someone else's inventory for nearly three months out of your own working capital.

A deposit would have changed that whole story. It is the cheapest collections tool a small business has, and most owners are too shy to use it.

A deposit does two jobs at once

The obvious one: it funds the work. If you have to buy materials, pay subcontractors, or book a truck before you see a naira, a deposit means you are not lending your own cash to the job.

The second one matters more. A deposit filters your customers. Someone willing to move money before you start is telling you they have money and they intend to pay. Someone who stalls, negotiates the deposit down to nothing, or goes quiet the moment you mention it is showing you exactly how the final invoice will go. You get that information for free, before you have spent anything on them.

How much to ask for

There is no universal number. Set it against the job and against the risk.

1. 50 percent is the sensible default for most project work: agencies, contractors, fabricators, event suppliers. Half up front, half on delivery. It covers your costs and splits the exposure evenly.
2. 30 percent works when your upfront costs are low and you are mostly selling time, or when the customer is established and has paid you cleanly several times.
3. 100 percent is right for new customers on small jobs, for custom work nobody else could use if they walk away, and for anything under ₦250,000 where chasing the money would cost more than the margin on it.

Lean toward full payment upfront on anything you cannot resell. If you print 5,000 flyers with a customer's logo on them and they disappear, you own 5,000 pieces of waste.

Set the deposit against your real costs, not a round number that sounds polite. If materials for a ₦2,000,000 job cost ₦900,000, a 30 percent deposit leaves you ₦300,000 out of pocket before you have done a single hour of work.

How to ask without sounding desperate

Do not ask. State it. A deposit sounds like a favour when you raise it halfway through a negotiation, and like a policy when it is printed on the quote from the start.

Put it on the quote as a line of its own: "50% deposit to schedule, balance due on delivery." Say it the way you say your price, without apology and without a paragraph of justification. The longer you explain, the more it sounds like you are in trouble.

When a customer pushes back, do not defend the deposit. Tell them what it buys: the deposit reserves their slot and releases the materials order. That is true, and it moves the conversation from "do I trust this vendor" to "when do you need it delivered."

When to waive it

Waive it for customers with a real track record: several invoices, paid on or close to time, no drama on any of them. At that point the deposit is friction with no benefit, and you can move them onto standard terms instead. Payment terms explained covers what to put them on once they have earned it.

Waive it for large corporates whose finance systems genuinely cannot pay against anything but a delivered invoice. That constraint is usually real. But charge for it somewhere else: shorter terms, a higher price, or milestones. Do not hand over the deposit and Net 60 in the same conversation.

Do not waive it because the customer is offended, in a hurry, or promising that this one will be different. Those are the three most expensive reasons to skip a deposit.

Long jobs need milestones, not one big deposit

On work that runs for months, a single deposit is not protection. You burn through it in the first few weeks and spend the rest of the project working unpaid, which is the same position you were trying to avoid.

Break the money into milestones tied to visible progress: 30 percent to start, 30 percent at an agreed checkpoint, 30 percent on delivery, 10 percent after sign-off. Each milestone should be something the customer can actually see, so the payment feels earned rather than requested. And enforce the rule that makes milestones worth having: if one goes unpaid, work stops there. You lose a week instead of four months.

Where the rest of the money lives

A deposit does not remove the invoice. It makes the balance smaller and the customer safer, and you still have to send the rest, track it, and follow it up when it slips. Arvalox holds that half of the job: it records what came in upfront, ages the outstanding balance from the day it falls due, and reminds the customer before and after that date, so the back half of the job does not quietly turn into the eleven-week story you started with.