Partial payments and payment plans

A repeat customer calls with a dead condenser in July. You quote $6,400. She does not argue with the price — she says she has about two thousand dollars right now and can do the rest over the summer, and asks whether that works.

You can say yes. But be clear about what saying yes means: you are lending her $4,400 of your own money, with no credit check, in a phone call — and once your state's lien window closes, with nothing behind it but her word.

Installment credit to consumers is regulated federally and by state. This is business guidance, not legal advice. Before you make plans a standing offer — especially with interest — have the wording reviewed by an attorney in your state.

Three things get called "paying in installments"

They look alike on the invoice and they are completely different risks.

Progress billing is about your cash flow: you bill as you finish, so the job funds itself. A plan you carry is about theirs, and it starts after the work is done and paid for out of your pocket. Do not let a customer talk you into one by calling it a draw schedule.

Collect your cost, carry your profit

One number decides whether a plan is generous or reckless: your out-of-pocket cost on that job.

On the $6,400 condenser:

• Equipment: $3,100
• Subcontracted electrical: $450
• Labor cost, two techs for a day: $750
• Direct cost: $4,300. Gross profit: $2,100.

The safe version is getting your direct cost in hand before you start carrying anything. Collect $4,300 and everything you float afterwards is profit — a default costs you a bad month, not rent money. Collect $2,000 and you are $2,300 in the hole on someone else's equipment, with no way to get it back off her roof.

One caution before you call that a down payment: states can cap what a residential contractor may take before work starts. If a cap applies, invoice for work actually performed as allowed and start the carried balance from what remains. Deposits and down payments covers the question; your licensing board publishes the current rule.

That is not a reason to refuse. It is a reason to know which one you are doing, and to keep the second kind rare, short, and reserved for people whose payment history you can look up. A first-time customer off a lead site does not get one. Neither does a job whose cost is mostly special-order material you cannot return.

A four-payment plan, run out

Same job, $2,000 down at install, balance over four months:

Read the last column. You are underwater for eleven weeks and see no profit until October. If the plan quietly stops in September — she changes banks, the card expires, her hours get cut — you have paid $4,300 to collect $4,200.

That is the argument for short schedules and a small number of payments. Longer schedules create more chances to fail and can run past remedies you expected to use. Consumer-credit rules have their own thresholds, so a short plan is not automatic clearance.

What has to be in writing before the truck leaves

A plan agreed verbally is a favor. A plan in writing is a debt. Five things, in a document she signs or approves electronically:

• Every payment as a dollar amount and a calendar date. Not "monthly." Not "four payments." $1,100 on the 1st of August, September, October and November 2026.
• The payment method, authorized in the same document. Autopay against a card or bank account on file. A plan that runs itself beats one that depends on the customer acting every month. For recurring debits from a consumer bank account, federal Regulation E wants the authorization in writing — signed or e-signed, terms clear, and a copy given to the customer — so put the amounts and dates in the authorization itself, not just in a note to your processor.
• What a missed payment does. Say plainly what a miss triggers — commonly that the remaining balance becomes due immediately — and whether a fee applies. Acceleration clauses are ordinary in business contracts, but some states' consumer credit statutes require a written default notice and a right to cure before you can accelerate on a consumer, so have your wording checked rather than copied. That fee clause is its own decision, and it has to exist before the job.
• What the balance does not suspend. If you offer a workmanship warranty, say whether it stays in force during the plan. Do not leave that to month three.
• The invoice it belongs to. One invoice for the full $6,400 with the schedule attached — not four invoices for $1,100, which muddles both your records and your revenue.

Charging interest changes what you are

The instinct is to add a few points for the trouble. Careful: a finance charge is the line where a favor becomes consumer lending.

Federal and state consumer-credit rules can apply when you regularly extend consumer credit, charge a finance fee, or use installment agreements. That can bring disclosure, rate-limit, or licensing questions. Do not launch a standard interest-bearing plan from a template; get state-specific advice. If interest is what you actually want, third-party financing moves much of the credit administration to a lender.

When a payment is missed

Call the same week. Not a letter, not a portal reminder — a call, from you, asking what happened. Most misses on a real customer are an expired card or a bad month, and both get fixed in five minutes if you catch them early.

Then know what you still have, because two clocks are already running against you.

Mechanic's lien deadlines run from the work, not from the schedule. The trigger and deadline differ by state, and preliminary notice may be required much earlier. If a lien is your backstop, get the actual deadline and notice sequence before the plan starts.

Small claims has a ceiling, and it may be lower for your business than for you. Check the current cap and entity rules with the court before counting on it.

Putting the schedule where she agreed to it

A plan holds when the dates and amounts are attached to the priced job the customer approved, not living in a text thread. Build the job in DoneQuote from your own services, put the payment schedule on the document, and send it for digital approval — so the four dates and the $1,100 are recorded in the same approval that recorded the $6,400, instead of being reconstructed from memory in October.

The line to hold

Get to your direct cost as early as your state's deposit rules allow, keep what you carry inside your profit and inside 90 days, put every date and dollar in a signed schedule with autopay attached, and send anyone who needs longer to a lender who prices risk for a living.