Glossary
Deposit
A deposit is money paid up front, before the main work or the final invoice.
Last updated 26 October 2026
A deposit is an upfront payment. It is commonly a percentage of the total fee, paid on signature or before work starts, and then deducted from later invoices. It is how a freelancer avoids funding the whole job, and how a client shows they mean to go ahead.
Deposits spread risk. Larger deposits are often used when the rest of the fee is on a long net period, such as Net 60, or when the supplier has to turn down other work to make time. For example, a photographer might take 40% on booking; a developer might take 30% on signature and the rest on milestones.
The contract should say when the deposit is due, whether it is refundable if the job is cancelled, and how it is applied to the last invoice. A deposit that is “on account” but silent on cancellation is how people argue about a refund after a kill. If you mean it is kept when they cancel, say so. If you mean it is a kill fee, use that word.
A deposit is different from a monthly retainer. A retainer pays for ongoing access or a set number of hours. A deposit is a slice of one job, paid early. Mixing the two in one sentence is a common source of confusion.
Agencies that book contractors against a client deposit should not start the contractors until the deposit has actually landed. The paper can say work starts on receipt of the deposit. That one line saves a week of unpaid kickoff calls. If the client’s finance team needs a purchase order before they can pay, get the PO number into the paper or do not start.
A worked example
A photographer takes 40% on booking and the balance on delivery of the final files. The contract says the booking deposit is kept if the client cancels inside 14 days of the shoot, and is applied to the last invoice if the shoot goes ahead. When the client cancels 10 days out, the photographer invoices nothing more and keeps the 40%.
How it shows up in a contract
Sample wording · our own drafting
The Client will pay a Deposit of [30%] of the Fees on signature. The Supplier will not start the Services until the Deposit is received. The Deposit is credited to the final invoice. If the Client cancels for convenience, the Deposit is retained and is the minimum cancellation sum unless the kill-fee clause says a higher amount is due.
In Plain English
The client pays 30% when they sign. Work does not start until that money arrives. It comes off the last invoice. If they cancel without a breach, they do not get it back, and they may owe more if the kill-fee line is higher.
Common mistakes
- Starting work before the deposit lands, then discovering the client is still “in approvals”.
- Calling it a deposit without saying whether it is refundable on cancellation.
- Forgetting to credit the deposit on the last invoice, so the client is billed the full fee twice.
- Using “retainer” and “deposit” as if they were the same thing.
Related
The legal wording governsLast reviewed 26 October 2026Pending lawyer review