Payment Terms for Job Shops: Deposits, Net-30 and Cash Flow

Most shops obsess over the rate and the markup, then hand the customer the one variable that quietly decides whether a profitable job actually pays the bills: when the money arrives. A job priced at a healthy margin can still starve a shop if you buy the material in week one, pay wages every Friday, and wait sixty days after shipping to see a euro of it. Setting payment terms job shop owners can live with is not paperwork — it is cash flow management disguised as a line on the quote.

This guide covers the terms that matter for small-to-mid machine and fabrication shops, when to ask for a deposit, how to put a number on the cost of waiting, and how to write terms that protect you without scaring off the buyer. Terms are part of the price; treat them with the same rigor you give your hourly rate.

Why terms are part of the price, not an afterthought

A buyer comparing two quotes at the same price will read "50% deposit, balance net-15" as more expensive than "net-60, no deposit" — because for them it is. Money in your hands sooner is money out of theirs sooner. That asymmetry is exactly why terms belong in the pricing conversation, not bolted on after the customer has already anchored to a number.

The shop that ignores this finances its customers for free. Every day between when you pay your suppliers and when the customer pays you is working capital you have to fund — out of your own cash, your line of credit, or by delaying your own vendors. On a busy month that gap can swallow more cash than your actual profit, which is how shops with full order books still end up scrambling to make payroll.

The vocabulary every estimator should own

Terms get written in shorthand that buyers and accountants read fluently. Use it precisely so there is no ambiguity when the PO arrives.

Term	What it means	Best used for
Net-30 / Net-60	Full payment due 30 / 60 days after invoice date	Established repeat customers with clean history
CIA / PIA	Cash (or payment) in advance, before work starts	New customers, one-off jobs, custom material
COD	Cash on delivery — payment when parts ship	Small jobs, walk-in or unvetted accounts
50% deposit	Half up front, balance on delivery or net terms	Material-heavy jobs, long lead times, NRE/tooling
Progress / milestone	Staged payments tied to defined completion points	Large multi-week builds, weldments, assemblies
2/10 net 30	2% discount if paid within 10 days, otherwise full at 30	Encouraging fast payment from slow-but-good payers

State the term, the trigger (invoice date or delivery), the currency, and any deposit on the quote itself. A term the buyer only discovers on the invoice is a term you will end up negotiating from the weak side. The manufacturing quote template guide covers exactly where these belong on the document.

When to require a deposit — and how much

A deposit is not a sign of distrust; it is how you avoid financing someone else's material and setup out of your own pocket. The rule of thumb: the deposit should at least cover the cash you are committed to spending before the customer is contractually locked in.

Work it out in four steps:

Add up your at-risk cash. Raw material plus any custom tooling, NRE, or outside processing you must order before you can start.
Add irrecoverable setup. Programming, fixturing, and first-article time you cannot resell if the job is cancelled.
Divide by the order value to get the minimum deposit percentage that keeps you cash-neutral at kickoff.
Round up for risk based on the customer's history and the resaleability of the material.

A €20,000 weldment that needs €7,000 of plate and €2,000 of fixturing has €9,000 of at-risk cash — a 45% deposit, not the reflexive "we don't usually ask." For commodity material you can repurpose, you might drop to 30%; for an exotic alloy cut to a single customer's geometry, 50% or more is simply prudent. New customers and bespoke material justify cash in advance until they have earned terms.

Net-30, net-60, and the real cost of waiting

Offering net terms is a real cost, and you can price it. The carrying cost of extending terms is roughly:

Financing cost = Invoice amount × annual cost of capital × (days outstanding ÷ 365)

Take a €50,000 invoice and a working-capital cost of 10% per year. Net-30 ties up that money for a month: 50,000 × 0.10 × (30 ÷ 365) ≈ €411. Stretch the same customer to net-60 and it doubles to about €822 — before anyone has paid a cent late. If a customer demands net-90 on volume work, that financing cost is no longer a rounding error; it is a real line that either comes out of your margin or goes into your price.

This is why margin and terms have to be read together. A 12% margin on a net-60 job, after financing, is not a 12% margin — and the difference compounds across every open invoice on your books. If you are not sure your quoted margin survives the wait, the margin vs. markup breakdown is worth a revisit before you concede longer terms.

Early-payment discounts: do the math before you offer one

"2/10 net 30" looks generous and harmless. It is one of the more expensive things a shop can offer without realizing it. The customer who pays on day 10 instead of day 30 earns a 2% discount for paying 20 days early. Annualize that: 2% over 20 days is roughly 37% APR of effective cost to you.

That can still be worth it if your own cost of capital is high or your cash is genuinely tight — turning a receivable into cash 20 days sooner has real value. But offer it as a deliberate trade, not a default courtesy. A 1% discount, or a discount only on invoices above a threshold, is often the smarter version. Run the annualized number first; never give away margin on reflex.

Protecting cash flow on long jobs

For anything that runs multiple weeks — a large weldment, a multi-op assembly, a build with staged outside processing — a single payment at the end concentrates all the risk and all the cash strain at the worst point. Progress billing spreads both.

A clean structure for a six-week build might be 40% at order (covering material and setup), 30% at a defined mid-point such as completion of machining or fit-up, and the final 30% on delivery and acceptance. Each milestone has to be objective and written down, or it becomes an argument. Tie payments to events the customer can verify — material received, first article approved, assembly welded — not to vague "progress." On long-lead work, also state that pricing is subject to material confirmation at order, the same protection a validity period gives the price itself.

For repeat customers, the inverse risk is the slow drift: net-30 quietly becomes net-50 in practice. Track days-to-pay per account, charge the late fee you wrote into the terms, and put a credit limit on accounts that keep stretching. Terms you never enforce are not terms — they are wishes.

A quick checklist before the quote goes out

Deposit covers at-risk material, tooling, and irrecoverable setup
Net term matches the customer's payment history, not optimism
Financing cost of extended terms is built into the price or the margin
Trigger date, currency, and late-payment terms are stated explicitly
Long jobs use milestone billing tied to verifiable events
Any early-payment discount has been checked on an annualized basis

Run a real RFQ through this and you will usually find at least one term you were giving away. Pricing the part is half the job; the pricing guide for CNC parts handles the number, and the terms above decide whether that number ever reaches your account in full.

Putting terms on every quote, automatically

The reason terms get left off is the same reason scope and revision get left off: rebuilding the commercial block by hand for every RFQ is friction, and under time pressure it is the first thing to go. QuoteBuddy reads the uploaded drawing, builds the cost from your machine rates, material, and target margin, and renders a complete quote PDF — with your deposit, net term, validity, and currency carried onto every document automatically. The terms stop depending on which estimator is at the keyboard or how busy the afternoon is.

Set your standard terms once and every quote that leaves the shop inherits them. You can start a 30-day trial and turn a real drawing into a complete, defensible quote — priced right and with the terms that keep the cash flowing — in minutes.