Guide
There's a simple rule for sizing your last invoice: no more than 15% of the contract, and no less than what it actually costs you to finish the punch list. Here's the maths, plus how to collect it without a fight.
Your final payment should sit between two numbers: it should never be more than 15% of total contract value, and it should never be less than your remaining cost-to-complete plus a normal margin on that last phase. Anything above 15% turns your final invoice into a hostage negotiation. Anything below cost-to-complete means you're funding the last week of work out of your own pocket.
Most trades get this backwards. They let the customer set the final number based on how nervous they feel, not on how much work is actually left. That's how a $12,000 kitchen remodel ends up with $3,600 sitting on the table over a scratched cabinet door.
Once a job is substantially complete, the customer has almost nothing left to lose by delaying payment. You, on the other hand, have already spent money on materials, labour, and possibly a deposit to a supplier. The bigger the final slice, the bigger the amount you're exposed to over a dispute that might genuinely be worth $150 to fix.
A 15% cap keeps the final payment proportional to what could plausibly go wrong at the end of a job: a punch-list item, a missed detail, a final inspection. It's rarely proportional to a full week of remaining labour, because there usually isn't a full week of labour left by the time you're invoicing the final draw.
The other side of the rule matters just as much. If your remaining work costs $900 to finish, your final payment should be at least $900 plus your normal margin on that phase, not less. Contractors who collect deposits and progress payments that don't track actual cost often find they've already been paid out before the job is done, and the final invoice becomes optional to the customer because there's nothing left for you to threaten to withhold.
You can check this quickly with a break-even calculator to see what a phase actually costs before you set the payment schedule, rather than guessing.
Say you quote a kitchen remodel at $12,000 total, with a payment schedule of 40% deposit, 30% at rough-in complete, and 30% on completion. That final 30% is $3,600.
By the time you're at the completion walkthrough, what's actually left to do? Usually it's a punch list: touch-up paint, a cabinet adjustment, a final clean. Say that genuinely costs you $900 in labour and materials to finish.
| Item | Amount |
|---|---|
| Final payment invoiced | $3,600 |
| Actual cost to complete remaining work | $900 |
| Pure profit exposed to dispute | $2,700 |
That $2,700 has nothing to do with the work left on site. It's profit you've already earned on the rough-in and cabinetry install, sitting there as leverage the customer can use over a scuffed baseboard. Structure the same job at a 15% final instead — $1,800 — and you've cut the exposed amount by half, with the same punch list still unresolved as leverage in your favour, not theirs.
Run the full schedule through a job profitability calculator before you quote, so the deposit and progress draws actually match the cost curve of the job instead of round numbers that feel fair.
If your current template is 40/30/30 or similar, and jobs regularly run $10,000 to $20,000, that back end is too heavy. A better shape front-loads payment to match cost:
On the $12,000 kitchen, that might look like 40% deposit ($4,800), 45% at cabinet install and appliances in ($5,400), and 15% final ($1,800). Same total, far less profit riding on a walkthrough.
The final payment should be collected in person, at the completion walkthrough, not invoiced afterwards and chased by email. There are two reasons for this.
First, momentum. A customer standing in a finished kitchen, happy with the result, is far more likely to pay on the spot than one who receives an invoice three days later after the emotional high of a finished job has worn off.
Second, it lets you close out issues in real time. If they spot something during the walk, you fix or note it there, rather than it festering into a reason to withhold payment weeks later.
Bring a simple sign-off sheet to the walkthrough. It needs three things: a list of any outstanding items with a date you'll return to fix them, a line confirming the customer accepts the work as complete subject to that list, and a signature. This does two jobs at once. It gives the customer confidence that anything unfinished is tracked and owned, and it gives you a signed document that the final payment is due now, not once every item on a wish list is resolved.
Keep the punch list short and specific. "Touch up paint on hallway trim by Friday" closes cleanly. "Customer wants to think about whether they like the cabinet colour" does not, and shouldn't go on the sheet at all — that's a separate conversation, not a reason to hold the final payment.
Sometimes a customer, often on a larger job or one where trust hasn't been built yet, asks for a 20% or 25% retention instead of your usual 10-15%. You don't have to refuse outright, but you do need to reprice around it.
If they want an extra 10 points held back, that's 10% of contract value now unavailable to you at completion. Two ways to handle it:
What you shouldn't do is agree to a 25% final on a $12,000 job and simply hope the punch list stays small. That's not a payment schedule, that's a bet, and it's one you're structurally set up to lose.
The Small Business Operations Kit ($19) turns guides like this one into fill-in-once worksheets: rate card, quoting sheet, job costing, payment terms and follow-up templates.