In the world of low-voltage integration, one size does not fit all, and that even applies to getting paid by clients. The structure and timing of progress payments can mean the difference between being underwater for months and maintaining healthy, even robust, cash flow.
Rather than relying on a lump sum payment at the end of a project, staggered payments ensure you can cover the cost of materials, labor, and overhead at every stage of a project without accessing money designated for overhead or profits or mixing funds from another project to cover project costs. That can even include charging a design fee.
Another key reason for progress payments? They reduce your risk. Getting paid as you go using solutions such as D-Tools Payments embedded inside of D-Tools Cloud significantly lowers exposure to project abandonment or client default.
According to industry consultant Jason Sayen of IAmSayen, most integrators haven’t properly mapped out their payment cycles. Instead, they’re reactive—billing based on ad hoc triggers like completing a change order, finishing an installation phase, or just simply deciding, “It’s time to invoice,” with little formal structure.
Another critical piece is defining internal roles: Who on your team determines when a phase is complete, and who notifies the back office that it is time to invoice? Here are four tips for building your payment plan structure:
1. Base Your Payment Schedules on Project Type or Size
"There are usually two main project types: new construction and fast-track or retrofit projects," says Sayen. New builds typically require four to eight payments. Retrofits might only need two. Let the project complexity and timeline guide your structure.
For example, a large multi-phase project with design/engineering, prewire, trim, and finish stages clearly calls for staged progress payments. But a single-phase installation may simply require a deposit and final balance.
2. Charge Design Fees
Josh Christian, CEO of the Home Technology Association (HTA), makes the case as to why integrators should be charging for their designs. In particular, he notes that architects, designers and builders will see that as a way integrators are elevating their professionalism compared to their competition.
He says the best way to start charging a design fee is to get a sample set of drawings together and show them to builders, architects, and designers.
“They will understand the labor that is involved. They will also understand what is in it for them by streamlining the process later and massively minimize the change orders and project delays that inevitably will happen when all this stuff is kicked off until the last minute,” Christian says.
When talking about design and documentation, the definitions can vary.
“Some dealers are charging for site visits or initial consultations simply because they are trying to weed out ‘tire kickers’ who are getting a whole bunch of quotes,” adds Christian.
HTA recommends that integrators charge for design and documentation (including drawings that can be done in D-Tools software) that are aimed at serving the project well, such as:
- Device placement drawings layered on top of blueprints
- Equipment rack drawings
- Electrical requirements, including placement, amp requirements, isolation and grounding needs, number of circuits required, etc.
- Cooling requirements designed to guide the HVAC contractor on the cooling needs for the electronics
- Pre-wire plan
- Framing requirements to accommodate in-ceiling speakers avoiding joists, additional support for weighty electronics, or isolated studs in home theaters with subwoofers to eliminate room-to-room vibration.
3. Cover Your Equipment Costs Upfront; Invoice on Milestones
The more expensive equipment, the larger deposit. Many integrators collect 100% of equipment prices upfront and bill separately for labor. If needed, use an "equipment deposit" and collect before ordering. Milestone-based invoicing is the industry norm for a reason. Contract approval, prewire completion, equipment-rack delivery, and final walkthroughs make logical billing markers. Time-based schedules only make sense for long-term commercial projects, according to Sayen.
4. Use Three to Four Payment Phases
There is no hard-and-fast rule on how many progress payments you should receive on a project but here are some options you can set up in D-Tools Payments:
50% / 40% / 10%
- Use When: Projects are mid-size, multi-phase, and equipment heavy.
- Why: Front-loads cash flow to cover parts while allowing the client to hold 10% to ensure successful project completion.
30% / 30% / 30% / 10%
- Use When: Doing larger projects with four or more clearly defined phases.
- Why: Even distribution accommodates extended timelines and complexity.
100% (equipment upfront) + 50% (labor upfront) / 50% (labor later)
- Use When: Equipment is highly customized or high cost (e.g., projection systems, full home theaters).
- Why: Eliminates financial risk from equipment outlays without client sign-off. For example, on a $10K project that is $5K equipment and $5K labor, the dealer receives $7,500 upfront and collects $2,500 later.
60% / 30% / 10%
- Use When: Cash flow needs are high, or equipment procurement must happen early.
- Why: Offers security up front for small to mid-size integrators.
80% / 20%
- Use When: Clients have a spotty payment history or it's a single-phase fast-track project.
- Why: Reduces risk on jobs with minimal post-install follow-up.
In the low-voltage integration industry, a well-structured progress-payment policy isn't just good practice, it's essential for survival. By tying payments to project milestones, clearly defining internal roles, charging for design, and isolating finances per job, integrators can maintain healthy cash flow and reduce risk.
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