Deposits and Payment Terms in Agency Projects
By CodexierPublished 6 min read
Almost every web or software agency asks for some money before work starts, and almost every buyer wonders whether that is reasonable. It usually is, because the agency books people for your project and cannot resell those weeks. What matters is not whether you pay upfront but what each payment is tied to, what you own at each step and what happens if the project stops halfway.
Why agencies ask for deposits
A deposit does three jobs for the agency. It reserves calendar time that would otherwise go to another client. It covers work that starts immediately and has no visible output yet, such as discovery, structure and setup. And it filters out buyers who are not ready to decide, which protects the planning of every other project.
The risk is on the buyer side and it is simple: money paid for work that has not been delivered. Every protection below reduces that gap.
Milestone payment plans
Most project work is paid in stages, each tied to a milestone both sides can recognise. The table shows the common models and who carries the risk in each.
| Model | How it works | Risk for the buyer | Suits |
|---|---|---|---|
| Full payment upfront | Pay the whole price at order | Highest: all money before any delivery | Small fixed-price packages from established suppliers |
| Deposit and balance | A share at start, the rest at launch | Moderate: depends on the size of the deposit | Short projects of a few weeks |
| Milestone plan | Deposit, payment at design approval, payment at launch or acceptance | Low: money follows visible progress | Most website, shop and app projects |
| Monthly in arrears | Invoice for hours or sprints already done | Lowest for the buyer, highest for the agency | Ongoing development and retainers |
| Instalments after delivery | Price spread over months after launch | Low, but check ownership until the last payment | Buyers who need to protect cash flow |
A milestone is only useful if it is defined as something you can check: an approved design file, a staging site you can click through, a signed acceptance test.
Payment on delivery and acceptance
The last payment is the buyer's strongest lever, so it should be tied to acceptance rather than to a date. Acceptance means you have tested the delivery against the agreed scope within an agreed window, typically five to ten working days, and either signed it off or listed defects. A clause that says the delivery counts as accepted if you do not respond within the window is fair; it stops projects from hanging open. Our guide to acceptance testing and sign-off has a template for that window.
Be careful with a final payment that is so small it no longer motivates anyone. If the last instalment is a token amount, the agency has little reason to prioritise your defect list. Equally, pay for the accepted parts and hold back only what matches the open defects.
Protecting yourself as a buyer
- Look the company up at Bolagsverket or in the public company registers: registration date, board, annual reports if it is a limited company.
- Check that the supplier is approved for F-skatt at Skatteverket. If it is not, you may become responsible for withholding tax and employer contributions on what you pay.
- Get the payment plan in the contract, with each payment linked to a named milestone and the deliverable that proves it.
- Write down what you own after each payment: design files, code, content and the domain, and when ownership passes.
- Agree what happens to paid money on termination: work done up to that point is paid for and handed over, unused prepayment is returned.
- Keep deposits proportionate to the first phase of work, not to the whole project.
One VAT detail catches buyers out: in Sweden, VAT applies to an advance payment when it is received, so a deposit invoice (förskottsfaktura) carries full moms and the final invoice deducts what was already invoiced. If you are VAT-registered you deduct it as usual; just make sure the invoices reconcile.
When you do not need any of this: for a small, fixed-price package from a supplier with a published price and a clear scope, a staged plan adds admin without reducing much risk. Paying at order is reasonable there, provided you can see exactly what is included, which is why our own packages list their contents on the pricing page.
Card, invoice and instalments
How you pay matters almost as much as when. Card payment is fast and gives you the card issuer's dispute process if something is not delivered at all. Invoice is the norm between Swedish companies, with 30 days as the common term; longer terms are negotiable but should be written into the agreement, and late payment gives the supplier the right to statutory interest and a fixed reminder compensation under the Interest Act. Instalments spread the cost but move ownership questions to the end, which is covered in our guide to financing a website or app.
Invoices should name the project, milestone and amount. If you want the terms of a quote checked, book a call. For a company website launch, the price is fixed before you order, so the only real question left is which payment option suits your cash flow.
Frequently asked questions
How large a deposit is normal for a website project?
There is no legal norm. A useful rule is that the deposit should roughly match the work done in the first phase, such as discovery and design. If the agency asks for most of the price before showing anything, ask what that money pays for in the first weeks.
Can I get a deposit back if I cancel?
Only what the contract says. Without a clause, the agency may keep payment for work done and for time it can show it reserved. Agree before signing that unused prepayment is returned and that finished work is handed over.
Is it a bad sign if an agency does not ask for a deposit?
Not necessarily. Some agencies invoice monthly in arrears or deliver a small fixed package and invoice on launch. It usually means the agency carries more risk, which may be reflected in the price or in stricter terms elsewhere.
Do consumer rules apply when I buy a website for my company?
No. When you buy as a business, the Consumer Services Act does not apply and the contract terms govern almost everything. That is exactly why the payment plan, ownership and termination need to be written down.
Want a second opinion on the payment terms in your quote?
Bring the quote or contract you have received. In fifteen minutes we will point out how the payments are tied to delivery, what you own at each step and anything worth renegotiating before you sign.
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