Should I pay a deposit upfront to a new supplier?
When an upfront deposit is normal, when it's risky, and how to protect the money.
Deposits are normal, until they're a warning sign
Plenty of legitimate suppliers ask for a deposit, materials cost money, custom work ties up their time, and a deposit protects them if you pull out. So the question isn't "are deposits bad?" It's "is this deposit, to this company, at this size, a sensible risk?" The answer depends on three things: how normal the deposit is for the job, how much you'd lose if the company folded tomorrow, and what the public record says about the company itself.
When a deposit is reasonable
A deposit is usually fine when it's proportionate to the work (a fitted kitchen or bespoke manufacturing reasonably needs one; an off-the-shelf product usually doesn't), when the company has a track record you can see, years of trading, accounts filed on time, stable ownership, and when the amount is one you could absorb if the worst happened. A 10–25% deposit to an established firm for genuine upfront costs is ordinary business.
When to be cautious
Turn the caution up when you see any of these together: a large deposit (50% or more), a company that's very new, pressure to pay fast ("I can only hold the price / the slot until Friday"), a request to pay by bank transfer rather than card, or a mismatch between a slick sales pitch and a thin company record. None of these alone proves anything, but stacked together they're the shape of most deposit losses. And if the public record shows overdue accounts, a recent change of directors, or, worst of all, an insolvency or winding-up notice, treat the deposit request very differently.
How to protect the money
- Pay by card, not transfer. A credit or debit card gives you chargeback rights; a credit card adds Section 75 protection on purchases over £100. A bank transfer gives you almost nothing back if the company disappears.
- Keep it as small as they'll accept, and tie any further payments to delivery milestones you can verify.
- Get it in writing, what the deposit covers, the delivery date, and what happens if either side pulls out.
- Check the company first. Five minutes on the public record tells you whether this is an established firm or a brand-new company with overdue accounts, which completely changes how much deposit is sensible.
The decision, in one line
Pay a deposit that's proportionate, to a company that checks out, by a method that protects you, and never one so large that losing it would hurt. If the company doesn't check out, ask for less deposit, better payment protection, or work on completion instead. This is general guidance from the public record, not advice on your specific deal, the decision is yours.
Check the company before you decide
The single fastest way to know whether a deposit is a sensible risk is to see what the public record says about the company. Run a free check and get a plain safe / caution / avoid verdict with the reasons, before you commit a penny.
Deciding on a deposit? See the company's public record first.
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