Advance payment before the start of renovation works is not a mistake, nor is it in itself a sign of an unreliable contractor.

On the contrary, in today’s renovation practice, an advance is common and often a necessary part of the agreement.

It is important to understand the context in which this practice developed.

During the early 2000s in Croatia, situations frequently occurred where contractors completed the work but investors did not fully pay them — or did not pay at all.

Such experiences led to the closure of many small and even larger contractors who were unable to collect payment for their work and materials. As a result, advance payments became one of the ways contractors protect themselves from financial risk.

However, although advances are justified, the way they are agreed upon and paid is extremely important to ensure that both parties are protected.

Advance Payments in Renovation Projects: Smart Practice or Real Risk?

In practice, this is most often a partial advance, which serves to:

  • purchase initial materials

  • reserve a time slot and workforce

  • cover initial organizational costs

A reasonable advance usually ranges between 10% and 40% of the total project value, depending on the scope of the renovation and the type of work.

Paying a larger amount upfront, especially without clearly defined terms and documentation, increases the risk for the investor.

The advance must be tied to a clear agreement

The most common mistake is not the advance itself, but an advance without clear conditions.

To avoid problems, it is important that the advance is:

  • clearly stated in the offer and contract

  • defined by a fixed amount or percentage

  • linked to a specific project phase (e.g. start of works, material procurement, etc.)

In this way, the advance stops being simply an “upfront payment” and becomes part of a structured process.

Payment Stages in Renovation Projects: Protection for Both Sides

One of the safest practices in renovation projects is stage-based payment, where part of the agreed amount is paid before the start of specific phases of work.

This approach means that:

  • the initial portion of the work is paid in advance

  • subsequent payments are tied to predefined construction phases

  • the final payment is made upon completion of all agreed works

This model ensures a clear, transparent, and predictable project flow, while maintaining a balance of interests for both contracting parties.

When Is an Advance Payment a Risk for Clients in Renovation Projects?

An advance payment can be risky in situations where:

  • the contractor has no verifiable references, past projects, or clear business history

  • there is no written contract defining scope of work, phases, deadlines, and payment terms

  • the advance amount is not proportional to the project scope or is not tied to a specific phase

  • the work schedule is not clearly defined, making progress impossible to track

  • materials, quantities, and specifications have not been agreed in advance

  • there is no clearly designated responsible person or project contact

  • payment is requested without any formal record (invoice or contractual documentation)

  • the contractor requires full advance payment before all work begins, without a staged structure

The risk does not stem from the advance itself, but from the lack of clear contractual relationships, transparency, and phased planning.

An advance in renovation projects is not a problem, but rather a tool which, when used properly, ensures a stable and fair relationship between investor and contractor.

The key to security lies in clear agreements, written documentation, and a structured payment schedule.

When expectations and obligations are clearly defined on both sides, an advance stops being a source of concern and becomes part of a professional renovation process.