What would a bank ask about the deposits a cabinet installer collects ahead of jobs?
A bank will want to know how much customer money is held, whether it is kept apart, and what it has been spent on. Deposits taken for unfinished jobs are an obligation, not profit. Expect questions on how jobs are tracked and what happens if work is late or cancelled.
Prepare a schedule listing each deposit, the customer, the job and the expected start. Show how it appears in the books: as a liability until the work is done. A lender will check that income is not overstated by counting deposits early.
Explain how the money is used. If deposits pay for materials, say so and show the match. If they cover wages or old debts, the bank will see a company living off customer cash, which looks risky. A separate account can show discipline.
Describe your policy for delays and refunds. What happens if a supplier is late or a customer cancels? Show a record of how this has been handled. Add the pipeline view: how many jobs are booked, their timing, and the cash needed to complete them. Your accountant can prepare these schedules, and your lawyer can review the wording of your deposit terms. Deposits also matter in a sale. If the business is bought with deposits already collected, the work still has to be completed for those customers, so the seller and buyer need to agree who owns that duty and how the cash is handled at closing. Your lawyer and accountant should write that down clearly. A bank will want to see that plan before it lends against the business.
Key takeaways
- List every deposit against its job and start date.
- Show deposits as obligations until the work is done.
- Explain refund and delay practice with examples.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow a bank looks at your business
- 02Business Development Bank of CanadaGovernmentWhat are financial statements?
- 03Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
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