How Freelancers Get Deposits (Let’s ask them)
I wrote why you should Start Every Project With a Deposit and how deposits can help you Manage Your Cashflow and Make Your Income More Predictable.
Let’s find out how some freelancers get deposits for their work.
Michelle Garrett @PRisUs
Everyone in the Twitter marketing, writing, and content community knows Michelle Garrett, for her helpful tips and running the popular #FreelanceChat every Thursday at noon EST. (Put it in your calendar; it’s always worthwhile)
Also, take a moment to see Michelle’s website. This is a perfect example of what goes on this type of site. Lots to learn here.
I Asked Michelle How Long She Had Been Freelancing Before She Collected Deposits
“(I started asking for deposits) in the past few years. I billed at the end of projects for YEARS without a problem—then BAM! I have been stiffed several times in the past. It has happened with first-time clients and also with clients I have done business with for years.”
What Are Client Reactions When Michelle Asks For A Deposit?
“I have experienced clients reacting to that news—then once I explain, they understand. But if it feels at all shady, I would decline.
There are no good excuses on the client’s end for not being able to pay in advance and/or in a timely manner. With all the systems in place to transfer funds, it should be easy to get that taken care of. It should be a PRIORITY on the client’s end. I’d say that if it’s not, they may not be a client you want to work with.”
How Does Michelle Bring Up The Subject Of The Deposit With New Clients?
“When we get to the point that they’re ready to sign a consulting agreement, I let them know that I’m sending an invoice along with it for either the first month’s retainer fee or half the project fee. Sometimes a client will bring it up during our discussions, at which point I’ll explain my policy.”
Are You Afraid To Ask For A Deposit? Here Are Michelle’s Thoughts On That
“Freelancers shouldn’t feel bad about asking about payments—when, how, etc. That’s a mistake I made as a newer freelancer. I would feel it was wrong to ask when I would be paid, how I would be paid, etc. But you are running a business and should not feel at all badly about asking those questions.”
Andrew Hoyer @andrewhoyer
For the past 12 years, Andrew has been a freelance web developer focused on WordPress and iOS development. On Twitter, Andrew drops pearls of wisdom like this one, “We’re entering the ‘everything can’t be free’ phase of the digital age.” I think he’s right.
The best place to learn more about Andrew, his services, and samples of his work is on his GitHub account.
How Long Has Andrew Been Collecting Deposits?
“I just looked back at my oldest invoices, my first real freelancing software development project, and I see that I did it in two payments—half up front and half at the end.
Before this, I was using freelance sites to bid on jobs. But as soon as I started getting my own projects, I realized the need to get paid some upfront. It just felt like the right thing to do. Maybe I didn’t know any different and, as a result, had no concerns about asking for it. And the client was totally happy to do it, and that set the pattern from day 1.”
Note: Read that again. From day 1 as a freelancer, Andrew collected deposits. What are you waiting for?
Collecting Deposits Works With Agency Jobs Too. Here’s Andrew…
“These days, I have a very clear process with clients and agencies I work with. The agencies definitely do this, so as a subcontractor for those jobs, I fit right into their process.
Most often, we’ll do 1/3 up front, 1/3 once the bulk of the work is done, and 1/3 at launch.
This method has worked well. The client shows they are serious about a project by making an up-front payment.”
Note: Andrew’s observation about how deposits get clients serious about projects is important. That alone is a great reason to get a deposit.
Once You Collect A Deposit, You’ve Got To Get To Work
Andrew’s further thoughts on deposits: “A deposit puts responsibility on the freelancer to get to work quickly.
By the end of the project, there’s a little more risk that the client won’t pay the final invoice, but this has never happened to me in 12 years. If the client pays the up-front part, they always pay the last one. The only exception to that is when a project gets canceled partway through. And in those cases, because I already have the initial payment, it at least covers my initial time investment into the project.”
Note: That’s a huge reason to get a deposit. What if the project dies early? At least you got some payment.
Why Some Freelancers Aren’t Successful Getting Deposits
“As for why some freelancers aren’t successful in getting clients to agree to a payment plan, I have a few ideas:
It could be the type of client. I’ve worked with mostly small businesses and individuals. It’s possible that big companies, governments, or other organizations with strict rules might not be able to do this.
The payment breakdown. I think 50% upfront is a lot. I prefer three payments of 1/3 at the start, 1/3 in the middle somewhere, and the last 1/3 at the end. I’ve done 1/4 payments, which also works, although if the project is too small, you end up doing more admin work than needed.
Maybe there are confidence or trust issues. I’m not sure if I’ve done something special in this way, but when you’re dealing with a new client, there certainly needs to be a reasonable level of confidence right from the initial contact.”
Karen Carps @GuppyFishWeb
For over 13 years, GuppyFish Web Design has helped clients develop a profitable online presence. That includes web design, search engine optimization, marketing automation, content marketing, and social media.
Karen has been getting deposits for many years from all types of clients.
How And Why Did Karen Start Asking For Deposits?
“It was pretty early on. Like many newbies, I started with low-level clients who would sometimes ghost me a little way through the project, and I’d have nothing to show for it.
I started asking for deposits within the first two years of business.”
How Does Karen Approach Asking For Deposits?
“When I send over a proposal and a contract for their review, it always indicates the deposit amount. The contract states that work will not begin on the project until I receive the signed contract, SOW, and deposit in full. Once they sign the contract, I send an invoice for the deposit amount.”
Note: See how straightforward that is? The deposit is part of Karen’s terms and conditions.
Is There Ever Pushback?
“I don’t recall ever getting pushback. If you just state it as a condition of the contract, people accept it the way it is. I especially don’t see pushback now that I have much higher-end, better-established clients.”
Does Karen Have Different Terms For Various Clients, Or Are They Consistent?
“Terms are pretty consistent across the board. A non-profit client may have a smaller deposit, and some clients (either that I know or who were referred by someone I trust) may be able to pay for their project in installments, but they still have that deposit.”
Note: There may be slight variations in the terms, but when it comes to the deposit, it’s non-negotiable.
Karen’s Straight-Forward Suggestions For Freelancers Who Want To Get Deposits
“Start collecting deposits... now. For your next project, include it in the contract or terms as though it’s something you’ve always done. That client doesn’t need to know they’re the first one.
Don’t make a big deal about it... just include it.”
How Does Karen Use Automation In a New Prospect Situation?
“I have most of my client processes automated. When someone is interested, I apply a tag in ConvertKit that gets everything started.
The person has to fill out a short form. Depending on the answers on that form, they receive either a link to my calendar or a very kind ‘I don’t think we’re a good fit’ email.
The short form is non-negotiable. I’ve found that those unwilling to do that will not be good about getting me deliverables or following through with what I ask them to do during the project.
I also use automation to prepare for that initial meeting, onboard the client and wrap up the project. It’s been one of the best things I’ve done in my business.”
Note: It sounds like automation has made Karen’s business much more efficient. You might want to ask her about that.
Freelancers and agency owners, you can learn more about managing your money in my books.
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Andy's book has changed the way I run my business and I'm more successful for it already. I've landed two great new clients since I've read through it. I manage my time more efficiently. As Andy explains, you don't need to read every chapter and I didn't. But the chapters I did read (and there were many) have been read multiple times, highlighted, and dog-eared. This book is on my desk and referenced almost daily.
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