Why you should insist on a deposit
Many freelancers early in their career get burned by clients not paying them. Often they’ve not put a contract in place and they didn’t ask for a deposit to start the work. Here are some reasons why you should always insist on a deposit for any project.
It’s not about trust
Clients place their trust in you to deliver them a professional service. It may be their first time engaging a self-employed professional and understandably they might be nervous about your ability to deliver.
Similarly, you’re placing your trust in the client: you want to know that you’re working with someone who takes their project seriously and who’ll provide you with the input you need to make their project a success. And of course, you need to know that they will pay you for your time.
Trust is important in this working relationship, but trust is not enough to do business with someone. You can’t immediately trust someone you don’t know, things can go wrong, and you need to ensure you’re covered. Taking a deposit does not signify a lack of trust: it’s a business transaction that’s part of your contract, and it sets the right tone for the working relationship.
How do deposits help?
Scheduling and commitment
Clients who pay their deposit ensure that they get my time commitment on their project. If I don’t receive a deposit, then a project loses priority and drops to the bottom of my schedule.
Minimising risks
Clients who pay a deposit show that they’re serious. I once worked on a project where I foolishly didn’t request a deposit: the client cancelled the project after I’d done a lot of work and I got no compensation. A prompt deposit payment reassures me that the client won’t bail out and leave me taking all the risk.
Cash flow
Taking a deposit is simply good business sense. I can’t maintain cash-flow if I only charge at project completion, especially if projects overrun or payments arrive late. Early in my self-employment I worked on a few projects without deposits and went three months without receiving any money as they were all “pay upon completion”; not very clever!
A better end product
When I receive up-front payment, it makes me happy. I’m happy because I know I’m working with a reliable client who’s serious about their project. When I’m happy, I do better work and this means a better website for the client and an improved working relationship.
It helps qualify the prospect
You can’t always tell if a client is going to be good to work with, and asking for a deposit may give you some insight into a client’s mindset. My experience has shown that clients who quibble about deposits will usually have a big problem paying anything. Needless to say, you don’t want those types of clients.
Final thoughts
Once I explain the above, most clients understand and are more than happy to pay the deposit to ensure they get my commitment. And for clients who still don’t wish to pay a deposit, I politely decline the project.
What are your experiences of handling the deposit conversation with your clients?
* Note that if you do a lot of different work for one client over a long period, deposits for every job may not be appropriate. Adjust your process for long-term clients if necessary, perhaps with a retainer agreement or similar.