(Art credit: Sisi Recht, "Growing")
Unlike a nine-to-five job, working as a freelancer means more financial turbulence – sometimes, clients don’t pay on time or disappear when bills have to be paid. That’s why, to ensure you keep your cash flow stable to pay for project expenses, receiving upfront payments is key to your success as a freelancer.
Some clients might not be happy to pay upfront, especially if they are working with you for the first time. However, there are a lot of ways you can motivate them to do it. Also, an upfront payment doesn't necessarily have to be the full amount of your fee. Before we dive deeper into the tips to help you get paid upfront, let’s first clarify what an upfront payment is.
What is an upfront payment?
Think of an upfront payment as a deposit. It can be the full project cost or just a fraction of it – for example, 20%. In both cases, a client pays it before you start a project. You can ask for an upfront payment before the project starts or whenever you have finished a milestone and are about to start working on the next one.
Create a good contract
Cooperate with a law firm to create a contract you can send to clients before you start working together. Specifying exactly how the work is performed, when payments are made, and when the client gets a refund is key to protecting your interests.
Most freelancers would avoid signing contracts as they want to start work right away and, as a result, get paid faster. However, without a good contract, your clients might not pay you at all. That’s why it is so important to have some (even the simplest) contract in place.
Before you enlist a lawyer to help with creating a contract draft, you should outline the main points you want to include in the contract. Make sure you include a mention about upfront payments – the deadlines for the payment, how it should be sent, and the situations in which upfront payment could be returned (refunded).
Set up recurring invoices
If you work with clients on a retainer basis and want to send recurring invoices upfront every month or so (depending on your arrangement with a client), use invoicing software. It will help you automate the tedious task of creating a similar invoice to the one you have created in the past and sending it to clients.
Also, you don’t have to remember about creating an invoice – the software will make it for you and send it to your client’s inbox automatically. So what’s the best invoicing app to use? There is no one answer, as your invoicing needs are unique.
To choose the right software, check out these invoicing apps. If you are using Wordpress and want to send invoicing directly from where you do work, check out this comparison of Wordpress invoice plugins.
Offer a Money-Back Guarantee
One of the most common reasons why clients don’t like paying upfront is the fear a freelancer won’t perform a service on time or the work outcome won’t satisfy them. To break through this fear, you can offer a money-back guarantee.
However, make sure you specify the exact situations when the return of funds is possible. For example, you would want to keep the money if there are just minor project mistakes that can be corrected. Offer a money-back guarantee only in the situations when your client is not satisfied at all and nothing can be done to make corrections or improve the results.
Send payment requests
Some payment services such as Payoneer make it easy for freelancers to send a payment request to clients. You can ask clients to pay in the preferred currency using their credit card, by making a local bank transfer, or via their Payoneer account.
By using this solution, you can also send reminders if your clients pass the payment deadline. Thanks to this solution, you spend less time requesting a payment and your client uses much less effort to send you the money.
Send an estimate
Before you start working with a client, send an estimate describing how much the service will cost. If you work on a per-hour basis, you can mention the number of hours you think will be needed to finish the project. If your preferred method of work is a flat fee, make sure you provide an estimate that is as accurate as possible and based on the project information you have managed to collect from your client.
By sending an estimate, you make it clear how much the client will pay in the end. Avoid being in a situation where you are communicating the full project cost after the project is over, as it can lead to arguments. It’s worth setting up the right expectations from the very beginning of your cooperation. Once the client accepts the estimate, you can send a request for an upfront payment.
Offer a discount
Another way to motivate your clients for upfront payments is offering a small discount. You could offer anywhere from 3% to 15% off (depending on your pricing policy) if clients opt to pay upfront for the project. Online invoice generators help you add discounts to a final price, as well a description of why you add such a discount and when a payment should be made.
What if your clients don’t agree to pay you upfront, no matter what incentives you create for them? Don’t give up! If you've just start working with a client and haven’t gained their trust yet, make sure your first project fulfills the requirements your client has set up.
If your clients don’t agree to pay upfront, you can build in a small extra sum to your final invoice to account for all costs related to borrowing money in those cases where you need to buy materials or any kind of app or software.
Getting paid upfront is beneficial for freelancers as it helps keep your cash flow stable and avoid situations when clients run away without paying you once the project is finished. It also gives a sense of safety that can help you focus on the project (instead of worrying of not being paid). However, clients won’t always want to pay upfront.
As a freelancer, you have to create the right incentives for clients to pay you before the project is finished. Remember, if they don’t work for you for any reason, don’t give up!