The importance of a deposit
My first real article here is one for freelancers although if your a curious client feel free to read on. This is my advice to start up (and some established) freelancers regarding deposits and should provide information and insight into their importance.
It is fairly well established that freelance web designers love what they do, but most likely hate dealing with the money side of business. It seems to be the way with a lot of creative and media industry freelance types. I’ve known many photographers, sound engineers and designers that when pushed for a price on services will often seem awkward and out of their depth, which of course then makes it very hard for those people to then ask for some of that money up front. It is pretty essential to do this though for a lot of reasons as will become apparent as you read through my three key rules of getting a deposit.
Rule 1: Always ask for half up front
(and include any out-of-pocket expenses)
Always ask for half of what you have quoted as your deposit and don’t forget to add to that any software licenses, web space, stock photos and any other necessities. Some people are under the illusion that because we are professionals and freelance that we are well off, which is rarely the case.
There are two very good reasons to ask for half the money up front as a deposit. Firstly is because from getting a job agreed and signed off to getting the final invoice in is usually a fair amount of time, in between which you need to eat, pay rent and be able to socialise (providing you manage to wrestle the time for such things!). Getting half up front means you have some breathing space and you can relax into the job without the stress of feeling rushed to get that invoice in.
The second very good reason is that its a great method to gauge how your client sees you and how they handle their payments. If you have a client that drags their heels over a deposit, then chances are you have a client that will drag there heels when you put in your final invoice. Remember they’ll be a lot less keen to hurry your payment to you if you’ve already built a site and gone live, putting yourself in a position where you have to chase payment every day until it appears is no good for the soul. However if you’ve had a client pay promptly on a deposit you’ll likely find that they’ll be prompt on the final payment, they respected you and your work from the start and they should respect that still at the end.
Rule 2: Do not start work until the money has cleared in your account
This is an important one to stick too no matter how much deadline pressure is on you from the client, even if they’ve told you the cheque is in the post or that the bank transfer has been sent and should be “with you any day” wait for it to clear regardless. We’ve all heard these things from clients in the past to see nothing emerge, being steadfast on this rule negates the client being able to question trust which is always an awkward topic.
It’s not uncommon that a client may demand that the work be done for say two weeks into the future, if you waited for a deposit you would miss the deadline! So best get started then? No! If the client absolutely needs something that quickly then chances are they’ve made a gross error in planning which is not your fault. You can help, and you can pull out all the stops if they really need it but don’t start until the money is there. If they really need done quickly, the money will appear quickly otherwise you need to explain why the deadline can’t be met. If you fill them in on a realistic time frame they’ll most likely be understanding, and if they aren’t then ask yourself if they are clients you really want to deal with.
Rule 3: Make no exceptions to friends or family
If a friend or family member wants a website and that’s what we love to do then its only natural that you want to help them but you have to be careful. Its a job like any other and it can be tricky enough to give them a quote without feeling awkward. Once your over that hurdle though you should insist on the same conditions as your other clients. If you take a moment to explain it to them your friends and family shouldn’t be put out by the request of a deposit, especially when they realise it can be the difference between waiting a couple of weeks or six months for a site as you have to put it on the back burner so you can pay your bills through other work. Theirs is valid work which makes them valid clients, if they don’t see why you need a deposit up front then tactfully decline the work because work is no reason to lose a friend or break down a family relationship.
Don’t learn the hard way
I recently took on a job contracted to me by a friend and fellow professional who has been working in the industry much longer then myself and knows his stuff to say the least. With the promise of more work in the future this job was the litmus test. I booked the job into my calendar and dived straight in as soon as I got the news that the job had been signed off and the deposit cheque was on the way. Three weeks later I was running on the fumes of my bank balance and being kept in food by my immensely supportive and understanding girlfriend. The money still hadn’t appeared and I had to put the job on hold. What’s more I asked for less then half for the deposit meaning that at the time I was unsure if I had just wasted three weeks of income, but knew that if the money did show I would still be in for some rough times financially while waiting for the final payment due to the time investment.
Yes… I broke all three rules and although it inspired my blog post, my stress levels hit the roof and my work suffered for it. When I told my friend who contracted me the work that next time I would be waiting until the deposit cleared in my account before starting and that I wanted half up front he was so accepting of it that I realised having I said that from the start he would have been fine with it, and that would have saved me a lot of hassle.
Final words of wisdom
Making these rules policy and allowing no exceptions will make it a lot easier to enforce them and if people don’t understand then take the time to explain it to them, they are human and being honest with them should provide a positive response. If they still don’t understand you may be dealing with a client that as promising as they may seem may not be someone you want to deal with. In other words, a deposit keeps you sane, fed and free of troublesome clients.
Wait… your wrong!
I hope you’ve enjoyed this article and that its been of use to you. If you disagree however with any points or have anything to add I’d love to hear your thoughts, so please leave a comment!
In theory getting a deposit is an excellent practice. In most cases I would agree with you, in some cases, where the company you are offering to work for will in the long run be more beneficial to your future contracts a deposit is not always possible as the request for one will result in a decline of work. Then I guess you just have to use common sense, do some background on the company on their paying history and decide if it is worth the hassle for the added benefits and “foot in the door” opportunity.
Great article though, made me really make a push toward deposit based business.
D
I think its worth the risk (of having your request declined) to be up front and ask, their response can be a great way to tell in what regard they hold you and if they are going to be troublesome in the future.
A lot of the time if you’ve had the chance to lay the groundwork and discuss the job with them they should be happy to pay something up front if a formal agreement can be put in place. I’ve not yet ventured into the larger corporate world myself but dealing with smaller companies they’ll be happy to pay if they are confident with what you’ve proposed; If they are not then they’ll be trouble. With an agreement in place you’ll find the thirty day invoice period will suddenly shorten if they want you.
All that said it will depend on the nature of your profession and who you are approaching for work. For instance if you ended up doing work for say Coca Cola, Apple or Buckingham Palace chances are the system isn’t very flexible, but would be reliable. In this case from a freelancing position they’d be awesome clients to have, they’d pay but it would be hard to get them to change their terms. It would be a big leap and a likely risk worth taking, just be sure to have enough in the savings to keep you going through the job and the invoicing period but I’d still say don’t be afraid to ask for a deposit! If that makes them drop you straight out then they won’t be worth the stress they’ll cause.