Freelancers: Should You Ask For a Down Payment?
<p><em>What is one of the greatest fears of freelancers or self-employed workers? Our answer: not being paid. It is very frustrating to fight to get a payment, especially when you sent everything and respected all their conditions. What can you do to increase your chances of being paid in time? Why not ask for a down payment?</em></p> <p></p> <h3><strong>What is a down payment?</strong></h3> <p>What is a down payment exactly, and how can it help you have a clear conscience? A down payment is simply a partial payment on an amount to pay. In other terms, before starting working on a new project, you ask for a percentage of the total amount.</p> <p>How many times did we read freelancers’ stories about not being paid? Unfortunately, it seems to be a recurring problem. We understand that some self-employed workers can be reluctant to ask for a down payment before starting a new project, especially if it is a new client; however, note that it is a widespread practice. It can be relevant if it is a project that will last many weeks. It can also be interesting for your new client because they will not have to pay a considerable amount at the end, but smaller payments along the way. A down payment can also be used to pay for the necessary materials for the project. In sum, when you ask for a down payment, you can look more credible and you protect yourself. </p> <h3><strong>But what if my client refuses?</strong></h3> <p>If a client refuses to pay a down payment, remember that it is a red flag. It can mean that they are a bad payer or that they are not professional. You will then avoid many problems by testing your new client with a down payment before starting working. Be firm and keep your position even if it can sound intimidating. Indeed, it is your business; therefore, it is your rules that count. Sometimes, it is better to refuse a project when we are not 100% sure that we will get paid at the end. Listen to your instinct, and do not hesitate to talk with other freelancers if needed. </p> <h3><strong>How much should I ask before starting working?</strong></h3> <p>Now that you know how useful down payments can be, what about the amount to ask for? How many payments? Once more, it depends on the project and your relationship with your clients. Some ask for 10%, 25%, 30%, and even 50% before starting working. Tell yourself that the busier you are, the higher the down payment should be. Some freelancers ask for 30% at the beginning, 30% along the way, and 40% at the end. Others prefer two payments of 50%. It is up to you to decide whether option is best for you, but keep in mind that you will have to send and manage invoices each time you ask for a payment.</p> <p>On another matter, how many payments should you ask for? We say it depends on the length. If it is a short project, you can ask for a down payment before starting working and another one at the end. If it is a project that will last an entire year, why not separate the costs quarterly? You then ensure to have an income along the way instead of waiting on a big amount at the end. It is something to think about. Also, <a href="https://pige.quebec/blog/pourquoi-demander-un-acompte-a-vos-clients-pourrait-vous-sauver-la-vie-ou-presque/" target="_blank">Christine from Pige Québec</a> explained that it could be more relevant to ask for a down payment for projects of more than $1000.</p> <h3><strong>Reminder: Mention it in your contract of services</strong></h3> <p>In order to avoid misunderstandings, it is strongly recommended to note down everything regarding down payments and payments in <a href="https://www.momenteo.com/blog/the-importance-of-having-a-good-contract-of-services" target="_blank">a contract of services</a>. Indeed, the payment terms are a subject that must be discussed with your potential clients. And since memories fade and promises can be forgotten, write down everything in a contract. Then, make sure it is read and signed by your client. This way, your client will know how much and when they need to pay you. Moreover, if this person decides not to pay you, you will have an official document that will prove the business relationship. If you need to go to court, you will then have a step ahead.</p> <p>A contract of services should also include a complete description of the service and the delivery, the questions about the intellectual property, and the contract termination terms. In summary, a contract of services can protect you even more than a down payment!</p> <p>In conclusion, a down payment may not solve all your problems, but it will increase your chances of getting paid. As bad payers can be everywhere, here are <a href="https://www.momenteo.com/blog/9-tips-get-paid-time" target="_blank">9 tips to get paid on time</a>. Do not forget that you can always send a formal notice to start the legal process if nothing works. Do not give up! </p> <p><br /> <br /> <br /> </p>