Consulting and freelance deposits

Setting your consulting fees is one thing, but do you ask clients to make a deposit when they hire you? Asking for a deposit poses several benefits.

Benefits of a deposit

  • May help provide legal proof that you’ve entered a contract — money or "consideration" has changed hands
  • Reminds the client that they’ve entered a binding contract
  • Scares off some people who had no intention of ever paying you
  • Ensures you’ll receive at least something, if the client disappears without paying
  • Improves your cash flow situation, so you can pay your bills while you’re doing the work
  • Protects you if a client decides to cancel the contract before you start — when you’ve already turned away other paying work
  • Reduces the amount of credit you’re extending to the client
  • Allows the client to spread payments over a period of time
  • Provides some money for you to pay subcontractors and third parties

Professionals expect deposits from their clients. Don’t be embarrassed to ask for money upfront.

Related to deposits

275 thoughts on “Consulting and freelance deposits”

  1. I definitely agree with requiring a deposit for new customers. If they flake and refuse to pay the balance, at least you will have your deposit. I make exceptions for repeat clients and well-known organizations with a good reputation for paying.

  2. In Spain it is normal to ask for 40% in the beginning and 60% when you hand in the report or project. Sometimes a rule like this 30%(beginning)+30%(darft)+40%(end) is applied

  3. A great point is that transfer of payment equates to a confirmed contractual agreement. I also agree with giving existing clients and some large corporations a “pass” on the deposit too.

    Great post!

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