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.