Guest Blog: Asking for payment in advance
Alison Wren, Owner of Paprika Marketing, sums up the challenges and opportunities associated with asking for payment up front and how it works for her business.
Asking for payment in advance
When I started my marketing consultancy in 2011 I had no experience of selling business services. My previous business was ecommerce – customers paid the money and we sent the goods. Simple.
So before I launched Paprika Marketing I spent some time researching best practice for freelancers like myself. And pretty much everyone said the same thing – get some money up-front.
What I do
When I start working with a new client I always ask for at least some payment before I begin work.
If it’s a one-off strategy session or training course I’ll ask for 100% before the day.
If it’s a bigger chunk of work like an ecommerce site audit, then I’ll request 50% in advance with 50% payable on completion.
For regular retainer type work like Adwords management I’ll ask for the first month in advance before moving to a 14 day (i.e. mid-month) payment date.
With my initial invoice I also send a short agreement covering what I will deliver and the payment terms.
How it works for me
I have never had anyone object to this.
In fact, when offered 2 instalments, several have asked to pay everything up front in a single payment.
I have had a couple of potential clients who agreed verbally to start the project but then changed their minds. But that’s cool –it’s better to find out now rather than several hours work later.
Why it works for me
Like so many people, I hate talking about money. So getting the conversation out of the way early is a big help.
I work mainly with small businesses – some of them very small. So, of course, money is tight. And some, particularly start-ups, don’t have any. Others may not be 100% committed to the project and when forced to think about actually paying for it, start to waver.
It’s good to weed these out before they take up too much time and energy.
You also start to develop an instinct for the iffy payers. I’ve had one or two of these – companies who managed the initial payment fine but when it came to the regular monthly invoice were quite happy to leave it unpaid. We all know how frustrating that can be.
Attitudes are changing
During my 7 years in ecommerce I noticed that even wholesalers were moving away from the standard 30 day accounts and moving to payment with order (my credit card got plenty of exercise).
So don’t think you must stick to invoicing on completion and offering 30 day terms just because it’s traditional.
If you are thinking about changing your payment terms and asking for a deposit or full payment in advance, I’d say just go for it. It’s not just your bank balance but your peace of mind that will benefit.
Alison Wren escaped corporate life to create ecommerce business The Wedding Crafter in 2004, growing it from back bedroom start-up until selling in Spring 2011. She now runs Paprika Marketing, creating and implementing effective online strategies for small business. You can follow Alison on Twitter @PaprikaMktg