Getting paid before the project is finished

Thanks to everyone who attended yesterday’s webcast (part 2 of 3), How to Talk About Money with Clients, (you can still sign up to watch it on demand or watch the “trailer” here).

In it, I shared lots of language you can experiment with when answering questions like, “What’s your hourly rate?” or “How much is a logo?” and what to say when a payment is late — a pretty common occurrence these days.

Here’s one example that many people seemed to appreciate: what to say when the project isn’t quite finished but you want to submit your invoice because you know it will take a while to get your money or just because you’re in the midst of a cash flow crunch.

I suggested something along the lines of, “We’re winding down and here’s what’s left to do: [list the details]. I’d like to get the final invoice into your system. Does that work on your end?

Have you tried this and how has it worked? Do you have any more suggestions for this situation?

2 thoughts on “Getting paid before the project is finished

  1. Alisa Bonsignore

    I structure all of my contracts so that the final payment is due at the completion of the project or on X date (usually 2-4 weeks past the target deadline), whichever comes first. I’ve had many occasions where I’ve been able to say, “I know that we still have work to do, but per the terms of my contract, I’ll be invoicing for the final installment on Thursday.” It’s nice to have agreed-upon terms to fall back on.

  2. Carly Franklin

    As Alisa suggested, I think the key to handling this situation successfully lies in the contract language you include at the outset of the project.

    Early in my career, I dealt with several projects where I collected 50% up front for a deposit, but the completion was then dragged out for a long time. With nearly all the work completed, you’re left in the lurch for 40% or more of your fee waiting for a few small items from a client to finish and invoice.

    My contracts have long since included terms that state I will collect 50% as a deposit and then will issue invoices monthly for the portion of the project which is complete in excess of the deposit. Though I rarely issue those interim invoices (preferring to collect a larger amount upon completion), it does give you the right to bill most of the balance if a project is nearly done and being dragged out. It’s a vulnerable position to have your income tied up waiting on someone else to act.

    Further protection I include in my contract language states that deposits and other payments remitted are non-refundable and may not be applied to any other project than that for which it was originally intended. This keeps a client from being able to ask for their money back if they change their mind for any reason and you’ve already put time into a project. I implemented this after having a client decide to put a project on hold pending the outcome of a trademark application and subsequently requesting a refund of their deposit – after I’d spent time helping them come up with the very name they submitted for trademark!

    I didn’t refund the deposit – after all, that is my income and was already spoken for in the form of bills and expenses of operating my business. It caused some waves, but we got through it as the client was also a friend which, I suspect, is why they felt it was OK to ask for the money back until the trademark was complete.

    The moral of the story is that, as the saying goes, an ounce of prevention is worth a pound of cure. Protect yourself up front with solid contract language and you’ll ave yourself a lot of potential grief in the long run.

    Good luck!

    Carly H. Franklin
    Principal
    CFX Creative / BOOST Social Media
    @carlyfranklin / @cfxcreative / @gimmeaboost

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