How to Ask Upfront Payments from your Clients

How to Ask Upfront Payments from Your Clients the Right Way

As a freelancer – or any professional for that matter – there’s nothing worse than waiting for your clients to pay their invoice. We can all agree that it’s one of the most taxing moments that business owners and freelancers endure before they get paid. Besides putting your bills in pending, the feeling of getting short-changed is the worst thing ever. These are all real-life scenarios of doing business.

Fortunately, you can prevent that by taking measures and making sure you ask for an upfront payment from your customers. Asking for upfront payment can be daunting, especially if you’re not used to it. However, it’s going to be necessary if you want to get paid on time.

Why Charge for Upfront Payments?

You might be wondering why you should consider charging your products or services upfront for your business. The reason is to make sure that you get paid. Sure, sending invoices at the end of every project is standard. But sometimes it isn’t always a reliable option for running a successful business.

That’s why most business-to-consumer (B2C) brands charge upfront since people tend to be less trustworthy than business-to-business customers (B2B). However, keep in mind that this isn’t always the case. In fact, many small businesses are waiting as long as a month or two to be paid.
Looking from that angle; if the majority of clients wait this long, the cash flow of these companies will stagger. Eventually, the business will fail, as well.

Benefits of Upfront Payments

Upfront payments are great since it makes sure that money is coming to your pockets even before you start a project. This amount of assurance will give you the inspiration to provide quality work to your customers. Apart from that, here are other benefits that you can get when you ask your client for advance payment:

Keeps the cash flowing

The number one reason why you want your customers to pay you upfront is to make sure you have the money coming consistently. You can then you the funds you get to pay all of your expenses and overhead. This payment method is amazing, especially when you have a long-term project that may take weeks or months to complete. Instead of scrambling to pay your bills until your invoice is settled, you can get the funds you need to handle your expenses early on.

Covers out-of-pocket expenses

Keep in mind that some projects come with additional expenses such as the supplies, cost of materials, outsources or software that are needed to accomplish a project. While you’ll likely get reimbursement from out-of-pocket expenses, there are times when you won’t have the budget for it. With upfront payment, you will have the funds ready for you. But don’t forget to still ask for reimbursement after you’ve spent your hard-earned money on out-of-pocket expenses.

Prevents you from getting scammed

No feeling is worse than completing a project and not getting paid from your customers. With an upfront payment, you can make sure that you won’t get scammed by a client. You can ensure that the time and effort that you spent on a project will be compensated accordingly. In addition, asking customers for upfront payment will demonstrate true professionalism. It ensures that you can be trusted to deliver quality work on time.

How to Ask for Upfront Payment

The only solution to delayed or non-payment is to charge upfront. To help you out, let’s look at some of the ways you can adopt this method and start asking your client for upfront payment.

Simply Ask for It

If you want your customers to start paying you in advance, you should consider making changes in your payment terms. If you don’t have one yet, you can create one that outlines and details the requirement for advance payment. Many companies agree to either a Net 15 or Net 30. What this means is that they will give customers a period of either 15 or 30 days, respectively, to settle their accounts.

Instead of putting this, you can demand 100 percent of the payment before they receive the product or service. You can delete other details in your payment terms such as fees and other penalties for non-payment. That way, your customers will be compelled to pay you upfront.

Request for Partial Upfront Payments

While it’s amazing to have your customers pay you upfront, you should also consider the ones that don’t feel comfortable paying you in advance – particularly the ones that are working with you for the first time. If you force them, they might turn away. If you haven’t asked for upfront payments, some of your current clients may not want to switch over to it.

In this matter, you shouldn’t expect a 100 percent payment upfront. Instead, you should be a bit more flexible. For example, you can ask for a partial payment instead. It can either be as high as 50 percent or as low as 10 percent. However, it will depend on several factors:

  • Your customers
  • The price of your projects
  • Your relationships

Play it by ear and determine which payment terms work for both you and your clients. Keep in mind that the concept is to secure upfront payment so that your customers are invested and are more likely to follow through with the rest of the total amount that they owe you. With this method, they don’t have to commit fully upfront with a 100% advance payment.

Determine the Common Hesitations Your Clients Have

Again, while asking for upfront payment is great, some of your clients may not feel wary about it. So, it’s good to know why they will object to this idea. In most scenarios, it would be due to uncertainty – your clients don’t know if they can fully trust you. They’re not sure if you’re going to deliver the quality they desire after paying you either in partial or full.

Here are some ways that you can do to help your clients overcome their fear of upfront payments:

1. Breakdown the project into milestones

Give your customers peace of mind that they can oversee and approve the work as you go along. You can use ReliaBills to emails them the bills to your client each month or every time you achieve a milestone. You can then use an online payment platform like Stripe, PayPal, or TransferWise.

2. Use Escrow

Escrow allows your clients to put their money into an account that you can’t touch until the transaction is complete. This platform works well for both parties since you already know that your client can and will pay for your project once it’s complete. At the same time, your customers can also guarantee that their money is secured and that they’re also getting quality work from you.

3. Offer Social Proof

If you’ve done business with well-known customers (or many customers at this point), you can ease the worries of your new clients about upfront payment. Social proof is a great way to showcase your reputation, so make sure you utilize it to full effect when proposing the idea of upfront payment to your clients.

Don’t Deliver the Project Until Payment is Settled

This doesn’t work for all industries. But for the select some, you can request your customers to pay you before receiving the full project. In some cases, you can send half of the project or give them a progress report.

Once the client pays, they will receive the full project right away. Keep in mind that this arrangement can only work if you have clients who want to ensure that their requests are met before they pay you. This method will ensure that your payment is there even before handling over a project, reducing the risk of late or non-payment.

Use Electronic Invoices

By switching over to electronic billing, you can reduce a massive chunk of stress that surrounds getting paid for your hard work. With platforms like ReliaBills, you can email you invoices, send payment reminders, and get paid online – minus the hassle.

You also have the option to save contact details for your business and clients. Invoice-wise, there are a ton of templates that you can choose to personalize your invoices. All of these features make online invoicing convenient for you and your customers. ReliaBills lets you know which invoices are pending and which are already paid off.

You can automate your payment reminders so you won’t forget to send them out. It’s a great idea to send them reminders before you submit your invoice to your clients. That way, your customers are aware of the coming invoice and will pay you as soon as they receive it.

Wrapping Up

Asking for upfront payment can be challenging – especially if you haven’t done it before. But with the help of these tips that we shared, you can start incorporating this method to your business strategy. With this in place, you will be compensated consistently by your customers. As a result, your business will grow.

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