There are many benefits to working as a freelancer, including the ability to work remotely and to choose your own schedule to fit in with other commitments. It’s no wonder that many people are choosing to go freelance, particularly since the COVID-19 pandemic has pushed employees to reconsider their working conditions and priorities.
However, there are a number of responsibilities that freelancers need to take on, such as filling in self-assessment tax forms, filing your own expenses and invoicing. This also means that you are responsible for making sure that you get paid on time, which can be a challenge when you’re dealing with unfamiliar clients. Keep reading to find out how to ask for upfront payments and why this is important.
What is upfront payment?
Before going into the details of why you need to ask for them, it’s important to answer the question: “what is upfront payment?” Basically, this refers to a situation where a freelancer receives payment for their work before actually delivering it.
This could be a full payment upfront, or may also be a partial payment in the form of a deposit. Often, a partial deposit is enough to secure the job, but for smaller tasks it might make more sense to request full payment in advance.
Upfront cash payments offer freelancers security
Of course, the most obvious reason for asking for payment upfront is to ensure that you actually get paid. It’s relatively uncommon for freelancers to not be paid for a job, and in this case you can pursue legal action. However, it is possible that you will be waiting for a long time before actually receiving payment, with many small businesses being forced to wait up to 72 days for a late payment.
As a freelancer, this can have an impact on both your business and personal cash flow. So, by receiving payment upfront, you can avoid the possibility of late payments.
Payment upfront can test the suitability of new clients
When you ask for upfront payment, this can serve as a kind of test for new clients. If the client is perfectly willing to pay a deposit, then you can feel comfortable in the knowledge that they are aware of standard practices for freelancers.
However, if they are unwilling to make a deposit before you complete any work, it could be an indication that they are not used to dealing with freelancers or perhaps even that they do not intend to pay at all.
In addition, once they have invested money in upfront cash payments, clients are more likely to be engaged with the project. You’re likely to receive faster responses to any queries and therefore a smoother overall process, helping you to finish the project on time.
How to ask for upfront payments
Put simply – if you don’t ask for payment upfront, then you won’t receive it. While some clients might be unwilling to do this, it’s always worth asking. Make sure to use a professional approach and be clear in your reasons for asking for an upfront payment, citing the importance of security for freelancers and the improved client relationship that this can encourage.
When you ask for an upfront payment, it’s also essential that you are clear about the terms of this. Are you asking for a full payment? Or just a deposit? Deposits may be as low as 10% of the overall price, or may go up to around 50% of payment. Be prepared to be flexible with this so that you can find an option that works for both you and the client.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.