Why you should insist on a deposit

When I start a new project, especially if it’s with a new client, I insist on a deposit to start the work. Most of the time I get the deposit quickly and start the project. Recently I was asked why I insist on deposits, so I thought I’d jot down my reasons; perhaps this will help other self-employed professionals who are required to justify their deposits.

It’s all about trust

A successful project comes from a successful working relationship between the client and the service provider. When a new client engages me to design them a new website, they are placing their trust in me to deliver them a professional service. It may be a client’s first time engaging a self-employed professional and understandably they might be nervous about the provider’s ability to deliver.

Similarly, I’m placing my trust in the client: I want to know that I’m working with someone who takes their project seriously and who will provide me with the input I need to make their project a success. And of course, I need to know that they will pay me for my time.

So how do deposits help?

A deposit can help allay these fears on both sides:

  • Scheduling and Commitment: Clients who pay their deposit ensure that they get my time commitment on their project. If I don’t receive a deposit, then a project loses priority and drops to the bottom of my schedule.
  • Minimising Risks: Clients who pay a deposit show that they’re serious. I once worked on a project where I foolishly didn’t request a deposit: the client cancelled the project after I’d done a lot of work and I got no compensation. A prompt deposit payment reassures me that the client won’t bail out and leave me taking all the risk.
  • Cash-flow: Taking a deposit is simply good business sense. I can’t maintain cash-flow if I only charge at project completion, especially if projects overrun or payments arrive late. Early in my self-employment I worked on a few projects without deposits and went three months without receiving any money as they were all “pay upon completion”; not very clever, and now remedied. Deposits ensure I stay in business!
  • A better end product: When I receive up-front payment, it makes me happy. I’m happy because I know I’m working with a reliable client who’s serious about their project. When I’m happy, I do better work and this means a better website for the client and an improved working relationship.

Once I explain the above, most clients understand and are more than happy to pay the deposit to ensure they get my commitment. And for the clients who still don’t wish to pay, I politely decline the project: experience has shown that clients who quibble about deposits will usually have a big problem paying anything.

What are your experiences of handling the deposit conversation with your clients? I’d love to hear other perspectives, so please comment below.

3 thoughts on “Why you should insist on a deposit

  1. I completely agree with you in fact I have about 7 seven years working by myself and always those customer who say they want a sample first end buying nothing! Serious customers always ask for a deposit before you ask for it. No deposit, no work, but I’m sure some beginners will do a sample even if you tell them not to do it, it’s a novice common mistake.

  2. Good advice. I sell Real Estate and can not take a deposit, but some agents get a loyalty agreement from their clients. Basically means I will work only with you for finding a home. We spend a large amount of time on deals and buyer can walk anytime and you make nothing unless a home closes.

    Tough business.

    Excellent looking website, very clean. Keep up the good work.