Deposit and Payment Milestones

You complete a project. You invoice. You wait 30 days for payment.

Meanwhile, you've already paid your team and your expenses.

This cash flow problem kills agencies.

Smart payment terms solve it.

The Standard: 50/50 Payment

50% upfront when contract is signed.

50% on delivery.

This is standard for good reason:

• Client is motivated to start (they've paid)
• You have cash upfront for expenses
• Clear milestone

Works best for: 4-8 week projects

For Longer Projects: 33/33/34

33% upfront (contract signed)

33% at project midpoint

34% on delivery

This keeps cash flowing throughout the project.

Works best for: 10+ week projects

The Three-Stage Model

For complex projects:

• 25% Discovery (upfront)
• 35% Execution (mid-project)
• 40% Delivery (final)

This aligns with actual work and cash needs.

The Monthly Retainer Model

Monthly retainers are paid upfront each month.

"Invoice sent on the 25th. Due by month-end."

Or prepaid: "Pay for next month on the 20th of current month."

With retainers, you want payment received before work starts next month.

Net 30 Terms

"Payment due 30 days from invoice date."

This is normal for businesses.

But for agencies: You need faster.

Use Net 15 or Net 10 instead.

Or: "2% discount if paid within 10 days."

Example: $10k invoice becomes $9,800 if paid within 10 days.

Most clients take the discount.

Deposits and Red Flags

Always get a deposit before starting work.

50% deposit is standard.

If a client won't pay upfront, red flags:

• They might not pay later
• They're testing you
• They have cash flow problems

Require deposit before committing.

Late Payment Clause

Add to contracts:

"Payment is due by [date]. Late payment incurs 1.5% monthly interest. If unpaid after 30 days, work pauses until paid."

This incentivizes on-time payment.

And protects you if they're late.

The Difficult Client

Client delays payment. It's been 45 days. You need cash.

Options:

1. Call them. "Invoice is 45 days overdue. When can we expect payment?"

2. Send reminder. "Friendly reminder: Invoice 12345 is due. Here's the link to pay."

3. Formal notice. "Invoice is 60 days overdue. I'm pausing work until paid. Please remit payment by [date]."

4. Small claims. File in small claims court if amount is under $10k.

Most clients pay when you follow up. Some wait for pressure.

The Partial Payment Problem

Client says: "I can only pay $5k now, $5k next month."

This is risky. They might not pay the second installment.

Options:

1. Require full payment. "I need the full $10k upfront. I can't start work without it."

2. Milestone-based. "You pay $5k now. I deliver partial work. You pay $5k more for final work."

3. Net 15 terms. "I invoice you the full amount. Payment due in 15 days."

Option 1 is safest. But option 2 works if you want the client.

International Clients

If client is international, payment is harder.

Add a surcharge for payment processing:

"International clients: Add 3% for payment processing (Stripe, PayPal)."

Or require bank transfer only (cheaper than cards).

Retainer Payment Options

Monthly prepay: Client pays at beginning of month for that month's work.

Monthly arrears: Client pays at end of month for that month's work.

Auto-renew: Client is charged automatically each month (easiest).

Auto-renew is best if you can set it up (with client's explicit consent).

It reduces admin and improves cash flow.

Contract Language

Include this in every contract:

"Payment terms: 50% upon contract, 50% upon delivery.

All invoices are due [Net 10/15/30] from invoice date.

Late payment after 30 days incurs 1.5% monthly interest.

If payment is 30+ days late, all work pauses until paid."

This is clear and protects you.

Milestone Verification

For big projects, tie payment to milestone completion:

"$5k on discovery completion (March 15)

$5k on design approval (April 5)

$5k on development completion (May 1)"

This ensures both parties are happy before paying.

The Advance Payment Deposit

Some agencies require a non-refundable deposit.

"Deposit of $2k is required to reserve your start date. This goes toward your project fee."

Example: $10k project, $2k deposit. Client pays $2k, then $8k at delivery.

This secures their spot and reduces client flakiness.

FAQ

Can I require 100% upfront?

Only if you're very established or it's a small amount ($5k or less).

Most clients want some milestone-based payment.

What if a client has payment issues?

Ask for payment plan upfront. "Can you do 3 payments?" is better than discovering late they can't pay.

Should I use credit card or bank transfer?

Credit card: Higher fees (2-3%), faster processing.

Bank transfer: Lower fees, but slower (3-5 days).

For large amounts, offer both. Let client choose.

What if they want to pay partially?

Require them to sign acknowledging the payment is partial and work pauses until full payment.

Don't start work with unpaid balance.