Charging upfront can be uncomfortable, but it doesn’t have to be! Learn how to handle upfront payments professionally and stress-free.
March 12, 2025
March 13, 2025
Have you ever wondered how you can improve cash flow, reduce financial risks, and build committed relationships with clients as a small business? The answer is simple — ask for upfront payments.
Requesting to get paid as a freelancer should be done with strategy and tact. Explore pros and cons of upfront payments, various payment structures from deposits to retainer fees, and practical expert tips in today’s article.
It may seem like there can be no disadvantages to upfront payments, but it’s not all sunshine and rainbows. Before making a big decision, check which cons you may potentially have to deal with.
Keep in mind asking for upfront payments is just one of the ways to improve cash flow.
Consider these pros and cons before switching to an upfront payment policy. In most cases, however, it is still worth implementing. By the way, I’m covering the ways of overcoming the cons later in the article. Now, let’s see what types of prepayments there are.
There are essentially four major upfront payment structures:
This first partial payment can be also in the form of a deposit — a non-refundable amount a freelancer charges before starting the work.
Moving to the next stage means the client is happy with the work you provided so far. Charging per milestone safeguards you from constant tiny edits some customers like to overindulge in.
As you can see, the payment model depends on various factors, including the industry you’re in and the project scope. Many professionals offer several upfront payment options for clients to choose from.
It’s a good idea to see how others charge upfront before introducing this practice to your own business. Our expert Gabrielle Seaton runs her own agency, NextTech Recruitment, sourcing niche IT talents globally. She shared her way of doing it: always have a personalized approach by giving clients several payment options.
When agreeing on terms with a new or existing client, I first assess their needs. For example, I determine how many positions they are looking to hire. Then, I quote my terms — let’s say 20% of the candidate’s annual remuneration. Of this fee, 50% is paid upfront to commence the search. And they pay the remaining 50% iupon a successful hire. This final payment could be due when the contract is signed or when the candidate starts work.
It's important to tailor your services depending on the client and their needs. If they are looking to hire 10x people, I suggest asking for a payment upfront to show their commitment to hiring, engage, and cover any recruitment fees, etc.
I usually give the client some options to show that this would be the best scenario for both sides. It ensures the recruiter will be paid at least 50% of the fee for their time if the role does not end in a successful hire or the client changes direction. It also creates a buy-in from the client side to hire as they have invested in the process already – plus, it doesn't cost them anything extra.
Here is an example of some options I’ve recently sent to an existing client when they asked me to work on some new positions:
Option 1 - Day Rate
Day rate of €580 per day
We can cap the days so I do not work more than €5,000 per month (or whatever budget you set)
Option 2 - Retained/Fixed Fee
Fixed fee with 50% of the fee invoiced to commence the search, and the remaining 50% invoiced upon a successful hire start date
For standard roles (Junior-Mid level) €5,000 per hire
For senior/manager level hires €7,500 per hire
Option 3 - Contingency %
20% of the candidates' annual remuneration (any role/seniority).
They had a limited budget but urgently needed to fill several key positions in their team. We decided to re-negotiate our agreement as we had previously worked on both Option 1 and Option 3, but felt neither were the right fit for both sides. Option 1 was becoming more costly for the client, and Option 3 did not work for me as they often switched priority of their most urgent positions, meaning much of the work I did wouldn't result in a successful hire, or would take a longer time than preferred for both sides.
{{Gabrielle Seaton}}
Staying open to negotiation shows your clients you care about them and helps build a stronger relationship. When you already have an established base of regulars, asking for an upfront payment can be pretty straightforward. But what if you’re just getting started?
Even if you're a small business working towards a stable client base, agreeing to unfavourable and unsafe terms should be a no go. Here are some tactics you can implement to start charging upfront:
If you have old clients and want to switch to upfront payments, notify them at least a month in advance — this way you can keep your relationship transparent and maintain trust.
Once I settle on the specifics, I make sure to document the payment terms in my contract. The contract clause includes:
– When the payment is due
– The amount due (whether it’s a full or partial payment). For partial payments, when the remainder is due—and on what terms
– When and how the payment qualifies for a credit or refund
– How payment is accepted (direct deposit, check, credit card, online payment, etc.)
{{Essea Fayangcao}}
Even a simple contract is better than none — not only does it protect your work but it can also motivate your clients to pay upfront. There are many free templates online you can use to draft your own contract.
You can find clauses to put on your contracts in online resources such as Law Insider or Gavel.io.
Most customers try to avoid upfront payments because they’re worried they won’t get their money back if the work isn’t done up to their standard. A good contract will detail all the circumstances when a refund is necessary, protecting both parties.
Investing in invoicing software can significantly reduce the administrative burden.
Even if you haven’t positioned yourself as a reliable service provider yet, charging a small deposit can be a good start. Asking for upfront payments is a standard business practice. Show your clients you’re trustworthy and provide all the tools necessary to make the process as clear and simple as possible. By charging in advance, you’ll be able to concentrate on delivering great results instead of chasing payments.
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