How to Negotiate Upfront Payments in Your Contracts

By Lilou Hoffman

Do you know what can be the worst feeling of being a freelancer? It is most discouraging when a freelancer is not paid for his or her work. This could happen for various reasons, such as working with a new client, or not having a binding contract. One of the ways to avoid this is to get clients to pay you upfront.

In most cases, this is in the form of a deposit with the rest being paid on completion. Some form of upfront payment is beneficial to both parties. However, good negotiation skills are required to make this happen.

When you work on a long-term project, asking for a deposit upfront guarantees that you have enough money to cover your monthly overheads. When you don’t have to struggle for covering out-of-pocket expenses, such as materials and outsourcing, you can focus on providing excellent product quality and service.

It’s not always easy to ask for payment upfront and if all your clients see is another expense, they may just walk away. This means you have to find other ways to reframe your fee as an investment in their success. Here are some keys to make negotiating with buyers for upfront payment easier.

Present a Professional Image

You have to be your own PR agent. If clients do some research on you prior to hiring, what will they see? You should come across as a reliable, competent professional. It’s a simple way to build trust and make them more likely to be happy about making an upfront payment.

Prospective clients want to see samples of vendors’ work, plus testimonials. Clients may even view your LinkedIn profile, so make sure it is up to date. Check to see that your other social media accounts give the right impression.

Know Your Worth

If you’ve attended any negotiation training, you will know you need to approach a client with a clear understanding of what your services are worth. Many of us undervalue our real worth because we lack confidence.

We’re often tempted to negotiate and offer a lower fee just to win a client more quickly. Show clients you’re not prepared to drop your prices or settle for invoicing after the job – because you provide a premium service. Many clients do not mind paying upfront when they appreciate the value they will receive.

You should never apologize for what you charge, own it. Even if a client balks at first, you can use your knowledge of the value you offer to make working with you a desirable prospect.

Decide What a Job Is Worth Ahead of Time

Clients don’t want to receive an invoice on completion of a job that is much higher than what they expected to pay. They are much more comfortable if they know exactly what they’ll have to pay ahead of time.

Charging a set fee per project means both parties are clear about what to expect. You won’t feel you are being short-changed and the client won’t feel as though the costs keep rising.

Once you’ve decided how much you want to charge, add a percentage before pitching to your potential client. Lead with this inflated price, allowing yourself room to offer a discount if they pay upfront.

Negotiate a Payment System

A 25-50% deposit upfront is typical in many industries. A milestone payment is when clients pay vendors incremental amounts at certain stages of a project. For this method to work, you will have to agree on pay dates with the client and make sure payments are made.

A 100% upfront payment is less common. This is very beneficial for the supplier in many ways, but it can also present some challenges. You may finish a project, and the client continues to make changes and add work – thereby increasing the scope of the original agreed to project. Just because you get payment upfront shouldn’t mean that a client is entitled to free labor.

When negotiating payment with a client, be open and transparent about what you expect. The best way to do this is to state clearly in your contract that you expect an upfront payment and explain what you offer that makes it worthwhile.

Help the client to understand some of the hidden costs and how they can benefit in the long run in ways they haven’t considered. You could even consider taking a negotiation course or negotiation seminar to learn more about how to reframe your fee as an investment in a client’s success, and how to convince a client to choose you over a competitor.

Give Reassurances

Discuss your process, timeframe, rates, and deliverables, so your client understands exactly what to expect and when to expect it. Make sure this is all in writing in your contract, so you and your client are both covered. If purchasers are going to make upfront payments, purchasers must feel confident that you’re not going to take their money and run. Buyers need to know that you are invested in a relationship with them and will provide the value they expect.

Conclusion

If you expect clients to make an upfront payment, they need to be able to trust you and know that you’re offering a premium service. They need to believe that they’re making an investment in their own success and that they will reap the rewards. To achieve upfront payments in your contract, you’ll need to put some thought into your negotiation plan.

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Lilou Hoffman
Building online visibility for the Negotiation Training Experts is Lilou Hoffman’s talent and passion. Her experience in working with sales professionals has given her key insights, essential when it comes to writing instructive and practical posts.

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