How to Ask for Upfront Payment From Clients

Are you afraid to ask your clients for upfront payment? This is a common problem freelancers and small business owners face throughout their entrepreneurial careers.

This is because most believe they have to provide something in advance before they can get paid. Yet, when you look at most reputable companies, this is exactly what they do -- charge upfront.

When's the last time you pumped gas, purchased groceries, or stayed in a home without paying upfront?

Likely, never.

If you're looking to change your policies to reflect upfront payments, then you can use the following tips.

Why Charge Upfront Payments?

The top reason businesses charge upfront for their product or service is to ensure they're paid. Sending customers an invoice with the hopes they'll pay it within the deadline isn't always a reliable method for running a successful business.

This is why you'll find most B2C brands charging upfront since people tend to be less trustworthy than B2B customers.

But this isn't always the case. We find that many small businesses are waiting as long as 72 days to be paid. If the majority of their clients wait this long, their cash flow will suffer, and ultimately their business will too.

The only way around this is to charge upfront payments. Let's take a look at some of the ways you can adopt this into your business model.

Simply Ask for Upfront Payment

This is the most obvious way to get your clients to pay you in advance. You should start by making changes in your payment terms.

If you don't already have one, then you can create one that details the advance payment requirement. A lot of companies agree to a Net 15 or Net 30 arrangement, which gives customers 15 or 30 days to pay their invoice.

Rather than putting this, you can demand 100% of the payment before they receive their product or service. Then you can delete any other details in your payment terms, like late payment fees and other penalties for non-payment.

Request Clients Make Partial Upfront Payment

Now, there's the risk of turning away clients who may not feel comfortable with paying you upfront. Especially if they've never worked with you in the past.

Then some of your current clients may not want to switch over to this model.

In this case, you should be a bit more flexible. For instance, you can ask for a partial payment. This can be 50% or as low as 10%.

It depends on your clients, the price of your projects, and your relationships with them. You'll need to play it by ear to make payment terms that work for the both of you.

The idea is to secure an upfront payment, so your clients are invested and more likely to follow through with the rest of the debt.

At least with this method, they don't have to fully commit upfront with a 100% advance payment.

Know the Common Hesitations Clients Have

Now, you can expect some clients to feel wary about paying upfront. So it's good to know why they'll object.

In most cases, it's due to uncertainty -- they don't know if they can trust you. Are you going to deliver the quality they desire?

And if you don't, will they get their money back? If you can offer guarantees that ease their worries, then you can help customers feel more comfortable about taking the leap of faith.

Let's take a look at three ways you can help prospects overcome their fear of upfront payments.

1. Break Up Project into Milestones

If you're about to embark on a long-term project with a new client, then you can break up your payments by milestone.

For example, if the project will last for six months, then consider breaking it up into six monthly milestones. The client can pay upfront for the first month, and then after each milestone.

This can give them peace of mind that they can see and approve the work as you go along. You can use a platform like invoicely to email the bills to your client each month.

They can also pay online using a debit or credit card or a portal like Stripe or PayPal.

2. Use an Escrow Account

Fly-by-night businesses are very real. To help prove you're not out to take people's money, you can use an escrow account.

Escrow allows clients to place money into an account that you can't touch until the transaction is complete. This works out well because it ensures the client can and will pay for your project once completed.

Then for the client, they don't have to worry about their money being taken before they can see the project. This offers security on both sides.

When you've done business with known customers (or a lot of customers), you can ease the worries of upfront payment. Social proof is excellent for showcasing your reputability.

For instance, you can include testimonials on your website and social media profiles. This should include the name and company (if applicable) of the customer.

Then if you can include headshots, then even better. Another option is to include logos of the brands you've worked with, case studies, and/or video testimonials.

You can even go as far as to give prospects contact info to referrals.

All of this helps to show you are legit, offer quality work, and have the backing from past clients.

Give Incentives to Pay Early

If upfront payments don't fly well with a particular customer, then you can show your flexibility by offering a 2/10 Net 30.

We already discussed that Net 30 is when you allow customers to pay within 30 days of the invoice date. But to sweeten the deal for the both of you, you can put the 2/10 in front, which means they'll get a 2% discount if they pay within 10 days.

Of course, you can also make other arrangements, such as 5/10 or 10/10. Consider giving customers the option to decide which agreement they want.

What makes this work is that it promotes clients to pay as soon as possible to save money.

Don't Deliver the Project Until Payment is Sent

Depending on the industry you're in, you can request customers to pay before receiving the full project. In some scenarios, you can send half of the project to view, a snapshot of the completed work, or another form of proof that you've finished the job.

Then once the client pays, they receive the entire project right away. This arrangement can work if you have clients who want to ensure their requests are met before spending a dime.

And this ensures you get paid before handing over a project, which reduces the risk of late payment (or worse, non-payment).

Use Electronic Invoices

When you switch over to electronic billing, you reduce a lot of the stress that surrounds getting paid for your hard work. With tools like invoicely, you can email invoices, get paid online, and send payment reminders.

You can also save contact details for your business, as well as your clients. Then there are professional templates you can use to create invoices.

When you use e-invoices, you make it convenient for both you and your customers to manage invoices. In your dashboard, you can see which invoices are pending and paid off.

You can automate your payment reminders, so you don't forget to send them out. It's a good idea to send the reminders before you submit your invoice, so the client is aware of the coming invoice.

And if you agreed to upfront payments, then you can send the invoice right away. Once it's paid, you'll receive a notification via email.

What's also exceptional about this tool is that you can access and create invoices from anywhere you have an internet connection. So if you're on the go and strike a deal with a client, you can use your tablet or smartphone to draw up and send the invoice on the fly.

Improve Your Business with Upfront Payments

You may find that charging upfront payments can limit many of the problems SMBs deal with. When you set up this payment model, you will see your client relationships and cash flow improve.

When clients are required to make payments upfront, they're inclined to read your contract and agreements thoroughly. This means less confusion in the long run.

Then you're also weeding out flakes so you can focus on working with serious customers.

With the above tips, you can improve your payment process using a mix of upfront and early payments. So give them a try and let us know which methods work the best!