The 50% down, 50% at completion payment structure is probably the most common in our industry. And when the project goes exactly as planned, it works well for agencies and clients.
But if you’ve ever made a website for a client, you know that projects rarely go exactly as planned. A client hires you for a project that’s supposed to take a few months, and a year later, there’s still no end in sight.
At this point in my business, it’s less about the money, and more about the overhead. I just want to finish it, check the box and move on.
But if you’re living project-to-project or having to make payroll for your team, waiting on huge payments is a cashflow nightmare that can put you in a real bind.
We’ve discussed several ways to help keep projects on track, but today I want to focus specifically on payment terms, and a few simple, practical tweaks that can help make your cash a little more predictable.
#1: Start the Care Plan at Install
That dev site’s already sitting on your server, running your licenses, and getting your updates — so why wait until launch to charge for it? You’re doing the work anyway. By starting the care plan as soon as you spin up a development site, not only are you getting paid for the work you’ve been doing for free, but clients will feel the project timeline slipping as they pay monthly for a site that’s not even live yet.
I hear this tip shared in TAB a while back, implemented it straight away, and never had a client question it. $100/mo care plan won’t solve cashflow issues when you’re waiting on $5,000 payment, but it makes it sting a little less.
#2 Add a Backstop
If you estiamte a project should take three months to complete, set the final payment to be due at launch or after 4 or 5 months (a little wiggle room for the inevitable delays) — whichever comes first.
You can go ahead and set up that final invoice right when you set up the first and put the due date on it. That way, you don’t have to feel “pushy” about getting paid, the due date is very clear from the start.
#3. Consider Milestones or Schedules
While the first two tips are small tweaks you can make with minimal disruption, changing your payment schedule to milestones or schedules is a bigger adjustment.
With milestone payments, you could set up a 25% deposit, 25% for approved design, 25% when dev is complete, and 25% at launch. That doesn’t mean projects won’t stall, but because you’re segmenting the work, you’ll never be as upside down. This does require a little more admin work, but I’d rather spend 10 minutes making an invoice than months waiting on a check.
Scheduled payments ignore the milestones completely, breaking the total into monthly installments. A $10,000 project broken into 4 monthly $2,500 installments helps your clients spread out the payments, but makes things much more consistent on your cashflow. This one requires you build a little more trust with your client, but works great as long as you do what you say (and get a card on file).
