P2 · Trying to get paid
Deposits, Milestones, and Not Financing Your Clients
Use deposits and deliverable-based milestones to cap unpaid exposure, protect calendar capacity, pause on nonpayment, and avoid financing a client's project yourself.
A deposit is primarily risk allocation. It confirms commitment and gives the solo operator cash before reserving weeks of capacity that cannot easily be resold at the last minute. Thirty to fifty percent is a common commercial range, not a legal rule. The right percentage depends on project length, materials, cancellation risk, bargaining power, and any state rules that apply to your industry.
Choose the deposit from exposure, not from a trust ritual
A deposit is a way to cap how much unpaid work can accumulate before the client has skin in the project. Thirty to fifty percent is a common commercial range, not a legal requirement, and the right amount depends on project length, customization, cancellation risk, and client procurement.
For longer engagements, use milestones tied to observable events—approved wireframes, delivered draft, completed workshop, production handoff—rather than calendar dates that can arrive while the client is blocking progress.
Cap unpaid exposure on a $12,000 project
Cash-risk example: a $12,000 eight-week project with 40% deposit, 30% at approved midpoint, and 30% before final source handoff limits the amount of completed unpaid work. A $0 deposit and 100% net-30 after final delivery turns the freelancer into the client's lender for the entire project.
Model the maximum unpaid balance at every stage
Model the maximum unpaid exposure at every stage. On a $12,000 project with 40% at signing, 30% at an approved midpoint, and 30% before final source handoff, the unpaid balance never grows the same way it does under '100% net-30 after final delivery.' Write what happens if the client misses a payment or approval: work pauses, the delivery date moves, the reserved slot can be released, and a previously agreed restart fee may apply.
Bonsai's current product flow even supports collecting an upfront payment with a signed contract, which shows how normal this sequence has become in freelancer tooling. The contract still controls your own arrangement.
Tie milestones to events a client can actually observe
Milestones work best when tied to observable deliverables—approved wireframes, delivered draft, completed workshop—rather than vague dates that can arrive while the client has blocked progress.
Cap the final balance before it becomes the whole project
For long projects, do not let one large final payment accumulate after months of work. Smaller earned milestones limit the unsecured credit you are extending to the client.
Pause the work when an overdue milestone says to pause
Write a pause-on-nonpayment clause and use it consistently. Continuing to work after an overdue milestone teaches the client that the stated due date has no operational consequence.
Separate approval previews from the final asset handoff
Separate 'final delivery' from 'preview for approval.' Designers can use watermarked or low-resolution proofs; developers can keep source or production credentials controlled until the agreed payment condition is met.
How milestones change the risk curve
Design the payment schedule around exposure. A deposit compensates for reserved capacity and reduces the amount of unpaid work at risk; a milestone payment should trigger when an observable deliverable or phase is completed, not merely when a calendar date arrives. For a $12,000 project, one workable structure might be $4,000 to reserve the start, $4,000 after approval of the first defined phase, and $4,000 before final production files or launch handoff. The right percentages vary with project length, bargaining power, material costs, and client procurement rules. What matters is that the maximum unpaid balance never becomes larger than you can comfortably finance. If a client requires net-30 or net-60 after every milestone, model that delay before agreeing to the price.
Write pause mechanics before the first late payment. State how many days after a missed payment work pauses, what happens to the delivery schedule, and whether a restart depends on cleared funds and new capacity availability. Avoid threatening language; make the rule operational. For example: ‘If an invoice remains unpaid five calendar days after written notice, work may pause and remaining dates will be rescheduled based on availability.’ If the final deliverable contains source files, credentials, production access, or a license transfer, make the handoff trigger consistent with the payment clause and applicable law. Never hold a client’s own pre-existing assets hostage. If the customer cannot pay the original schedule, renegotiate in writing before continuing. An agreed smaller milestone is usually safer than silently extending unsecured credit while the unpaid balance grows.
Track ‘work at risk’ as a number. At any moment, estimate delivered-but-unpaid work plus committed external costs that cannot be recovered. Set an internal ceiling—perhaps one milestone—above which new delivery stops until payment catches up. This is especially useful with large corporate clients whose AP terms cannot be changed. You may accept net-45 if the price and cash reserve support it, but then avoid allowing two additional milestones to accumulate before the first is paid. For long engagements, invoice immediately when the milestone is accepted and confirm the invoice entered AP. Payment architecture is part of project design: it should keep the client’s approval incentives and the freelancer’s cash exposure aligned throughout the work.
Payment-exposure ladder
- Deposit
Size the upfront payment around cancellation risk, reserved capacity, and unrecoverable setup work. State when the project slot is actually reserved and what happens to the deposit if the client cancels under the signed agreement.
- Milestone trigger
Tie each invoice to an observable event such as approved discovery, delivered draft, accepted build, or scheduled production phase. Avoid milestones whose only trigger is “about halfway” because the client and freelancer can measure that differently.
- Pause rule
State what happens when an invoice or required approval is late: notice, pause date, calendar release, and any re-start process. The goal is to prevent unpaid work from quietly growing while the client’s AP process stalls.
- Final handoff
Make the final-payment trigger and release package explicit. If source files, production credentials, licenses, or final assets are held until payment under the agreement, describe exactly what the client receives before and after clearance.
Payment schedule before reserving the calendar
- Choose a deposit based on cancellation and capacity risk.
- Tie milestones to deliverables the client can recognize.
- State when work pauses for nonpayment.
- Keep final source or release conditions explicit.
- Account for processor and AP settlement time.
Deposit and payment-term references
Deposit questions before the first invoice
Why ask for a deposit?
A deposit allocates risk before you reserve scarce calendar capacity. If a client cancels or delays, you have not financed the entire commitment yourself. The percentage should fit project length, custom work, cancellation risk, and any state-law or contract constraints.
Should milestones be based on dates or deliverables?
Deliverable-based milestones are often easier to verify because payment is tied to something the client can recognize as complete. Time-based milestones can still work for ongoing services, but define what has been earned and what happens if client delays move the schedule.
What does a pause-on-nonpayment clause do?
It states when work or scheduling can stop if a required payment is late. That prevents unpaid exposure from growing silently while preserving a written process for restart. The clause should match applicable law and the rest of the contract rather than appearing only on the invoice.
Should I hold final files until final payment?
Only if the contract and project design support it. A common pattern is approval via preview or staging, then release of production assets after the final payment trigger. Do not withhold client-owned credentials or sabotage live systems as leverage.