For the first year and a half of our existence, Sutton Creative Studios didn’t require retainers from our clients. Perhaps we were naive, but we chose to believe the best of our clients. In other words, we chose to believe their intentions were good and we would always get paid. Just as in many other aspects of life, however, we learned a lesson…
To back track a tiny bit, I must say that in a case or two our clients DID have awesome intentions. Unfortunately the client experienced a financial crunch and just couldn’t pay in a timely manner. But retainers cover you in the case of a client cash crunch. In order to resume work when the cash crunch is over, the client must simply replenish their retainer back to original, agreed upon, balance.
Unfortunately not all clients have good intentions. Some are simply looking to get quality products and/or services without paying any money. This is why you must protect yourself, and is the reason why retainers are a must.
Following are several suggestions regarding how to structure your retainers:
- Flat Rate Project: Require 1/2 of the project be paid for in advance, with another 1/4 due halfway through and the last 1/4 due before the final product is delivered.
- Hourly Project: Depending on the terms of your project, require that 2-3 weeks be paid for in advance. If your contract states your client has two weeks to pay an invoice before work ceases, require two weeks be paid in advance. If three weeks are allowed, require three weeks in advance. As long as your client is paying his/her weekly invoices in a timely manner, you should always have an active retainer available in case of emergency.
If you have a new client who is unwilling or unable to pay a retainer, you do have an option: Elance. Ask your client to hire you through a freelancing service like Elance, but notify them up front that there will be a charge (from Elance) added to your hourly rate. Do not discount your hourly rate to allow your client to pay the same amount. You are allowing the client to work with you despite their reservations/inability to pay your retainer by going through a third-party service. This service will delay your payment(s), so you should not be sacrificing your pay for their convenience. Consider it a client convenience fee.
Have you had issues getting a client to pay? What have you done to resolve the situation?
Kim Sutton is the Managing Partner and Chief Everything Officer of The Sutton Companies, including Sutton Strategic Solutions and Sutton Creative Studios. She is a graduate of The School of the Art Institute of Chicago where she earned her Bachelor’s Degree in Interior Architecture.
An avid reader and passionate learner, Kim is constantly researching, studying and developing business improvement strategies. When it comes to client work, Kim especially enjoys helping her clients develop innovative marketing strategies and sales funnels, particularly when they are using Infusionsoft to automate all the heavy lifting. To find out how you can further develop your company’s marketing and automation strategies schedule a 1-hour Business Boost Strategy Session by clicking here.
In her free-time, Kim cherishes the time she gets to spend with her husband, Dave (her business partner), and five children. She also enjoys reading, knitting, writing and playing video games.
Get a copy of Kim’s FREE guide, “10 Top Tools for Small Businesses” by clicking here.