Stay Away From Clients Who Refuse To Pay A Retainer
I worked as an independent consultant for many years, and one of the biggest problems I noticed that small business owners ran into often was getting clients to pay them.
Some clients were simply difficult to work with and tried to underpay or worse, get a free ride.
Unfortunately, there were times when small businesses didn’t get paid at all.
This can be devastating for any business! Overall, this is why I always advise my clients to make sure they are getting paid before they do the work.
Stop Waiting For Clients To Pay You
You should not work for free. You should not work for a client who does not pay. You should not allow yourself to be taken advantage of by a client who does not pay on time, or at all.
You need to protect yourself from clients that do this — and the best way to do so is by setting up an initial retainer with them before you begin working together.
In fact, I encourage every freelancer I coach or mentor to require payment from their clients before they start working on anything — not only because it protects you, but also because it shows clients that you’re serious about getting paid and helping them succeed in their business goals!
Be Firm When Talking To The Client
If a client refuses to pay you, it is important that you do not get angry and storm out of the conversation.
Instead, be firm but polite in letting them know that if they are not paying you, then they are not working with you. If they are not working with you, then they are not your client and it is no longer your problem!
Address Your Client’s Worries
The first thing you can do to address your client’s concerns is to explain why you need a retainer and why you need to be paid in advance. You might say something like,
“Even if we accepted to take on your project, since you do not have a budget, the project would stagnate. I am unable to pay my employees. As a business, we must prioritise paid work.”
Resolve Your Client’s Concerns
Explain your position and the reason you need to get paid, do not budge.
You are not a charity. You are providing a service and deserve compensation for that service.
This is not a personal loan or an investment in your business; this is payment for services rendered. It’s an investment in the client’s business.
Protect Yourself And Your Business With A Contract
A contract is a legally binding agreement between two parties that outlines the terms of their transaction.
The purpose of a contract is to clearly outline what services will be provided, how much they cost and when payment is due.
Proposals can be simple or complex, but they should contain the following:
What services are being provided?
This may include a full scope of work, the date range of your retainer projects, and an outline of expenses that aren’t included in your rate (such as travel).
It’s important to include miscellaneous fees of about 10% as a safety margin should the unexpected occur. Some consultants even charge a 20% miscellaneous fee — but keep in mind that if this isn’t written down somewhere explicitly it may create confusion among both parties later on about why certain things have been billed separately.
How much does each service cost?
Your rate should reflect the value you are adding to the client’s business by providing this service. Do not simply charge by the hour, because soon enough there will be a cap on how much you can charge and how many hours you’ve got in a day.
Make sure that a potential client is paying you for your time and work before you begin.
Include cancellation & refund policy if needed, to protect both parties.
Avoid clients who refuse to pay, no matter what their reason is. Especially if they refuse to pay you because ‘’they have been burnt before’’ — You’re not responsible for their misfortunes.
I know what it’s like to be in the position of a freelancer who doesn’t want to lose a potential client. When you’re just starting out, it can be tempting to take on any paying job that comes along — even if they don’t have any money upfront.
But trust me:
in the long run, you will save yourself time, energy and hassle by insisting on being paid before starting work.
You might even end up with more clients and more money if you do this right!
In the contrary, if you work for free, you might regret it, because someone not willing to invest in their own company’s development, is likely going to walk away from the deal at anytime, with no penalties attached. At best they’ll apologize for wasting your time. In most cases they’ll simply ghost you.
If you’re still not convinced, try reading “The Consulting Bible: How to Launch and Grow a Seven-Figure Consulting Business”.