When Should You Ask For a Down Payment?


As an entrepreneur, it really sucks when a client doesn’t pay his/her invoice. Especially if it’s a large one and you have to move mountains to get your money. Luckily, there are a few things you can do to make sure there’s less chance of unpaid bills, such as asking a down payment to your clients. In this article, we talk about when it’s a good idea to ask for a down payment. 

1. It’s a good idea when it’s an invoice of a big monetary value

We know ‘a big monetary value’ is different for everyone. But if you’d lose sleep over it, then it can be considered big. For one entrepreneur, missing out on 500 dollars isn’t the end of the world, for a small freelancer, that can be a big issue. 

Think about where you draw the line and make this clear to everyone that wants to do business with you. For every agreement over X amount of money, a down payment is needed. If you’re clear about this, clients usually don’t mind. 

2. It’s a good idea when it’s a service that takes up a lot of your time

If you’re in the business of offering services, you can also choose based on how long you’ll work for a client. If for instance, someone needs your services full-time for three months, you can’t wait for that money for that period of time. After all, you’ve got bills to pay! Tell your client you require a down payment. Furthermore, it’s a good idea to bill them monthly instead of after the project ends. If a client stops paying after the second month, you can just stop working. Easy peasy! 

3. It’s a good idea when it’s a new client

If you’ve worked with a client for years and they’ve always paid on time, you can skip the down payment if you feel good about your relationship. But if you start working with a new client or partner, it might be handy to ask them for a down payment. Of course it’s always a good idea to do a credit check (Dutch: kredietcheck) to see if they’re reliable before working with them! 

Even with a down payment, it’s possible that a client doesn’t pay their bill. Annoying! Luckily there are tons of collection agencies around, such as Credifin Nederland, that are ready to help you out and get your money back.


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