Creatives, Follow The ‘50/25/25 Rule’ To Ensure You Always Get Paid On Time
By Izza Sofia, 26 Sep 2019
Image via Shutterstock
As a creative, getting clients to pay you on time might be a perpetual struggle.
To avoid late payments or even—yikes—not getting them at all, Chris Do, founder of design education platform The Futur has come up with a brilliant ‘50/25/25 rule’ strategy that guarantees your clients pay on time.
According to Do, ensure you receive 50-percent of payment upfront before you get too excited and start squeezing out your creative juices.
Also inform clients that no resources or work will be put into the project unless a payment is made. Therefore, a delay in the footing of the bill will lead to a delayed start date.
After which, inquire about the next 25-percent of the payment “after hitting key milestones,” he adds. The final 25 percent should be purely profit, if you price your projects appropriately, and you should only deliver the end product once the last payment is in.
He also advised that for smaller projects, it’s better to receive 100-percent of the price before you start on anything.
You can also nudge for an early payment by promising your client a two-percent discount if they settle the bill early.
To learn more about how this rule works, head over to The Futur.
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Sometimes in the excitement of getting a potential new client, we forget to follow best practices, and start a project prior to getting a deposit against the job. Then, reality sets in when the client calls to say they’re not ready to start. If this happens to you, then use it as a learning opportunity. Follow the 50/25/25 rule. Get paid up front before you start otherwise it’s just good intentions. The last 25% should be pure profit if you’ve bid the project properly. As an example I provided net 15 days but as some of you may experience with large Fortune 500 companies (my assumption was that you had smaller clients) this may be hard to do, so adjust the terms accordingly. Just make sure this is calculated into your financial modeling so you don’t go broke waiting for this. Last tip. Build into your price the 2% discount. If you were going to charge $100, price the job at $102. Don’t sweat it if the client misses the early payment deadline by a few days. What other business questions do you have that I can help illuminate? Check out the link in my bio for the Invoicing Kit we put together. 👀 #businessofdesign #entrepreneurlife #graphicdesigner #graphicdesign #designlife #getpaid #payme #nofreework #paymefirst #paymenow #moneybedorework #bestbizpractices #fupayme
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[via Chris Do, opening image via Shutterstock]
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