Why does a freelancer need an upfront payment?
An advance payment is part of the remuneration paid before the entire service is performed. After the project is completed properly, it is credited toward the final price. It is not an additional fee added to the estimate, but an earlier payment of part of the agreed amount.
Its importance is not limited to protection against a client who does not pay. The deposit finances the start of the work, confirms the client's readiness to cooperate, and makes it possible to reserve a date without relying solely on a verbal declaration.
A freelancer sells not only the final result, but also their availability. If they reserve two weeks for a project, they may turn down other jobs during that time. If the client withdraws the day before the start, the contractor will not always be able to immediately fill the resulting gap with other work.
Booking an appointment without payment means that the entire risk of the client's change of decision is borne by the contractor.
Briefstreak
Is it always necessary to collect an advance payment?
Not every collaboration requires the same kind of protection. In the case of a short consultation paid in advance, essentially the entire price may serve as a prepayment. In the case of a multi-month subscription-based collaboration, the client may pay at the beginning of each month. In turn, for small jobs for a regular, reliable client, the parties may settle accounts after completion.
However, the lack of an upfront payment should be a conscious decision, not a default standard resulting from fear of the client's reaction. It is worth assessing the project's value, completion time, initial costs, past cooperation history, and the consequences of a possible withdrawal.
- The project requires reserving a specific date.
- Completion will take more than a few days.
- You must incur costs before starting work.
- You are working with the client for the first time.
- The project is being carried out for a fixed price.
- The initial results are of significant value to the client.
- You are turning down other assignments to remain available.
- The client is to receive files or access to the work before full payment.
How much advance payment should be collected?
There is no universal percentage that is appropriate for every project. In practice, deposits ranging from 20% to 50% of the total price are often encountered, but market custom alone should not replace calculation. The deposit should secure the contractor’s real risk and correspond to the value of the work performed before the next payment.
If the first two weeks include analysis, workshops, concept preparation, and the purchase of licenses, an advance payment of 10% may not even cover the costs of getting started. On the other hand, asking for 80% for a simple project in which the client receives no results for a long time may be difficult to accept.
Deposit 20–30%
This level may be sufficient for projects that have low initial costs, are divided into short stages, and anticipate the next payment relatively soon. It also works well when the client is a regular one and the cooperation so far has gone smoothly.
A low upfront payment should not, however, mean that the remaining 70–80% will be paid only at the very end of a multi-month project. It is safer to combine it with milestone payments.
Advance payment 40–50%
Half price is a clear solution for many small and medium-sized projects. The first payment confirms the booking of the date and finances the initial part of the work, and the second follows after completion or acceptance of the agreed result.
Model 50/50 is simple, but it works best for a relatively short project. If the implementation takes three months, the freelancer can still complete a significant part of the work before receiving the second payment.
Advance payment above 50%
A higher advance payment may be justified when a large part of the costs is incurred before implementation begins. This applies, among other things, to the purchase of materials, licenses, domains, studio rental, equipment reservation, payment of subcontractors, or the production of components made to individual order.
In such a case, it is worth showing the customer what determines the amount of the payment. A request for 70% without context may look like an attempt to shift all the risk, whereas the information that 40% of the price consists of external costs incurred before execution makes it easier to understand the terms.
100% advance payment
Full prepayment is standard for consultations, training, audits with a clearly defined scope, small service packages, and digital products. The client books a specific date or buys a standardized service whose terms are known before payment.
For a large, custom project, full payment upfront may increase the client's concerns. An alternative is to divide it into several stages, which allows both parties to reduce risk.
Better question: how much work will you do before the next payment?
Instead of starting from an arbitrary percentage, analyze the progress of the work. The advance payment should cover the work, costs, and risk incurred until the next settlement.
- How many hours of work will you perform in the first stage?
- What external costs will you incur before starting?
- How long will the date be reserved exclusively for this client?
- Do the results of the first stage have independent value?
- Will the client receive files, materials, or knowledge before the next payment?
- How difficult will it be to replace the project with another assignment in case of cancellation?
- Are you working with the client for the first time?
- What risk is associated with a delay in decisions or materials on the client’s side?
Let's assume that the project costs 12,000 PLN. The first stage includes analysis, a workshop, and preparation of a concept worth around 4,000 PLN. Additionally, you need to buy licenses for 600 PLN. An advance payment at the level of 40%, i.e. 4,800 PLN, is logically linked to the work and costs incurred before the next settlement.
When should the customer pay the deposit?
The safest rule is: project execution and reservation of a binding date begin after the terms are accepted and the payment has been booked. Simply sending the contract, the message “we are decided,” or providing invoicing details does not yet mean that the project has been financially confirmed.
You can preliminarily indicate an available date, but you should clearly specify how long it remains unreserved. For example, the offer may be valid for seven days, and the date is confirmed only after signing the contract and paying the deposit.
The start date is reserved once the agreement is accepted and the deposit is recorded. Until then, the indicated date remains approximate.
Sample entry
It is not worth starting work just because the client assures you that the transfer is already being prepared. An exception may be a regular contractor covered by an agreed payment term, but this should result from a deliberate policy, not the pressure of a specific project.
Advance payment and earnest money are not the same thing
In colloquial language, an advance payment and a deposit are sometimes used interchangeably, but their effects can be different. The contract must clearly indicate which solution the parties are dealing with.
A standard advance payment is an earlier payment of part of the remuneration. If the contract is not performed, the settlement of the amount received depends, among other things, on the reason for ending the cooperation, the part of the work performed, the costs incurred, and the content of the contract. Merely calling the payment an advance does not automatically mean that the contractor can always keep the entire amount.
An earnest payment has special effects specified in the Civil Code, unless the parties agree otherwise. In the event of non-performance of the contract by one party, the other may, under certain conditions, withdraw from the contract and retain the earnest payment received, and if it paid it itself, demand twice the amount. Upon proper performance of the contract, the earnest payment is credited toward the performance.
Therefore, an earnest money deposit may provide stronger security for the performance of the contract, but at the same time it increases the freelancer's liability. If the contractor fails to perform the obligation without justification, the client may pursue the consequences resulting from the earnest money deposit. This term should not be used without understanding its effects.
It is not enough to determine the amount of the payment. The contract should explain whether it is an advance payment, earnest money, a reservation fee, or a payment for a specific stage.
Briefstreak
Is the deposit non-refundable?
Merely stating in the message “non-refundable deposit” does not resolve every situation. If the project is completed before implementation, the content of the contract, the work actually performed, the costs incurred, and the reason for withdrawal must be assessed.
If the freelancer has already completed the analysis, the workshop, and prepared the concept, part of the amount received may correspond to the value of the service performed. However, it is worth describing this work as a separate paid stage, rather than assuming that a general definition of an advance payment will automatically allow you to keep the entire payment.
Before starting the project, it is necessary to determine what will happen if the client withdraws, delays materials, or suspends the work. The contract may provide for settlement of completed stages, external costs, and an additional fee related to canceling the reserved date, but its content should be tailored to the specific collaboration.
The deposit does not replace the contract
An upfront payment will not solve problems arising from an unclear scope. If the parties understand the number of revisions, deadline, responsibility for materials, or project outcome differently, an advance payment can only delay the conflict.
The contract or accepted terms of cooperation should link payment to a specific scope. The client must know what they are paying for, when the obligation for the next payment arises, and what the consequences are if the project is put on hold.
- Total project price.
- Amount and nature of the initial payment.
- Payment due date.
- Time of booking and commencement of work.
- Scope covered by the initial payment.
- Schedule of subsequent installments.
- Acceptance conditions for individual stages.
- Settlement rules in the event of cancellation.
- Procedure in case of client delays.
- Rules regarding external costs.
- Time of transfer of files and rights.
- Consequences of non-payment of the next installment.
How to split payments into stages?
The longer and more expensive the project, the less safe the simple 50% before start and 50% after completion model becomes. The first half may already be used in the initial phase, and the contractor will finance the implementation from their own funds for the following weeks.
Stage payments should be linked to work progress, not only to dates. Each stage should have a clear outcome and settlement point.
Model 50/50
- 50% before starting.
- 50% before handing over the final files or publication.
It works best for short projects with a clear scope, carried out over a few days or weeks.
Model 40/30/30
- 40% before starting.
- 30% after accepting the concept or the first stage.
- 30% before handing over the final materials.
This division limits the risk for both sides. The client does not pay almost the entire amount before seeing the results, and the freelancer does not wait until the end for most of the payment.
Model 30/30/30/10
- 30% upon signing the agreement.
- 30% after completing the analysis and approving the direction.
- 30% after completing the main part of the project.
- 10% before final handover or implementation.
It may work well for larger deployments, but it requires a very clear definition of what counts as the completion of each stage.
Monthly payment
With long-term cooperation, the first payment can be collected before the start, and then the following months can be billed in advance or according to an agreed schedule. This solution is suitable for marketing services, technical support, consulting, and recurring hourly packages.
Do not make the entire final payment dependent on subjective acceptance
The note “remaining amount after full client acceptance” may lead to project delays. It is unclear how much time the client has to submit comments, who makes the decision, and when the stage is considered complete.
Better are objective conditions: delivery of the elements described in the scope, completion of the agreed number of revision rounds, or expiry of the deadline for providing feedback. Of course, the result should comply with the agreement, but payment cannot depend on an unlimited process of searching for a version that will be "liked one hundred percent".
When should the final files be delivered?
Many freelancers show a preview of the results, but deliver production files, access credentials, unmarked materials, or launch the final deployment only after the required installment has been paid. This rule should be written into the terms of cooperation in advance.
This does not mean hiding the results from the client. They should have the ability to assess the project's compliance with the scope. The point is not to transfer the full usable value before receiving the agreed compensation.
The final files and the rights specified in the agreement will be transferred after the full fee has been credited.
Sample entry
What to do when a client does not want to pay the deposit?
Refusal does not always mean bad faith. The client may have internal purchasing procedures, previous bad experiences, or concerns about paying an unknown contractor. Instead of automatically giving up, it is worth asking about the reason.
If trust is the problem, you can propose a smaller first stage. Instead of charging 50% for the whole project, sell the analysis, workshop, audit, or prototype separately. The client limits the initial commitment, and you do not do a significant part of the work for free.
It is also possible to reduce the first payment and shorten the period until the next settlement. However, you should not give up all safeguards just because the client stated that his company always pays after completion.
I understand that 50% upfront is difficult for you to accept. We can divide the project into a paid analysis stage for 2500 zł, and after its completion separately approve and settle the implementation.
Sample response
Should a large company be exempt from the advance payment?
A recognizable brand does not eliminate risk. Large companies often have long payment terms and a complex invoice approval process. A freelancer may complete a project correctly and then wait for many weeks until the document passes through the relevant departments.
Before starting, it is necessary to determine whether the person placing the order has the authority to approve the expense, whether an order number is required, who receives the work, and from what moment the payment term is counted.
If the client's procedures really exclude an advance payment, it should be assessed whether the price and schedule compensate for financing the project. The stages can be shortened, the price can be increased to include the cost of deferred payment, or cooperation can be refused.
How to account for external costs?
Costs incurred on behalf of the project should not be financed by the freelancer without explicit consent. If you need to buy photos, fonts, licenses, a domain, hosting, materials, or subcontractor work, agree on how they will be settled before making the purchase.
You can include them in the deposit, charge the full upfront payment for specific costs, or ask the client to make the purchase directly. You also need to indicate whether external fees are refundable in the event of cancellation. Some providers do not refund funds after license activation or booking a date.
Advance payment, invoice, and taxes
Receiving part of the payment before the service is performed may create documentation and tax obligations. In the case of active VAT taxpayers, an advance payment received may, as a rule, give rise to a VAT tax obligation in respect of the amount received, with exceptions provided for certain transactions.
An advance invoice documents a received advance payment, deposit, or other prepayment. When the payment does not cover the full price, after the service is performed a final invoice may be needed to settle the remaining amount. If one or several advance invoices cover the entire remuneration, the rules for issuing the final document may look different.
Detailed obligations depend, among other things, on the taxpayer's status, the type of transaction, the client's country, the time the service is performed, and the current invoicing rules, including KSeF. It is not worth copying another freelancer's method of settlement. It is best to confirm your own process with an accountant or tax advisor.
Do not spend the entire advance payment at once
An advance improves cash flow, but it does not always immediately become earned compensation. A project may be interrupted, the scope may change, or part of the amount may need to be accounted for. The freelancer should keep funds needed for taxes, execution costs, and any possible refund of the unused portion.
A good practice is to separate the money received for future stages from the funds intended for current private expenses. A particularly dangerous situation is when subsequent advances finance the completion of earlier projects.
What to do when the client delays the next installment?
The schedule should provide that non-payment suspends further work and may affect the completion date. The freelancer should not continue with subsequent stages for many weeks in the hope that the client will eventually settle the outstanding balance.
After the deadline has passed, a short reminder should be sent and the consequence for the schedule should be indicated. If the project deadline depended on payment, downtime on the client's side should not automatically mean that the contractor must later make up the work at the expense of other assignments.
The next stage was to begin after the second installment was paid. Since the payment has not yet been credited, the work remains on hold. Once the payment is received, I will confirm the nearest available date to resume the project.
Sample message
Should I collect an advance payment from regular customers?
A good history of cooperation may justify more flexible terms, but it does not mean that the payment process should be abandoned entirely. A regular customer may change owner, the decision-maker, purchasing policy, or even find themselves in financial trouble.
Instead of an advance payment for each individual task, you can use a monthly subscription paid in advance, an hourly package, a renewable budget, or short payment terms for stages. It is important that the value of unpaid work does not grow uncontrollably.
Most common mistakes when collecting an advance payment
Starting work before payment
The freelancer sends a payment request, but at the same time starts the analysis and prepares the first materials. The client quickly gets used to the fact that the payment deadline has no real significance.
Random percentage
The deposit is always 20%, regardless of the costs and duration of the project. For a larger order, it does not even cover the first stage, and for a very small service it unnecessarily complicates the settlement.
One final payment after many months
The initial 30% looks reasonable, but the remaining 70% only becomes due after the four-month completion period. In practice, the freelancer finances most of the project.
No cancellation policy
The agreement specifies only the amount of the deposit. It is not known how to settle the work performed, the purchased licenses, and the reserved slot when the client cancels the project.
Confusing an advance payment with earnest money
The parties use both terms in different documents, and later each expects different consequences. The name and payment rules should be consistent in the offer, contract, invoice, and correspondence.
Transfer of full files before settlement
The client receives a finished result and can already use it, even though a significant portion of the fee remains unpaid. After handing over the full value, the freelancer's negotiating position becomes weaker.
Allocating the entire payment to private expenses
When a project is interrupted or requires expensive purchases, the freelancer no longer has the funds needed to fulfill obligations or properly settle accounts with the client.
How should I inform the client about the deposit?
It is best to present the payment terms together with the quote, rather than only after the offer has been accepted. The client should take the payment schedule into account when making a decision.
The total project price is 8000 PLN net. Payment is divided into two parts: 50% before the start and 50% after the agreed revisions are completed, before delivery of the final files. The date is reserved after the contract is signed and the first payment is received.
Example terms
There is no need to apologize for taking an advance payment or explain it as a lack of trust. It is a standard element of project management and cash flow. The most important thing is that the rules are clear, proportionate, and applied equally to similar clients.
How do you choose a payment schedule step by step?
- Determine the total price and the expected completion time.
- Divide the project into stages with specific deliverables.
- Estimate the time and costs incurred at each stage.
- Check how long you will work before the next payment.
- Include external costs and subcontractors.
- Assess the risk of cancellation and the value of reserving the date.
- Set the initial payment according to the value of the initial stage.
- Set the subsequent installments so as not to finance most of the project.
- Define the acceptance conditions and the deadline for reporting comments.
- Define the rules for suspending work in case of non-payment.
- Record the moment of handing over the final files and rights.
- Set out how cancellation, costs, and work performed will be settled.
- Present the full terms to the client before starting.
- Confirm tax obligations and the invoicing method with accounting.
Example for a small graphic project
The project costs 3000 zł and is to be completed within two weeks. The scope includes preparing two directions, choosing one of them, two rounds of revisions, and delivering the final files.
A simple model can predict 50% before starting and 50% after accepting revisions, before handing over production files. The first payment funds the analysis and preparation of the concept. The second covers completing the project and finalizing the materials.
Example for a website
The project costs 18,000 PLN and will take about two months. It includes analysis, information architecture, graphic design, implementation, and testing. The 50/50 model would mean that the second half would only be paid after many weeks of work.
A safer split may be 40/30/30. The first 40% is paid before work begins, the next 30% after approval of the key views design, and the final 30% before publication and handing over access. Each installment corresponds to specific project progress.
Example for fixed support
The freelancer provides monthly marketing support for 5000 zł. Instead of treating each payment as an advance for individual tasks, they can set a subscription payable in advance by a specified day of the month.
The agreement should define the scope of the package, availability, the method of billing additional work, the rules for carrying over unused hours, and the termination notice period. Failure to pay for the next month should mean suspension of services.
How can Briefstreak help before setting an advance payment?
It is difficult to determine the amount of the deposit without knowing the scope. If the client sends only a brief question about the price, the freelancer still does not know how long the implementation will take, what costs will arise at the beginning, or which elements are to be completed first.
Briefstreak allows you to gather information about needs, budget, deadline, materials, service variants, and additional elements. On this basis, the project can be divided into sensible stages and a payment schedule can be prepared that corresponds to the actual workload.
As a result, the advance payment is not an arbitrary amount applied to every client. It depends on the value of the first part of the project, the initial costs, and the level of risk of a specific order.
Summary
An advance payment protects the freelancer from financing the project out of their own pocket, confirms the client’s commitment, and makes it safer to reserve time. However, there is no single percentage that is suitable for all services.
In small and medium-sized projects, an initial payment of 30–50% is often used, but the amount should depend on the value of the initial stage, external costs, the time until the next settlement, and the risk of project cancellation. For consultations and standardized packages, full payment in advance may be justified.
In long projects, the schedule of subsequent installments is more important than the advance payment itself. A freelancer should not receive a small amount at the beginning and then wait several months for most of the remuneration.
An advance payment should not be automatically equated with a deposit, nor should it be assumed that it is always non-refundable. The rules for cancellation, settlement of work completed, external costs, and reservation of a time slot should be clearly described in the contract.
The safest process is simple: first you set the scope, then you divide the project into stages, assign payments to them, sign the contract, and start work only after receiving the required payment.
