Hey everyone. I plan on charging a set hourly rate for clients. I was wondering about charging a deposit before starting any work--do you bother doing that if your going hourly? I'm leaning towards not because it is hourly and I can end services if not paid, but I also don't want to get myself into a situation! Just curious what other hourly chargers do, and how you decide on the deposit if you do charge it?

__________________
Amy
www.porterofficesolutions.com

Hi Amy,
For me it depends on the situation. Since I give my project clients an estimate of how many hours I feel the project will take I generally charge 40% to 50% of that up front. Then at the end of the project, that amount can be credited to them on their invoice.
I didn't always do this, but got tired of 'giving away' hours of services. You are right about being able to end services if you're not paid, but those hours you've already provided can be a total loss if you have a non-paying client.

That said, I still will occasionally invoice the entire amount after services have been provided, but generally they have to have a good payment history with me first.

__________________
~Tina Marie Hilton of Clerical Advantage
& author of the VA Survival Guide & Workbook

My website & my contract clearly state that ALL work requires a deposit & a signed contract. While I believe that most people are basically decent & honest, you have to protect yourself from those who are not. I also think that serious business people will understand & probably expect to make a deposit. In fact, I would be suspect of someone who balked strongly at paying a deposit.

However, like Tina said, once a client has established a good payment history, you might reconsider, for that client only.

__________________
Lezly Harrison
Laserdog Productions - Code that Doesn't Bite

For my hourly clients, I generally request a small deposit before beginning work. Then, I bill or invoice on further hours worked. It also depends on the type of working relationship with my client, i.e. subcontract relationship, referral from another VA, etc.

__________________
Delilah Smith
Caliber Virtual Services

Hi Delilah,

When you say 'small deposit' how much do you mean? I was thinking along the lines of about a week's worth of work. I don't want to do retainer plans, so I don't want the deposit to be an amount that would be close to a retainer plan.

Thanks,

__________________
Lezly Harrison
Laserdog Productions - Code that Doesn't Bite

I request $200 and a signed contract before working with a new client (this is equivalent to approx 5 hours of work). If they are not willing to provide either/both of these, I don't wish to work with them.

I place the $200 in a 'retainer' account in QuickBooks and a savings account at the bank. I transfer the earned funds from retainer to services in QB and savings to checking at the bank when I do my end-of-month invoicing (sending a copy of the invoice to the client so they know what has been spent).

Initial deposits are fully refundable - less work performed - until spent should the relationship not work out; and that is written in the contract.

__________________
Lily Chambers, The Virtual Office Goddess, LLC
Author "How to Do Your Own Small Business Bookkeeping"

Lily, thanks for that. Five hours worth sounds like a good amount. If the client ends up being an on-going client, do you require another deposit? I guess what I'm getting at is, at what point do you waive the deposit? I'm sure it varies, depending on the client, but are there guidelines that you use?

__________________
Lezly Harrison
Laserdog Productions - Code that Doesn't Bite

Thanks for everyones input. Good point about anyone not wanting to pay, it would be a bit fishy.

__________________
Amy
www.porterofficesolutions.com

I too require a deposit usually between $150 and $200 depending on how many hours they think they will be needing. This amount is then applied to their first invoice and then I bill monthly with payment due within 10 days.

These terms are also clearly stated in my contract.

__________________
Lee Drozak
My Office Assistant