Hello. I have a question. If I have a new client that I am billing hourly, should I ask for a deposit? This would be that if someone was not on retainer. For my retainer clients, I do ask for a deposit. The problem is that for new clients who give me some work, we don't know exactly how long it will take, so what is the best way to bill them. I don't want to do all the work and then have trouble collecting my fee. Could I take a deposit and then ask for the rest at the end of the job? Please help! Thanks. Linda

You can definitely ask for a deposit, especially from a brand new client. Like you said, you don't want to do all the work and not get paid. You don't really know the habits of a new client, so getting a deposit of some sort, until you have dealt with the client and knows he will pay, is always a good idea.

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Pam
www.adminetcetera.com

Linda,

You should get a deposit whether the client is hourly, retainer or project always! The reason is just what you mentioned...you may not get paid.

Securing a deposit solidifies a commitment from the client so you definitely want to do that.

Before you contract with this client, you should determine a minimum number of hours you expect to work. Will this client need 2 hours per week or 4 hours per month?
All of this is determined when you had the consultation.

When I took hourly work, I requested a minimum of 2 hours per week because it is not worth my time to work any less than 2 hours a week for a client. So I would suggest you establish what your minimum will be. (Even if this is a pay-as-you-go client, I still think a minimum hours should be determined.)

Will that be one hour, two hours, three hours? But set a minimum so you are guaranteed at the very least some amount of work per week.

So if your minimum is 2 hours per week then they need 8 hours per month. So your deposit would be 50% or in my case, I ask always requested one month's deposit upfront.

(I don't really take hourly clients anymore but when I did, I billed 2 times per month because the accounting for a weekly billing is a time killer.)

So that is how you determine the deposit.

You hold the deposit until the end of the contract and apply the money to the last month's bill.

Make sure your contract states that if you don't receive the min amount of work in one week, you will bill 2 hours (or whatever your min is), anyway. You will find that this will prompt clients to make sure you have work.

The hardest issues I have had with hourly clients is that if they are not committed to sending the work and there are no policies in place, they will not pay, fall off the radar and then the VA is left unpaid.

So collect a deposit, make sure the contract states that a deposit will be collected. Make sure your bill payment terms are in place...payable upon receipt and the penalties for not paying. If they don't pay, you can draw from the deposit.

Also have a termination clause in place as well. I found hourly clients wanted to terminate 'at a whim' which made it more difficult to finalize the accounting. So set terms in place how much notice do you need to terminate the contract. If you collect 2 weeks or 1 month's deposit then you know how much to apply to the last month's invoice.

Collecting a deposit is customary, reasonable and the best way to protect your business.

Janine

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My policy states that for the first Pay-As-You-Go assignment, and for each Project contract, clients are asked to provide an upfront, non-refundable deposit equal to 50% of the estimated total. The deposit is applied to the total amount due, and payment is made prior to work commencing.

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Linda
Clockwise Virtual Assistance

I agree with others, you should get a deposit That said, all this should be covered in your agreement with the client. Deposits, time tracking, invoicing, payment, etc.. should all be covered. As you want to insure you get paid, the client also needs assurance that you are going to do the work once he makes his initial deposit.

Best wishes!

I AGREE I made the mistake of working with a client on PPH who sent me everything to get started - I sent the agreement to him - we agreed on the rate - and the deposit - I fell for the "death in the family" and well - I did 8 hours worth of work on their word and now have had to file a grievance and deal with that....NEVER again will I EVER take a project without some sort of deposit. Additionally, hourly require a minimum of 2 hours per week or 8 per month - anything less is not worth it for me.

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Patricia Loehn : Owner / VA
American Virtual Associates

I've learned this from volunteering at my brother's business: ask for a deposit FIRST... for me, I'm going to put in my contract a 50% deposit for all clients, whether they be hourly or retainer clients. To me, that acts as a safety net. I don't want to complete the job and have to chase a client around with a bloodhound because I can't find you to send me a payment.

A new client should expect to be asked for a deposit. I had a new client (a friend of a friend, no less) who wanted a project done with a tight turnaround. I made his deadline, then never heard from him again. He never even picked up the materials he had given me to do the project with. So yes, a deposit is perfectly acceptable and should even be expected by the new client.

It is always prudent to get a deposit. 50% of estimate billing is standard. Given the virtual nature of our business you never really know a PC. You don't want to end up working for free if a client does not pay.

The only time I do not get a deposit is if I already know the PC. I have a few local clients that I knew for years before starting our business relationship. I was comfortable enough with these individuals that I did not feel the need to get a deposit. But this is generally not a good business practice.

Julie

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Julie | Virtual Resource Services, Inc (VRSI)
http://www.vrsioffice.com