Never start without a deposit

Never start without a deposit
Written by: Karl Sakas

Have you ever had a client who was in a hurry to start… but they didn’t want to pay a deposit up front?

That’s a recipe for disaster—but remember that you’re in control! If they’re in such a hurry to start, they can be in a hurry to pay.

Here’s a cautionary tale from my agency career—followed by my advice on how to get clients to pay deposits at your agency.

The Eager-to-Start Olympic Athlete

Early in my agency career, I inherited a project working with an Olympic athlete—the agency would do a photoshoot, website, and print materials to support the athlete’s public speaking platform. It would be a mix of cash and trade (with celebrity appearances).

I was excited, ready to write a new resume bullet: “Managed integrated marketing project for Olympic athlete.” How cool, right?

My boss was excited, too. He was especially eager to do the photoshoot at a local stadium—which led to his scheduling the photoshoot before defining a final scope, much less getting an initial deposit.

Something felt a bit “off.” But as a relatively new project manager—and being new to the agency—I decided not to pause things entirely, and we kept going.

In retrospect, I should have pushed back on everyone’s unpaid enthusiasm. In the end, I pressed for a tiny deposit before we’d do the photoshoot, with an additional payment due before we’d deliver the high-resolution photos.

The team headed to the stadium for the photo shoot, spending half a day getting some great shots. We knew they’d help us on the website, print pieces, and more.

But then everything fell apart.

When I reached out to coordinate the second payment, the athlete’s agent shared bad news—they lost their major sponsor, and they had to pull the plug on the entire project.

We got $500 for $5,000 in work… around $12/hour.

It was a terrible experience—but as a PM, I vowed to never do that again! And indeed, that became my policy: Don’t even schedule the kickoff until after you’ve received a signed contract and the deposit payment.

That’s part of what you get when you hire an employee or contractor with more experience—they’ve made the mistakes at a previous agency, so they won’t make them again at yours.

How to Avoid This at Your Agency

Based on my experience learning things the hard way, here’s how to be smarter at your agency.

1) Don’t start work before receiving a deposit and a signed contract. If they’re truly in a hurry to start, they can pay you in a hurry. You can use my Reason-Options-Choose (ROC) framework, including some key phrases to encourage them to move forward.

2) Give clients payment options that meet their needs. I love taking payments via credit card. Sure, there’s a 3% merchant fee—but I know immediately if someone’s paid, versus the old “check’s in the mail” situation.

3) Build this into your kickoff process. In my case, I won’t even schedule kickoff until the payment’s in. That way, if someone hasn’t paid, I don’t have a meeting looming. This eliminates collections pressure on you.

4) Don’t deliver final deliverables without full payment. Structure this into your contract—because otherwise, you have no leverage if they withhold the final payment. Ask your lawyer about a clause to make the intellectual property release (transferring the IP to to the client) contingent on payment.

5) If you do relax your policy, be sure to call it out to clients. They need to know they’re getting a special deal, so they don’t expect this every time. Otherwise, you’ll get buried in custom demands.

Question: How do you handle this at your agency?

Turn your agency headaches into profits…

Get a copy of my popular eBook, Don’t Just Make the Logo Bigger: Taking Clients from Painful to Profitable, by filling out the form below.

In addition to the free eBook, you’ll join 2,500+ agencies and get my articles delivered twice a week, directly to your inbox!