The Problem with Prepayment
As you probably know, I believe very strongly in getting paid a certain percentage of a project’s price before getting started. This is not something that you have to do with established clients, but for first time jobs, you definitely want to look into this. But just like anything else concerning payment, there are some potential problems with receiving prepayment. Personally, I have encountered two issues in the past on several occasions.
1. What is your plan if you receive prepayment, but the client does not like what you turn in? You have two options if this is the case. 1. You can work with the client until they accept your work. 2. You can refund the money, and part ways. The problem with number two is that you may have already spent or transferred the money that the client prepaid. To avoid this issue, make sure that you always have enough money in your PayPal account to cover refunds. Although refunds are few and far between, you still want to be prepared if this situation comes up.
2. Many clients confuse prepayment for full payment. You need to be 100 percent clear in the wording that you use. If you are asking for prepayment for the entire cost of the project, that is fine. But if you are only asking for 50 percent, you need to make sure that the client knows this. There is nothing worse than sending an invoice for the remainder of the payment, just to have the client say that they already sent the whole thing. To avoid this, make sure you and the client are on the same page.
Remember, this is not to say that you should avoid prepayment. But it does mean that you should be careful about what you are doing. Yes, prepayment is a good thing, but only if you do it right.
