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Dear Danielle: Should I Get Upfront Payment?

By Danielle Keister |
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Dear Danielle:

Do you suggest requiring an up-front payment of any kind from clients? –CM

Absolutely!

Does your supermarket let you take your groceries home and eat them before deciding whether or not to pay for them?

Okay, I’m being a little flippant, but, seriously, this is business, not charity. Allowing folks to pay after the fact not only leaves your business unnecessarily vulnerable, but it amounts to extending credit, and credit is something that must be earned, not expected. I don’t know about you, but I’m not in business to subsidize or finance someone else’s business.

I’m not sure why the Virtual Assistant world continues to have a problem understanding this, but it’s actually very common for businesses to expect 100% payment upfront.

If you are doing project work, I really recommend you require 50% payment upfront or the per-hour minimum you have established in your practice (whichever is greater), with the full balance due in full upon completion and prior to delivery. You could even bill in other percentage increments throughout the project to correspond with completion of certain phases.

Requiring deposits and upfront payments (such as retainers) helps your business in a few ways. First, it weeds out anyone who isn’t serious about having the work done and might end up stiffing you (with a deposit, at least part of your business interests are covered). Your business cash-flow is improved, and administrative time reduced. And you end up getting a whole other (better) kind of clientele.

With new clients on Pay-As-You-Go (PAYG) plans, who pay by the hour rather than on retainer, I would require a first-time deposit in the order of something equal 3-5 hours work or your smallest retainer fee. It’s sort of like earnest money, and helps weed out those who aren’t going to be committed to working together.

Dear Danielle: How Do I Charge for Supplies?

By Danielle Keister |
0 Comments

Dear Danielle:

I have a client who needs a presentation created and then put on CD. I’m not sure how to charge for the CD since I buy them in bulk. Plus, this situation makes me wonder what to do about the future when I need to charge for supplies. What do you suggest? —MD

Well, there are a number of ways you can go about it.

  • The client can supply their own CD and you won’t have to worry about.
  • You can use your own supply, divide the number of CDs into the price for the box and use that amount to charge per CD at cost.
  • You can provide supplies such as a CDs at a standard individual rate with a fair mark-up value.
  • You can make sure you are charging a profitable rate or fee that allows you to throw in the occasional incidental supply and include the CD at no additional cost.

You are perfectly entitled to be reimbursed for expenses. Sometimes providing supplies at-cost is reasonable and makes sense.

It’s also common business practice to add your own markup.

For example, you might buy a box of hanging folders for $7.95 + tax, making the per folder cost $0.35, but charge clients $0.50 per individual folder, and then charge that standard cost on a case by case basis. You might decide to not bother to charge for a single folder if it’s a one-time situation (and just build those expenses into your flat project fee). Or, if it’s a special project or an ongoing task that requires regular use of this supply, you might decide to pass those costs fully onto the clients as separate expenses.

All that said, there’s something to be said for not sweating the small stuff so that you don’t come across as nickel and diming to the client. In the case of project work that I’ve made good money on, I’m sure not going to worry about the cost of little ol’ CD.

Determining what tack is appropriate for a given situation is a sensibility you will develop as your grow into your business ownership.

Whatever you do, just don’t forget that you are in business, not charity, and you don’t have to be apologetic for any of the business decisions you make with regard to your fees and making a profit.

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