Freelance Payment Terms Guide: How to Set Terms, Get Deposits & Get Paid Faster
Asking for 50% upfront feels uncomfortable. Chasing late payments wastes hours you could spend on billable work. Unclear payment terms lead to scope creep, delayed payments, and cash flow problems that threaten your freelance business.
Research shows that freelancers wait an average of 60 days to get paid, and 71% of freelancers have experienced late payment or non-payment at some point. The problem is not clients refusing to pay—it is freelancers failing to set clear, professional payment terms upfront.
This comprehensive guide teaches you to structure payment terms that protect your cash flow, filter out problem clients, accelerate payment, and provide legal protection when clients do not pay.
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Upfront Deposit
Before work begins
$2,500.00
50.0%
Milestone 1
Upon milestone 1 completion
$833.33
16.7%
Milestone 2
Upon milestone 2 completion
$833.33
16.7%
Milestone 3
Upon milestone 3 completion
$833.33
16.7%
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Stripe processing fee: 2.9% + $145.30
You receive: $4,854.70
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5 Common Freelance Payment Structures
The payment structure you choose determines when you get paid, your cash flow stability, and how much risk you assume. Each structure works best for different project types, client relationships, and risk tolerance levels.
1. Upfront Deposit + Final Payment (50/50)
Industry standard: 50% upfront deposit before work begins, 50% upon project completion. Balances client risk with freelancer cash flow protection.
BEST FOR:
- • New clients (unproven payment history)
- • Projects $2,000 - $10,000
- • Timeline: 2-8 weeks
- • Logo design, website builds, content packages
PROS & CONS:
- ✓ Covers initial time investment
- ✓ Filters out non-serious clients
- ✓ Simple to explain and invoice
- ✗ Half payment delayed until end
2. Milestone-Based Payments
Payment tied to specific deliverables or project phases. Typically 30-40% deposit, then 2-4 milestone payments as work progresses.
BEST FOR:
- • Large projects over $10,000
- • Projects lasting 2+ months
- • Multi-phase projects with clear stages
- • App development, book ghostwriting, video production
PROS & CONS:
- ✓ Regular cash flow throughout project
- ✓ Reduces risk of scope creep
- ✓ Client sees progress before each payment
- ✗ Requires clear milestone definitions
3. Net 30 / Net 15 Terms
Invoice issued upon completion or monthly for retainers. Client pays within 15 or 30 days of invoice date. Common in corporate environments with procurement processes.
BEST FOR:
- • Established corporate clients
- • Proven payment history (6+ months)
- • Smaller invoices under $2,000
- • Ongoing retainer relationships
PROS & CONS:
- ✓ Accommodates corporate payment cycles
- ✓ Professional and common in B2B
- ✓ No upfront payment friction
- ✗ 30-60 day cash flow gap
- ✗ Risk if client does not pay
4. Upon Completion (100%)
Full payment due immediately upon project delivery or client approval. No upfront deposit—all payment risk on freelancer.
BEST FOR:
- • Trusted long-term clients only
- • Small projects under $500
- • Quick turnaround (under 1 week)
- • Rush projects where deposit delays start
PROS & CONS:
- ✓ No upfront payment negotiation
- ✓ Fast project start
- ✗ All risk on freelancer
- ✗ No cash flow until end
- ✗ Vulnerable to scope creep
5. Monthly Retainer
Fixed monthly payment for ongoing services or guaranteed availability. Payment due first of each month, typically via recurring invoice or automatic charge.
BEST FOR:
- • Ongoing services (maintenance, content, social media)
- • Guaranteed availability (priority support)
- • Predictable scope (10 hours/month, 4 posts/month)
- • Long-term relationships (6+ month commitment)
PROS & CONS:
- ✓ Predictable monthly income
- ✓ Better client relationships
- ✓ Reduced invoicing overhead
- ✗ Requires clear scope boundaries
- ✗ Risk of undercharging if scope grows
Recommended Payment Terms by Project Size
| Project Value | New Clients | Established Clients | Risk Level |
|---|---|---|---|
| Under $500 | Upon completion or 25% deposit | Upon completion or Net 15 | Low |
| $500 - $2,000 | 50% deposit + 50% on completion | Net 15 or 30% deposit | Medium |
| $2,000 - $10,000 | 50% deposit + 50% on completion | 50% deposit or 2-3 milestones | High |
| $10,000 - $50,000 | 3-4 milestone payments (30% upfront) | 3-4 milestone payments (25% upfront) | Very High |
| Over $50,000 | 4-6 milestones (30-40% upfront) | 4-6 milestones (25-30% upfront) | Critical |
When to Require 25%, 50%, or 100% Upfront
The deposit percentage you require signals professionalism, protects your time, and filters clients. Requesting a deposit is not rude—it is standard business practice that serious clients expect.
25-30% Deposit
Lower barrier, demonstrates minimal commitment
Use when:
- • Projects under $1,000
- • Established clients
- • Corporate clients with payment processes
- • Quick turnaround (under 1 week)
50% Deposit ⭐
Industry standard, balanced risk
Use when:
- • Projects $2,000 - $10,000
- • New clients
- • Timeline 2-8 weeks
- • Default for most freelance work
100% Upfront
Maximum protection, filters non-serious clients
Use when:
- • Small projects under $500
- • Rush projects (under 48 hours)
- • Clients with payment red flags
- • High-risk clients (new, overseas, vague)
When NOT to Waive the Deposit Requirement
- Large corporations: They can afford deposits. Payment delays come from bureaucracy, not inability to pay.
- "We will pay extra later": Empty promise. If they cannot pay deposit, they will not pay final invoice.
- "We have never paid deposits before": Then they have worked with desperate freelancers. Set professional standards.
- Friend/family projects: Business is business. Lack of deposit leads to scope creep and delayed payment.
Payment Methods: Fees, Speed & Security Comparison
| Payment Method | Processing Fee | Payment Speed | Security | Best For |
|---|---|---|---|---|
| Stripe (Credit Card) | 2.9% + $0.30 | Instant (2-day payout) | Excellent | Most projects, instant payment |
| Stripe (ACH/Bank) | 0.8% (max $5) | 5-7 business days | Excellent | Large invoices, lower fees |
| PayPal Invoice | 3.49% + $0.49 | Instant (1-day payout) | Good (disputes common) | International clients, familiar platform |
| Bank Wire Transfer | $15-50 flat fee | 3-5 business days | Excellent | Very large invoices (>$10k) |
| Check / Money Order | $0 | 5-10 days (can bounce) | Low (fraud risk) | Avoid unless client requires |
| Wise (International) | 0.5-2% (varies) | 1-3 business days | Excellent | International, best rates |
| Cryptocurrency | Varies (gas fees) | Minutes to hours | Moderate (irreversible) | Tech clients, international |
Recommendation: Offer 2-3 Payment Options
Offering multiple payment methods increases the likelihood of fast payment. Most freelancers use this combination:
Late Payment Fees: How to Calculate & Enforce
Late payment fees serve two purposes: compensation for delayed cash flow and deterrent against slow payment. To be legally enforceable, late fees must be specified in your original contract—not added after payment is late.
Standard Late Fee Structure
Typical Rates
- 1.5% per month (18% annual) - Most common, legal in all 50 states
- 2% per month (24% annual) - Aggressive but legal in most states
- Flat fee: $25-100 after 30 days - Simpler for small invoices
- Escalating: 1% first 30 days, 2% after 60 days - Increases urgency
Legal Considerations
- • Check state usury laws (max interest rates vary)
- • Include clause in original contract, not after invoice
- • Calculate from due date, not invoice date
- • Clearly state in contract and on invoice
- • Be willing to waive for good clients with valid reasons
Sample Late Fee Contract Language
STANDARD CLAUSE (1.5% per month)
"Invoices are due within [X] days of invoice date. Any invoice not paid within [X] days will incur a late payment fee of 1.5% per month (0.05% per day) on the outstanding balance. Late fees will accrue until payment is received in full."
FLAT FEE CLAUSE
"Payment is due within [X] days of invoice date. Invoices not paid within this period will incur a $50 late fee. An additional $50 late fee will be assessed every 30 days until payment is received."
ESCALATING CLAUSE
"Invoices are due Net 30. Payments 1-30 days late will incur a 1% monthly fee. Payments 31-60 days late will incur a 2% monthly fee. Payments over 60 days late will incur a 2.5% monthly fee and may be sent to collections."
8 Essential Payment Contract Clauses
Your contract protects you when disputes arise. These eight clauses establish clear expectations, prevent scope creep, and provide legal recourse for non-payment.
1. Payment Schedule & Due Dates
Specifies exactly when each payment is due and how much.
2. Accepted Payment Methods
Clarifies how client can pay and who covers processing fees.
3. Late Payment Terms
Establishes consequences for late payment with specific rates.
4. Work Stoppage Clause
Allows you to pause work if payment is not received.
5. Scope Change & Additional Work
Prevents unpaid scope creep by requiring change orders.
6. Refund & Cancellation Policy
Clarifies that deposits are non-refundable and defines cancellation terms.
7. Intellectual Property & File Release
Ties IP transfer to full payment—protects your work until paid.
8. Collection & Legal Fees
Makes client responsible for costs of collecting unpaid invoices.
Payment Red Flags: Clients to Avoid
Certain client behaviors predict payment problems with 90%+ accuracy. Recognizing these red flags early saves you weeks of unpaid work and collection stress.
Critical Red Flags (Walk Away)
- Refuses to sign contract: "We don't do contracts" means they will not honor payment terms.
- Pushes back on deposit: "Can we skip the deposit?" means cash flow problems or no intention to pay.
- Vague about budget: "What's the cheapest you can do?" means they cannot afford your services.
- Pressure to start before contract: "Can you start today, we will sign tomorrow?" means scope creep risk.
- Bad-mouths previous freelancers: "Everyone we hire disappoints us" means they are the problem.
- Asks for spec work: "Show us what you can do first" means free work expectation.
- Threatens future work: "Do this cheap, we have lots more projects" rarely materializes.
Warning Signs (Proceed with Caution)
- Brand new business: Higher risk—require 50-100% upfront or milestone payments.
- Individual vs company: Individuals have higher non-payment rate—require larger deposits.
- Unclear scope: "We will figure it out as we go" leads to scope creep and payment disputes.
- Requests Net 60+ terms: Long payment terms often indicate cash flow problems.
- Multiple email domains: Professional email + Gmail + Yahoo suggests lack of structure.
- Overseas with no company: International collection is nearly impossible—require 100% upfront.
- Negotiates every detail: Excessive haggling often continues through project (scope, payment, timeline).
Green Flags: Ideal Clients
- ✓ Signs contract quickly without excessive negotiation
- ✓ Pays deposit promptly (within 24-48 hours)
- ✓ Has clear project scope and timeline
- ✓ Provides detailed project brief without prompting
- ✓ Established business with professional website
- ✓ Responds to questions quickly and clearly
- ✓ References or portfolio of past projects
- ✓ Accepts your standard payment terms
12 Strategies to Get Paid Faster
1. Invoice Immediately
Send invoices the same day work is delivered or milestone is complete. Every day you delay invoicing adds days to payment.
2. Offer Early Payment Discounts
"2/10 Net 30" (2% discount if paid within 10 days) accelerates payment from high-value clients. Only offer on invoices over $5,000.
3. Accept Multiple Payment Methods
Credit card payments are instant. Offer Stripe, PayPal, ACH, and bank transfer—remove all friction to payment.
4. Automated Payment Reminders
Send automatic reminders 7 days before due date, on due date, and 3 days after. Most late payments are oversight, not refusal.
5. Shorten Payment Terms
Net 15 instead of Net 30 cuts average payment time by 50%. Most clients pay on day 30 of Net 30 terms regardless.
6. Require Larger Deposits
50% upfront instead of 25% doubles your immediate cash flow. Serious clients expect deposits and pay immediately.
7. Make Invoices Easy to Read
Clear line items, bold total, payment instructions at top. Confusing invoices sit in email for days while clients seek clarification.
8. Send to Decision Maker
Invoice the person who can approve payment, not the project manager. CC accounting if necessary.
9. Follow Up Personally
Phone call on day 7 overdue is more effective than automated emails. Direct conversation resolves issues immediately.
10. Withhold Final Deliverables
Do not send source files, passwords, or final assets until payment clears. This is your only leverage.
11. Build Payment Urgency
"Payment due within 7 days to avoid late fees" creates deadline pressure. Vague "payment due" gets ignored.
12. Use Invoice Factoring
Sell Net 30 invoices to factoring companies for immediate cash (minus 3-5% fee). Good for cash flow emergencies.
What to Do When Clients Do Not Pay
Even with perfect payment terms, some clients will not pay on time. Follow this escalation process to maximize collection while maintaining professionalism.
Day 1-3 Overdue: Friendly Reminder
Assume honest oversight. Send polite reminder with payment link.
Day 7 Overdue: Formal Notice
Reference contract terms and late fees. More formal tone.
Day 14 Overdue: Phone Call
Direct conversation often reveals issues (disputed work, budget problems, admin delays).
Day 21 Overdue: Pause Work & Demand Letter
Stop all work. Send formal demand letter via email and certified mail.
Day 30+ Overdue: Collections or Legal Action
Three options depending on invoice amount and effort:
- Collections Agency: 25-40% fee, but no upfront cost. Best for invoices $1,000-$10,000.
- Small Claims Court: $30-100 filing fee, up to $5,000-$10,000 limit (varies by state). Represent yourself.
- Attorney: For invoices over $10,000. Include attorney fee clause in contract so client pays.
When to Write Off Bad Debt
Sometimes collection costs more time and money than the invoice value. Consider writing off if:
- • Invoice under $500 and client unresponsive for 90+ days
- • Client business has closed or filed bankruptcy
- • Client is overseas with no US presence (international collection is expensive)
- • Legal costs would exceed invoice amount
- • Your time is better spent on new clients than collections
Tax benefit: Write off bad debt as business expense on taxes. Document all collection attempts for IRS.
International Payment Considerations
International clients introduce currency risk, higher fees, slower payment processing, and near-impossible collection for non-payment. Adjust your payment terms accordingly.
Best Practices for International Clients
- Require 50-100% upfront: Collection is nearly impossible if they do not pay. Higher deposit protects you.
- Invoice in stable currency: USD or EUR prevents currency fluctuation losses. Let client handle conversion.
- Use Wise (TransferWise): Lowest international fees (0.5-2%) and fastest transfer (1-3 days). Better than PayPal.
- Add currency buffer: Add 3-5% to quoted rate to absorb currency fluctuation between quote and payment.
- Clarify tax responsibility: Specify whether quoted price includes or excludes VAT/GST. Who pays withholding tax?
- Understand wire fees: International wires cost $25-50 per transaction. Not economical for small invoices.
International Payment Methods Comparison
Wise (Recommended)
Fee: 0.5-2% • Speed: 1-3 days • Best for: All international payments
PayPal
Fee: 3.5-5% • Speed: Instant-1 day • Best for: Clients familiar with PayPal
International Wire
Fee: $25-50 flat • Speed: 3-5 days • Best for: Large invoices (>$5k)
Payoneer
Fee: 1-3% • Speed: 2-5 days • Best for: Freelance platforms
Cryptocurrency
Fee: Gas fees vary • Speed: Minutes-hours • Best for: Tech clients, high volatility risk
Key Takeaways
50% upfront deposit is industry standard for new clients and projects over $2,000—it filters non-serious clients and protects your initial time investment.
Milestone payments reduce risk on large projects by tying payment to deliverables and ensuring regular cash flow throughout the project.
Net 30 terms should be reserved for established corporate clients only—never offer Net terms to new clients, individuals, or for projects over $5,000.
Late payment fees (1.5-2% per month) must be in the original contract to be legally enforceable—you cannot add them after payment is late.
Accept multiple payment methods (Stripe, bank transfer, PayPal) to remove friction and accelerate payment—most clients pay faster when it is convenient.
Withhold final deliverables until payment is received—source files, passwords, and IP transfer only after payment clears. This is your only leverage.
Red flags predict payment problems with 90%+ accuracy—clients who refuse contracts, push back on deposits, or pressure you to start before signing will cause payment issues.
Follow escalation process for late payments—friendly reminder (day 1), formal notice (day 7), phone call (day 14), demand letter (day 21), collections/legal (day 30+).
Get Paid Faster with Professional Invoicing
QuickBillMaker helps you create professional invoices with clear payment terms, automated reminders, and integrated payment processing—so you get paid on time, every time.
Create Your First InvoiceFrequently Asked Questions
What are the most common freelance payment terms?
The five most common payment structures are: (1) Upfront deposit + final payment (typically 50% upfront, 50% on completion), (2) Milestone-based payments (payments tied to deliverables), (3) Net 30 terms (payment due 30 days after invoice), (4) Upon completion (100% due when project finishes), and (5) Retainer (monthly recurring payment for ongoing services). For new clients or large projects, deposit structures (50% upfront) or milestone payments offer the best protection.
Should I require a deposit from freelance clients?
Yes, especially for new clients, large projects (over $2,000), or clients with payment history concerns. A 50% upfront deposit is industry standard and filters out non-serious clients. For smaller projects under $1,000, 25-30% is acceptable. The deposit demonstrates client commitment, covers initial time investment, and reduces your risk. Skip deposits only for long-term clients with proven payment history. Always require deposits for projects exceeding one week of work.
What payment terms should I offer new vs existing clients?
New clients: Require 50% upfront deposit with final payment upon completion, or milestone payments (never Net 30 for untested clients). Existing clients with proven payment history: Can offer Net 15 or Net 30 terms for convenience, or continue milestone/deposit structures for large projects. Clients who have paid on time for 6+ months earn more flexible terms. However, projects over $10,000 should always use milestone payments regardless of client history.
How do I calculate and charge late payment fees?
Typical late fees range from 1.5% to 2% per month (approximately 18-24% annual rate), which is legal in most US states. Calculate as: (Invoice Amount × Monthly Rate) ÷ 30 × Days Late. For example, a $5,000 invoice with 1.5% monthly fee and 10 days late: ($5,000 × 0.015) ÷ 30 × 10 = $25. Specify in your contract: "Invoices not paid within X days of due date will incur a late fee of X% per month." Always include late fee terms in the initial contract, not after payment is late.
Which payment method is best for freelancers?
Stripe or similar payment processors (2.9% + $0.30 fee) offer the best balance: instant payment, automatic invoicing, client convenience, and professional appearance. PayPal (3.49% + $0.49) is widely recognized but costs more. Bank transfers have lower fees ($0-25 flat fee) but slower processing (3-5 days). Checks have no fees but take 5-10 days and can bounce. For international clients, Wise (TransferWise) offers best rates. Offer 2-3 payment options and pass processing fees to clients by building them into your rate.
What should I do if a client does not pay on time?
Follow this escalation: (1) Day 1 overdue: Friendly reminder email assuming oversight, (2) Day 7: Formal notice referencing contract terms and late fees, (3) Day 14: Phone call to discuss payment plan or issues, (4) Day 21: Pause all work and send formal demand letter, (5) Day 30: Consider collections agency or small claims court. Document everything. For ongoing projects, withhold deliverables until payment received. If payment is over 30 days late, stop work entirely and pursue legal collection.
Should I offer Net 30 payment terms to freelance clients?
Net 30 is appropriate only for: established corporate clients with procurement processes, clients you have worked with successfully for 6+ months, and smaller invoices (under $2,000) where cash flow impact is minimal. Avoid Net 30 for: new clients, individuals or small businesses, projects over $5,000, or clients with prior late payment history. Many freelancers find Net 15 a better compromise—it accommodates client payment processing while not extending receivables too long. For most freelancers, milestone or deposit structures provide better cash flow than any Net terms.
How do I handle international client payments?
Use international-friendly platforms: Wise (formerly TransferWise) has lowest fees (0.5-2%) and fast transfers, PayPal works globally but charges 3.5-5% for currency conversion, Payoneer specializes in international freelance payments, or direct bank wire (expensive: $25-50 per transaction). Specify currency in contract—invoice in your local currency and let client handle conversion, or agree on a stable currency (USD/EUR). Account for currency fluctuation by adding 3-5% buffer to quoted rates. Require full payment upfront or 50% deposit for international clients to reduce collection risk.