Requiring clients to put down a deposit for products or services is a common business practice, but that doesn’t mean it’s an easy task. Asking your customers to pay a fee upfront can feel uncomfortable — and if it’s not handled well, the encounter could cost you that person’s business.
If you want to ask clients for deposits but aren’t sure how, don’t worry. We can help. Read on to learn how to ask for a deposit politely — complete with adaptable email templates.
Why customer deposits are important
Although asking may feel awkward, deposits are often crucial for running a business.
An upfront payment can give you the cash flow you need to put your very best work into the client’s product or service. For example, if you work as a visual artist, taking upfront deposits allows you to always have the necessary materials on hand.
Deposits also help establish precise payment requirements with your client, laying a foundation for clear communication throughout your relationship. This way, you screen out people who aren’t serious about your services or are prone to flaking.
Even if a contract falls through, a deposit ensures you receive compensation for your time and effort up to that point. Otherwise, you could be left holding the bag for the beginnings of a project that you’ll never finish — or be paid for.
When to ask for a deposit or upfront payment
Some projects don’t require a deposit. For example, business owners in the retail market rarely need deposits from their customers — they simply sell the products in their inventory. On the other hand, some professionals, like photographers, rely on deposits to run their business because the deposit covers their expenses should the client cancel.
What type of work warrants a deposit request? We recommend asking for deposits in the following situations:
Large or costly projects
As a freelancer or small business owner, the scope of your work likely varies from project to project. Sometimes, a client wants a quick, simple job — other times, they’re seeking something complicated and time-consuming. If a client hires you for work that will take significant time, effort, or resources, request at least a partial payment upfront. While it’s not a hard and fast rule, a customer deposit is an excellent way to ensure your earnings on projects worth $1,000 or more.
Good client relationships are essential for your business. When your trust your customers, everything from work requests to payment processes run smoothly. But what if you’re working with a new client who hasn’t built that foundation of trust? In those scenarios, asking for a deposit before you start any work is reasonable. While we’d all like to assume every person is going to follow through on payments, you can’t assume a stranger won’t terminate an agreement early or refuse to pay.
It’s also common for small businesses to require deposits on custom projects. This is because commissioned work isn’t always sellable to just anyone — for example, you can’t list someone’s family portrait on your website. If the client decides they don’t like the custom piece and won’t pay for it (or they disappear), the deposit ensures your time and resources weren’t a total loss. If you decide to take on a one-of-a-kind project, asking your client for a deposit is a smart choice.
How to ask clients for an upfront payment
Imagine a client reaches out to you and asks you to create an expensive custom art piece. You know that a deposit is the right move in this scenario, but still hesitate to bring it up. We understand — talking about money can be uncomfortable. But if you use the following tips, you can politely and professionally broach the subject and secure that payment:
Send invoices as soon as possible
If you want to get paid on time, practicing prompt invoicing is wise. Once you and the client make an agreement — including the deposit amount — send your invoice as soon as possible. This will avoid any “sticker shock” for the customer, as your agreement will still be fresh in their mind. Sending invoices quickly also speaks to your professionalism, which promotes a better long-term relationship with your client.
Be clear about deposits in your payment terms
All business owners should strive for clear communication any time they deal with clients. However, communication becomes even more important when it comes to requesting payment. When you draft an agreement with a client, be transparent about your payment requirements. This includes:
- The deposit amount
- The due date
- Payment methods you accept
- Consequences of overdue payments
- Benefits for prompt payments
If you communicate clearly, politely, and professionally, your client will likely hold up their end of the agreement.
Incentivize timely payments
Many of us know what happens when clients fail to pay their bills. The business owner spends has to chase them down, pleading and cajoling to try and get the money they’re owed. If that doesn’t work, the business eventually turns things over to a collection agency, or, in the worst-case scenario, they simply cut their losses and eat the costs.
If you’re lucky, your clients will pay their invoices by the due date — and when they do, you might want to reward them. Offering an incentive to customers who pay on time is a great way to add value to your business and encourage your clients to pay on time. The motivation could be a discount, additional services, or anything else your clients will appreciate. But be sure any offerings don’t cut into your earnings — for example, if you require $500 for a project but want to offer an early payment discount, you could charge $525 for the service and offer $25 off. This way, timely customers save money and you receive fair compensation for late payments.
Email templates for requesting deposits from your clients
Asking your clients for deposits — or asking after overdue ones — is a delicate matter. You should strive to sound firm and professional without being rude. Here are a few templates you can use when dealing with clients in your business.
To ask for an initial deposit, use this email template:
Hi [client’s name],
Thank you again for trusting [your business] with your project. Our team is looking forward to working with you!
We’ve attached a copy of invoice [number] for the project. The total amount is [$0.00], which covers [description of work]. We require a [$0.00] deposit to begin work on this project. The deposit is due by [due date]. You can make payments via [preferred payment method] by [instructions].
Please feel free to contact me via [phone number] or [email address] if you have any questions.
What if the due date comes and goes without payment? Reach out to your client using this email template:
Hi [client’s name],
I hope you’re doing well. I am contacting you today with a friendly reminder about invoice [number]. The deposit for this project was due on [due date] and is now considered overdue. Please send payment as soon as possible so our team can begin work on your project.
I’ve attached the invoice to this email for your reference. Please don’t hesitate to contact me at [phone number] or [email address] if you have any questions.
More tips and tricks for managing your business
Asking for deposits is just one of many important conversations you’ll have with clients when managing your business. Whether you’re trying to remind clients about overdue payments, clarifying their expectations for your work, or sending a polite “thank you” when the project is complete, a client relationship management (CRM) tool can help you keep track of all that correspondence.
Practice’s CRM software was designed to assist you as you manage client relationships, handle your accounting, stay on top of your schedule, and much more. Plus, our blog is an excellent resource for budding entrepreneurs and seasoned business owners alike.