Having clear payment clauses in your contracts ensures two crucial outcomes: You are paid for the work you’ve done, and don’t wind up doing any extra work for free.
While that logic is straightforward enough, actually getting paid is a bit more nuanced. Whether or not you get the money you’re owed is ultimately determined by:
- Structure of your payment clauses
- The triggers for payment
- Carveouts for excluded work
- Remedies if your client fails to pay
Without each of these components in your client contracts, you’re potentially leaving your digital agency at risk of not getting paid and a potential court battle. It all comes back to the things you can’t afford to give away in your contracts — the most important leverage points to include when drafting payment clauses in your master service agreement (MSA) and statement of work (SOWs).
Getting Paid for Your Work
1. Get paid more up front. If you’re working on a fixed-fee project, be sure to get as much money as possible before you begin. Your payment clause should require a substantial deposit (at least 25 percent, or ideally 50 percent). Also consider including a “kill fee” trigger in case the client backs out of a project. You turned away other work for this job, so a kill fee allows you to at least recoup some expenses.
2. Get paid faster. Forget 30‑, 60- or 90-day payment cycles. Specify that payment is “due upon receipt” of every invoice. Some clients may insist they have specific payment cycles for vendors. Don’t shy away from explaining that you have your own payment cycle as well.
3. Expect payment due upon delivery. Don’t make payments dependent on a client’s satisfaction with the work you’ve done. That is purely subjective and leaves them too much wiggle room to withhold payment. Instead, your payment clause should specify that payment is due upon delivery of your work product.
Protecting Your Digital Agency’s Rights
4. Transfer ownership of intellectual property upon payment. If a client doesn’t pay, they don’t get to keep whatever it is you’ve created for them. It’s that simple. You designed a fantastic new logo or a whole website for your client — but if they haven’t paid? A clause like this allows you to take this IP back until they make good on their payment.
5. Include an attorney fee provision. This is a little insurance for when a client is out of bounds. Including a clause that specifies the client is responsible for paying attorney fees is a powerful deterrent. If a dispute goes to court and you prevail, the penalty they can expect to pay is significant. They’ll think twice about skipping out on paying you.
Establishing Clear Expectations with Clients
6. Be specific about scope. Make it clear exactly how many rounds of revisions are included in the project. Specify the number of major and minor revisions, how that’s defined and what that entails. This will help avoid endless back-and-forth where you ultimately wind up working for free. If the client requires anything outside of the defined scope of work, they can pay you at your hourly rate or potentially more for extra or rush work (based on the language in your service agreement, of course).
7. Spell out how you want to get paid. Do you want a check? An ACH deposit? Zelle? Make it as easy on your client as possible to pay you. Just be clear how you are to be paid. This eliminates one of the easiest ways for a client not to pay.
8. Know who your client is. Your approach to payment and payment clauses may vary depending on your client. Working with a Fortune 500 company is different than working with a startup. With a larger company, you might have less room to negotiate longer payment cycles but a greater expectation of payment. With a smaller or newer company, you might be able to insist on being paid earlier but you also might not get paid at all. In those cases, insist on a larger amount up front.
Furthermore, you may need to adjust your pricing based on certain risks you encounter a client insisting on their own form of agreement (read the linked article — sharks and lasers are in play here).
9. Skip problematic “soft words.” Avoid jargon like “both parties will use good faith to do X, Y or Z” or “make all reasonable efforts” or “meet or exceed industry standards.” What does any of that mean? Those are all arguable so it’s best to avoid them.
Be Proactive with Your Digital Agency Service Agreements
Each of these elements is designed to ensure full, prompt payment from your clients and prevent you from doing work for free. Having clear payment terms also helps keep any disputes from escalating or winding up in court.
If your DIY service agreements aren’t getting you paid on time (if at all), it might be time to go with the pros. Explore Matchstick Legal’s retainer or project-based plans.