The Three Defenses
1 · Deposit
25–50% before kickoff — and work does not begin until it clears. Filters tire-kickers, funds your runway. Under $5K projects, push toward 50%.
2 · Milestones
Split the balance across phases (e.g. 50/25/25). Caps your maximum exposure at any moment and creates natural review gates.
3 · Late fee
1–1.5% per month on overdue balances, with an optional 5–7 day grace period. Must appear in the signed contract AND on every invoice — one placement isn’t enforceable in most regions.
Most freelancers run zero defenses, get burned, then add one. Professionals run all three, every time — each works independently, so even if one fails the others cap the damage.
When they pay late: the escalation playbook
Day 1–3 past due — polite reminder
Friendly and low-stakes; assume it slipped through. “Invoice #X went past due yesterday — here’s the link.” Most invoices resolve here.
Day 5–7 — formal note
Reference the contract calmly: “Per our agreement, late fees of [rate] begin accruing on [date].” The contract does the work — you don’t need to.
Day 10–14 — pause work
If the project is ongoing: stop. “Per our contract, work pauses on unpaid invoices over X days.” Not a threat — a contractual right. Working unpaid extends your exposure daily.
Day 21–30 — demand letter
Total owed, accrued fees, a 7-day deadline, and the stated next action. An attorney letterhead alone resolves most holdouts.
Day 30+ — small claims or collections
Small claims is fast and cheap for amounts under ~$10K; collections agencies take 20–50% but handle everything. Knowing these exist lets you run stages 1–2 with calm authority.
The contract: 16 clauses, compressed
Parties, scope, deliverables & acceptance criteria, timeline, fees, the three defense clauses, revisions, change orders, IP ownership, confidentiality, termination, indemnification, dispute resolution, signatures. Don’t write it from scratch — start from a Bonsai or FreshBooks template and spend your energy on the defense clauses. (Practical guidance, not legal advice — laws vary by region.)
- Audit your current contract — do all Three Defenses appear?
- Add the late-fee line to your invoice template today.
- Write deposit, milestone, and late-fee clauses before your next proposal goes out.
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Quick answers
How much deposit should a freelancer charge?
25–50% of project value, due before work begins — and work starts when the money clears, not when it’s invoiced. For projects under $5K, push toward 50%; over $10K, 25–33% is standard.
What late fee can freelancers charge?
The industry standard is 1–1.5% per month (12–18% annually) in simple interest, optionally with a 5–7 day grace period. Critically, it must appear in the signed contract and on every invoice to be enforceable in most jurisdictions.
What do I do when a client won’t pay?
Escalate in stages: polite reminder (day 1–3), formal note citing the contract (day 5–7), pause ongoing work (day 10–14), demand letter (day 21–30), then small claims court or a collections agency past day 30. Most cases resolve in the first two stages.
Do I need a contract for small freelance projects?
Yes — at minimum the Three Defenses: a deposit, a payment schedule, and a late fee. If a client refuses a deposit, that tells you how they’ll treat the rest of the engagement.
Part of the free 9-training series → see all trainings. Know your numbers too: read The Freelance Profit Gap: 7 Data-Backed Truths.