Secure Your Upfront Deposit Fast: 5 Proven Steps

Intro

Upfront deposit: 10% at most? Two guides agree on that. Number one is your price and how you get paid; easiest first.

1. Put the agreement in writing

Number five: put the agreement in writing. Writing it down is much safer than relying on someone's word. A contract can be a signed paper, an email exchange or a handshake deal. Handshake deals can count, but they're very hard to prove, one guide says.

A written contract is proof of what you agreed, and helps prevent misunderstandings. It also reduces the risk of a dispute, because both sides agree to the details when they sign. Both sides should understand the work, the date it's done, and how much it costs. Even emails or notes on the back of an envelope can support a verbal deal, it adds.

Short is good, another guide says: try a three-page limit unless the job is very large. One guide for home repair businesses requires a written agreement for any contract over $50. Another guide, for freelancers in one city, says $800 or more within any hundred and twenty days. By our count, a 300 and a five-hundred-dollar job in that time make 800.

Rules like these differ where you live. If practical guides like this help you, subscribe. Every step and rule in this video comes straight from the official guide pages linked below.

2. Describe the work exactly

Number four: describe the work exactly. Every contract should describe the work or the result, and when it starts and ends, one guide says. It also says where the work happens, like your premises, the client's, or another place. Be very clear about the scope it covers and any specific exclusions, another says.

One guide's unclear version just says training a company's staff in some software. Its clear version: fifteen staff, two set dates, and sessions from nine in the morning lasting three hours. Plus a user manual and a one-page help sheet for each trainee. By our count, that's fifteen manuals and fifteen help sheets, thirty items in all.

Outline what the contract is for, who it covers, and how long it lasts, another guide says. At the very least, one guide lists the goods or services, the quantity, the quality, and how long it lasts. Plus the legal names of everyone involved. Inspect the area and ask your customer lots of questions to understand the scope, one guide suggests.

You can make that project plan part of the contract, it adds. One guide for home repair businesses adds a work schedule with start and completion dates. And who prepares the work area and cleans up after the job. Plus an itemized list of products and services, and the materials to be used, it adds.

Then know the difference between a quote and an estimate, one consumer guide says. A quote is an offer to do a job for a set price. If the customer accepts it, there's a contract to do the work for that price, another says. An estimate is your best guess of the cost, based on skill and past experience.

If the price may vary a lot from it, make that very clear to the customer, another guide says. And base the estimate honestly on reasonable grounds, it adds. The final price can be more or less, but generally within ten to 15%, the first guide says. Another caps it at 10% above an estimate in the contract, unless a signed change adds work.

An estimate can be spoken or written; there's no legal difference, the first adds. Quotes and estimates should show the work, other costs like materials, the hourly rate, and how long it takes. Give clear, understandable information before the customer agrees, a third guide says. Another's list: the work and its standard, the costs, payment terms, start and finish dates, and what to do in a dispute.

That information should be easy to understand, on paper or in an email the customer can save, one more guide says.

3. Plan for changes

Number three: plan for changes. A variation is a change to a contract that's already in place, one guide says. For example, when the price of materials goes up. Changes can be agreed verbally, but it's best to put them in writing and have both sides sign.

A variation clause sets when and how you can change the contract, it adds. One guide says to avoid a clause that lets only one side change the work. Say how to propose a change, by email or letter, with what's changing and the new date. And set a time to reply, for example no later than five business days.

One guide's example: a one-year delivery job at a fixed fee of $500 a week. Both sides agree to raise it to 600 a week, to cover the higher cost of fuel. By our count, that's $100 more a week, or 20%. With a quote accepted, the price can't go up unless the customer agrees to extra work, one consumer guide says.

Put any change in writing, so both sides see how it affects the price and dates, one guide says. If the project changes in a major way, give a revised written estimate, and both sign off on the new price. Use emails or letters to record each change, with a reply showing you both agree, one guide says. Who pays for changes to the specification, another guide asks, and how will they affect the price?

Plan ahead and review the contract regularly, so everyone knows what to expect, a third says. Communicate early and often, and give reasonable notice of changes, one small business guide says. Explain why changes matter, and outline the benefits and risks, it adds. A contract generally can't be changed unless both of you agree, another adds.

One guide says a term that raises costs without the customer's consent is unlikely to be fair. Our earlier seven-step guide to starting a business is linked on screen. Halfway there: the agreement in writing, the work described, and changes planned.

4. Agree how the job ends

Number two: agree how the job ends. Say what has to be done for the contract to count as finished, one guide says. A termination clause lets both sides end the contract, and can help prevent disputes, it adds. Include what money is due if it ends, such as refunds or compensation.

For ongoing work, each side might give a set notice period before leaving, another says. If the work needs fixing, a notice to remedy gives the worker a chance to fix it first. Clear written terms mean less chance of a dispute, one portal says. A dispute clause can help settle a disagreement quickly and cheaply, another says.

Its steps: check your facts, talk to the other side and keep a record, then write to them. Calm, professional, solution-focused talk often solves problems quickly, a small business guide says. If talking doesn't work, follow up in writing and keep records, it adds. Disputes can be about money, work performance or unfairness, one guide says.

Try to resolve a dispute before taking legal action, it adds. A customer's right to cancel differs a lot where you live. One consumer guide gives ten business days to cancel a door-to-door or phone sale. But for a store or website purchase, there's no automatic right to change your mind, it adds.

Another gives fourteen days for a service bought online or by phone, and thirty for a doorstep sale. By our count, the doorstep window is sixteen days longer. A third gives ten days when a customer signs at home, with a refund within fifteen days. A short window to cancel without penalty should be described in the contract, one more guide says.

If the customer cancels after asking you to start, that guide allows a reasonable charge for work already provided. And a customer who cancels a booked service may still be charged for some of its cost, another adds. So far: in writing, work described, changes planned, and a clear ending.

5. Agree your price and how you get paid

Number one: agree your price and how you get paid. You need to know at the outset how much you'll be paid and when the money arrives, one guide says. Fixed fees and hourly or daily rates are the most widely used, another says. Labour or skills are usually paid by the hour or day, it adds.

Paid by the hour or day? Write down how many hours make a standard day and week, and the rate. A job for a particular result usually pays a fixed fee, it adds. Long job?

Consider a clause to review the fee if your business costs go up. Agree who pays for costs like travel, meals and supplies during the job. On a long job, plan when pay arrives and who covers supplies, it notes. Progress payments can come on set dates, or when you reach a milestone, like writing a report.

The contract should say when each payment is due and what counts as acceptable work. One guide's example: a training job of $9,350 in three payments. 4,400 after two sessions, the same after the next two, and 550 after a feedback meeting. By our count, the first two payments are about 94% of the total.

One guide recommends deposits of no more than 10% of the total project cost. Another tells customers not to pay more than 10%, and says no deposit is legally required. Show the total price with taxes, or how it's worked out if it isn't known upfront, a third says. Deposit conditions belong in the agreement too, it adds.

Will payment come before or after the work, and by how long? One city's rule for freelancers: the contract spells out the work, the pay, and the date you get paid. Explaining how each side handles payments helps avoid confusion and supports timely payments, one guide says. And put payment terms in your standard contract for every payment option you offer, another adds.

Negotiate before you agree to do the work, and put the terms in writing, one guide says. To recap: put it in writing, describe the work, plan for changes, agree how it ends, and set your price and payments. Number five was the easiest step, and number one is how you get paid. A small first step: write down the main points of your next job before you start.

Each guide's numbers are its own, and rules differ where you live. Which step will you add to your next agreement? Tell us in the comments. Subscribe to see the next official guides we check.

Your next step is in the video on screen now: six steps to set your rates. Information only; results vary. This is Extra Income Explained.