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Requiring a Deposit

Ann Wylie

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My question:

My biggest client has requested that I stop requiring deposits for her bookings. She books programs for her company's different offices all over the country, each of which has a different billing code, budget, etc., so the pre- and post-billings for each engagement are a hassle for her. We've worked together for a year and I do trust her to pay me, and she has positioned her request "in the spirit of trust." However, she's a wee bit loose with engagements; though she's never canceled one, she has changed dates several times. So she's already trying my flexibility a bit. What's your take on deposits for trusted clients in general and from this client in particular?

Yes, you should require a deposit

-- Marguerite

I will always request a deposit for a speaking engagement. I discuss it with every client at the time of the booking. I have only one client in 10 years (FDIC) who does not "do business that way" so I have continued to work with them, however they have never changed the date. I would reply to her request that you need to maintain consistency in the way you run your business and that it is company policy that you receive a deposit to secure the date of her booking. I have said that to other clients and explained that without a deposit I do not consider it a secure booking and if another booking comes in for that date I will book it! Stand firm, especially if they seem to change the dates with you.

-- Linda Gabbert Keith, CSP

Trusted clients don't have a problem with deposits.

-- Kim

This sounds like one of those times when setting a crystal clear limit and living by it would make you a better business person. I feel it would be worth testing your value to this client by saying "NO" to the proposition. You've already conceded to several changed dates. I would ask if you concede to the removal of deposits, what's next? You could couch your response in terms of "commitment." "I require deposits from all my clients so that I know how my resources (time) is to be distributed. Without that deposit comittment, I'm forced to wing it and that's not how I do business" (a la Alan Weiss). On the light side, not wanting to give you deposits (because her system isn't set up for this...huh?) is insensitive. On the heavy side, I could consider it downright abusive!

Now, on the other side of the coin, it's always easier to do this with new clients on the radar screen than existing ones. But you could remind her that you've been flexible with her date changes and your system isn't set up for that either...it's fair.

I vote 70/30 in favor of drawing the line in the sand (isn't it nice how we third party consultants can make those decisions for you?).

-- Rebecca Everett

My take on this is that your client is making her problem YOUR problem. It seems to me that her company's billing system needs to compromise, not you. Would she make this request of other vendors? Perhaps you are willing to give in to save the client. What I foresee is more giving in. When I have given on little things, I have found that leverage being forced into bigger things. It took me 3 months, 3 letters and 3 phone calls to collect a three-figure fee from a client who did not want to pay a deposit. I won't do that again.

-- Daniel Jingwa

Our business life is much simpler and less clouded with doubt when we secure the deposit. That way the client doesn't hop around irresponsibly, but honors their commitment. I certainly have done work without first securing the deposit, but I will avoid it where possible. I don't imagine she has your interest at heart when she indicates there'll be no more deposits.

-- Arlene B. Isaacs

I function pretty much here in NYC -- east coast. I believe in retainers. One client who retained me for Feb. said "it's in the next calendar year; I cannot pay out of this years budget... " BUT she guaranteed the deposit -- 50% would be on my desk -- the end of the first week in January.

Another client for whom I did a series up and down the eastern seacoast paid me for all as soon as I did the first one. She turned me over to accounts payable and I developed a rapport with the contact who facilitated things.

I believe it's crucial that folks not take a sole practitioner for granted. We don't have big overhead or needs.

You know better than I, is she inconsiderate or taking advantage. Personally, I have low tolerance.

I would tell her "I want to keep my accounts current AND simplify your life. So, I will call each and every office and speak to the Accounts Payable person to assure that your organization sends out its payment to me as agreed upon." Don't let her getting away with thinking you are a push over. Folks in corporations don't seem to understand that they have cushions, LOTS of them. WE don't. Tell her you are a BUSINESS OWNER.

-- Jean Palmer Heck

Sounds like a sticky situation. I'd suggest that you explain to her that as much as you'd like to help her out, it's important that you are able to guarantee your availability to all your clients, including her. The best way you can do that is by securing those dates they want with deposits.

-- Terry

There is a big difference between being easy to work with and being professional in protecting your own interests.

You need standard payment policies that apply to all clients. Yes, of course, there will be times you need to adjust this for an individual client, but you can reference your policies and secure a quid pro quo for deviating from them. I require a 50% deposit now to CONFIRM the date, with the rest due on date of performance. I also offer a 10% discount for full payment now. 80% of my clients take the discount, the money sits in my bank, not theirs, and any shuffling of dates is far less anxiety-ridden.

-- Jim Waszak

I'd continue to require deposits.

It's probably not about the billing work. It's probably something else that is making her uncomfortable. She may feel that an engagement may come up that is canceled, and then she'd have to chase you for the money.

I'd emphasize to her that the purpose of the deposit is not about trust, it's about business. Deposits are used to evidence commitment, and in some cases to protect the "seller" against cancellation. I don't know what your policy is, but if you had a deposit against an engagement that the client canceled, I'd think that you'd be entitled to keep some or all of it.

Also, what happens if something should happen to her -- death, illness, bankruptcy?

My suggestion is that it's not about trust, it's about business.

-- MM

I had a trusted client. This month I'll be taking the client to Small Claims Court for non-payment of the last engagement. You already mentioned there were red flags (changing dates, for example). What about offering a different alternative: request the entire fee up front.

-- Dave

I am a beginning speaker and don't have a lot of experience with speaking clients, but I have been running my own home-based business for 18 years so I know something about clients in general.

I think you should continue to require the deposits. Trust is not the issue. I'm sure that you do trust her and that everything would be fine as long as you are working with HER. What happens if she moves, dies, gets replaced, promoted, or sick? Someone else may take over that may not be as reasonable as your current client, and then where would you be? I don't think that trust has anything to do with it... when I am negotiating a contract with a software client or strategic partner, I tell them right up front that I wouldn't be doing the deal at all if I didn't trust them. I want an air-tight contract in case I have to deal with someone else down the line! I believe that you should do the same.

After all, it IS a business.

-- Michelle

Can you ask her, "How can I help alleviate your pain and still meet my needs?"

Is there a way you can help her (administratively) with the billings so it's not such a hassle to her? What's her biggest agony, and how might you work with her, or other departments so you still get paid in advance.

It sounds like she's only making this change to suit her needs. If you can make it EASIER for her to continue to pay you in advance, there' isn't a problem. Find out what's the pain, and make it easy for her.

No, you shouldn't require a deposit

-- Richard Hadden, CSP

I have a similar situation with a couple of steady clients. I don't ask for a deposit for clients with a proven track record (they pay promptly and can be trusted not to cancel or postpone indefinitely). However, my fee includes travel, and therefore, it is in my interest to book non-refundable tickets (because the fare is substantially lower). And so the problem comes up when they cancel within 21 days and I have already bought the ticket. My agreement, for these clients, states that in the case of a cancellation or date change within 21 days, they are responsible for the airfare, and will be invoiced for it. It has only happened once with one client, and they understood their responsibility and paid for the ticket. They have continued to book me, and there has been no indication of hard feelings on their part.

When issues like this arise, I often harken back to something Joe Callaway, CSP, CPAE once wrote in Professional Speaker magazine, under the headline of "No Problem". Unless the client's request places an unreasonable hardship on me, I usually respond with "No Problem." I may not like it, but it usually achieves the goal of keeping the relationship positive, and that has always resulted in repeat business.

-- Maye Musk

I don't request deposits from most of my clients as they are big companies and have never not paid, although some have been slow. They also don't change the date of the talk if I am listed in their printed programs.

-- Patti Hathaway, CSP

I do not request a 50% deposit from my largest client for the same reasons your client mentioned. They also tend to re-schedule frequently which is a BIG hassle. They tend to reschedule last-minute which means they have to work around my other already scheduled dates. I also find that these new dates would not have been booked that late anyway. When a new client calls about a date I have scheduled for my big client, I now call them and ask them whether they definitely are going to use that date or do they have flexibility? Often, they will re-arrange their schedule for me to book another client.

The bottom-line for me is that they are my biggest client for the last 2 years and I feel it is a small price to pay since I'm receiving $60K+ per year from them. The only exception to the no-deposit situation is with a Train-the-Trainer program -- I do require a deposit because I am doing a significant amount of work prior to any speaking engagement with them.

-- Gary Wollin

Trust and confidence are very difficult to earn and very easy to lose.

Since this is your BIGGEST client, you might be able to win some big brownie points which some of your competitors might not.

First, determine the downside to you and your speakers if a date is changed. Do another analysis for a date canceled. I'm sure the problem is much less than you might believe. Still, I would voice my concern for the speakers' schedules and ask for a way to indemnify or 'make whole' a speaker who might have lost income or opportunity.

Most speakers would deal with both of you reasonably I'm sure.

I trust my bureaus and clients, totally. I'm sure I've gotten some new business and lots of spin-off business because I am so easy to work with.

BOTTOM LINE: Treat your biggest customer like they were your biggest customer. Don't worry about deposits until the first problem, then re-evaluate. BOOK THE BUSINESS.

-- Fun Nun

In my 21 years of speaking full-time I have never required a deposit. I have only been "stung" three times. I would rather be a "speaker-friendly speaker" and work on the trust basis from the beginning. I know of other speakers who do the same. Not all speakers agree to this, but it is my style.

-- Rosemarie Rossetti

A deposit is a prepayment option to ensure that you will be treated fairly. I sense that this client has been fair to you, has a trusted relationship and wants to make her job easier. It would be my advice to let her suggest the payment plan that works best.

Why not consider these other options?

-- Jim Brown

How would you feel about asking her to pay for one program now? Then she would pay for every program after the program and the last one she would ask you to do would be free. You now have the deposit issue resolved and she only has to make one check and charge the account once. If you get a request for a date that she wants you to speak on, call her and tell her that you have another inquiry for that date and if she changes the date now and you can't rebook the date she will have to pay for it anyway. It is a balancing act because she is a constant flow of revenue and you don't want to jepordize that. Good luck. Be open and trust.

-- Chuck Reaves, CSP, CPAE

Here is an alternative that has worked. Sell your client a block of engagements. Rather than processing an invoice for each engagement -- or two invoices if a deposit & balance invoice are necessary -- the client can buy a block of engagements to use as they see fit. Consider discounting the total of the fees by +/- 5%, point out how much time it will save her and others in her organization and ask for the order. The quick boost to your cash flow will offset the discount.

-- Cantu

  1. Does she know she is your biggest client? If so, you have given her a negotiating tool. It's okay to let one know they are one of your most valued clients or esteemed clients, but telling them they're your biggest or most important can be tantamount to saying "I will jump through hoops for you that I wouldn't for others."
  2. Are you her biggest/most important speaker? If so, then you have some negotiating strength to offset the first position if that is the case.
  3. Have you considered replying with "Of course that makes sense in the spirit of trust and in the spirit of fairness, can I assume you are applying this to all your vendors?" In other words, the facilities manager, the caterer, the printer of collateral material, the AV people, etc. (enumerate as fits your particular situation) are all agreeing to the no up-front deposit in the spirit of trust?' If the answer is "No, of course not" (which I strongly suspect would be the case, then their reasons for not having this applied will give you a clue as how to proceed. (If they aren't held to it, why should you be?)
  4. Finally, to my way of thinking, in the end, to me trust has to be combined with a worst-case scenario option. Worst case, for some reason you don't get paid. How much of a loss can you sustain without it being a catastrophic loss to you?

-- Nan Andrews Amish

The best advice I ever got on deposits came from Alan Weiss. Offer this person who is a bit loose with deposits this discount. Pay 100% with the booking, and get a 10-15% discount (you decide!).

Then if she gets sloppy, you give her another date, but you are paid! Most corporate folks budget for the year, and do not care when it falls with in the year. The 10% savings buys them an extra program or something else they could use. Many corporations will bite! (governments won't)

-- Mark LeBlanc

It is okay to waive the deposit. However, I would add to the agreement that the fee is due upon the completion of the scheduled program. In the event the program is canceled or re-scheduled less than 60 days out, the fee is still due and payable at the original time. You will conduct the presentation at a later date and hold all pricing for that engagement. You will invoice the client sixty days in advance of the scheduled date and expect it to be processed during that sixty-day time period and payable upon the completion of the date.

I am also assuming you are getting your full and normal fees with this client.

-- Bernard Zick

Have a revolving deposit -- i.e., if she usually has $5,000 out at any one time as a deposit, have her post $5,000 that STAYS with you as a deposit against any future business she might do with you. If there is not business done for 6 months or more, the deposit will be returned. In the meantime, she will pay all bills as presented. From a negotiating point of view, tell her this way you can tell the speakers you work with that there IS a deposit so don't worry. It would be smart to make it as large as possible, without at the same time making her mad.

-- Grant Holmes

Ask for an annual retainer. Let's say they train 12 sites a year and you charge $3000/day. ($36,000)

Tell her you need on the first of the month, the $1,000 retainer. They could easily call that a base figure and automatically bill them out of the upcoming site. You keep the retainer no matter what. If she flips a date or two at least you know you have a base fee covered. Then bill the remainder however she'd like.

You avoid the original billing. She can set up whatever procedure she wishes to retain you. Win-win.

-- Patti Eyres

I recently faced a similar issue with a long-term client. They asked for two things: first, to stop using deposits, and second to bill only once at the end of the month for all work done during the month (when I had previously billed following each day or 1/2 day). I've had a very large volume over the last three years from this client, and most of it is in their corporate university, which is local. The out-of-state bookings for them were only once or twice a quarter.

They understand that the advance deposits are primarily to hold the date, and to cover the costs of cancelled workshops. I agreed to waive future advance deposits, with two understandings: (1) if they change dates less than 21 days before an out of town booking, they pay all penalties, fare changes or other costs associated costs with re-scheduled travel expenses (billable immediately); and (2) if they need to cancel a workshop less than 30 days in advance, they will be billed the full fee, unless I can re-book the date for another client. This is a large corporation, and like your client, they have never cancelled a workshop -- even when I was holding advance deposits.

This arrangement has worked very well, and I've been told my flexibility was so appreciated that it was acknowledged by execs outside of my contact department. In fact, without my requesting it, they now process/pay my invoices within one week (significantly accelerated from the previous 25-30 day turnaround). So, overall it has worked well.

-- Ann Lovett Baird

If you decide to allow your client not to pay a booking fee, perhaps you explain to her that you have to charge a cancellation fee if she changes dates. You may have already told her this, but a busy speaker like you may be turning away engagements to hold a date for her. If she changes, you may not be able to re-book the day. It's not that you don't trust her, you are just running a business, and need to do it prudently.

-- Vickie Sullivan

I would give her a discount for paying in full. She only does the paperwork once and you're paid.

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