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farrahjordan
Community Member

How Milestone Payments Work from the Client Side

Hi Guys,

I am a freelancer, but my client is asking me how the exact mechanics of the payment process should work from her side, and I simply don't know details. Here's the situation:

-I am a photo retoucher and I get paid a flat fee per photo.
-My client and I (so far) have been setting up milestones for each batch of photos she sends me (my fee per photo x # of photos in the batch).

-BUT this is getting tiresome for my client because I do a batch of photos every day. She would like to put a lump sum in escrow and simple let me draw it down as she approves my milestones. How do I instruct her to set this up?

Thank you!



7 REPLIES 7
prestonhunter
Community Member

Have her pay you a bonus payment, from which you draw down.

petra_r
Community Member


Farrah S wrote:

-BUT this is getting tiresome for my client because I do a batch of photos every day. She would like to put a lump sum in escrow and simple let me draw it down as she approves my milestones. How do I instruct her to set this up?


Make the milestones (much) bigger. So instead of a milestone being 20 (as an example) photos which you complete every day, you can make the milestone 140 photos, so you can get paid once a week. Or set up a milestone for X number of photos (about a week's worth, or 10 days worth, or whatever works for both of you), which is released as soon as that number of photos has been done.

 

This means you are both protected and the client doesn't have to jump through the needless and timeconsuming hoops of creating, setting up, activating and releasing milestones every day, which is indeed a real pain.

 

Preston H wrote:

Have her pay you a bonus payment, from which you draw down.


That makes no sense. You are suggesting the client pay without anything having been done.

re: "You are suggesting the client pay without anything having been done."

 

This would work fine.

 

The client may pay a $100 bonus payment.

The freelancer is paid $5 for each one that she finishes.

She keeps track of her own work.

After the freelancer finishes 20, she has used up the $100 payment.

 

Then she notifies the client, who says she prefers to not make payments so often, so she then pays a $500 bonus.

 

That bonus payment will last for five times as much work.

 

Bonus payments are simpler to use than milestones, and advance bonus payments are very safe for freelancers to use. When my own clients, with whom I have an established relationship, have suggested using advance bonus payments to pay for work rather than setting up milestones or new contracts, I have accepted the offer. (But I do not accept advance payments - whether fixed-price milestone payments or bonus payments - with clients who are new to me.)

 

I always tell clients to not pay advance payments of any kind when hiring an unfamiliar freelancer. But there are certain circumstances where it can make sense for both the freelancer and client if they have an established relationship and trust each other.

 

Of course it is important to remember that bonus payments work purely on the honor system, and Upwork will not get involved in any disagreements about them. So it is true that there is no Upwork-provided "payment protection" associated with bonus payments.


Preston H wrote:

re: "You are suggesting the client pay without anything having been done."

 

This would work fine.


If a client came to the forum complaining that they had paid as a bonus in advance and got no work you would chastise them for not using Upwork correctly by not using the milestone system the way it is supposed to be used. With funded milestones.

 


Preston H wrote:

That bonus payment will last for five times as much work..


As would a milestone, which, as you know perfectly well, is how it is supposed to be done.

 

The client might also not appreciate being asked to pay as a bonus (with no protection) versus a properly funded milestone, which is, for good reason, what Upwork recommends for fixed rate contracts.

 

All it takes is setting up bigger milestones instead of those silly micro-milestones that eat into the client's time on a daily basis.

 

Hi Petra. Thanks for your feedback here. I think the larger milestone is a nice option that both me and my client can feel comfortable with. Two questions on the option:

- If my client places the money in escrow and we don't end up using the entire amount for the milestone, does the spare money roll over to the next milestone?
- If by chance we end the contract and there is still money in escrow, will this be returned to my client?

Thanks, Petra.

F


Farrah S wrote:

- If my client places the money in escrow and we don't end up using the entire amount for the milestone, does the spare money roll over to the next milestone?
- If by chance we end the contract and there is still money in escrow, will this be returned to my client?


Yes. Basically what happens is that the client puts (for example) $200 in escrow and you end up using up only $180 when you request payment, you just request $180.

The client can then set up another milestone of $200 (or whatever), which will be funded by $20 from the left-over escrow funds and will charge the client's payment method the remaining $180.

 

In the end, if there is money in escrow when the conract ends, you can just approve it to be sent back to the client when the contract is closed.

Great. Thanks again, Petra. 

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