Getting Paid: How Agencies Should Structure Payment Terms

Most agency payment problems are structure problems, not client problems. A difficult client with clear payment terms is easier to manage than a reasonable client with vague ones. The work happens upfront, in the contract, not the collection call.

This is what the standard agency payment structure looks like, and why each element exists.

The Deposit

A deposit (also called a retainer or advance) is paid before work begins. It serves two purposes: it filters out clients who aren’t serious, and it covers your costs if the project collapses early.

The standard range for project deposits is 30-50% of the total project value. For a $15,000 project, that’s $4,500-$7,500 upfront.

30% is appropriate when:

• The client is well-established and you have prior invoicing history with them
• The total project value is low (under $5,000) and the deposit is a cash flow signal rather than meaningful protection
• The contract explicitly defines what happens if the project is cancelled (and the deposit coverage aligns with your actual upfront costs)

50% is appropriate when:

• The client is new with no prior history
• The project involves significant upfront work that happens before any deliverable is reviewable (discovery, architecture, extended planning)
• The project has a high cancellation risk due to client-side dependencies (regulatory approval, funding rounds, decisions that haven’t been made yet)

Some agencies use a tiered structure: 40% to start, with the balance split across milestones. This is reasonable but adds invoice volume. For most projects under $25,000, a two-payment structure (deposit + completion) is simpler and easier to manage.

Milestone Billing

For projects over three months or over $30,000, milestone billing reduces your payment risk and gives clients visible checkpoints.

A milestone is tied to a deliverable, not a date. “Design review complete, client sign-off received” is a milestone. “Week 3 of the project” is not. Tying milestones to deliverables means you get paid when you’ve done something provable, and the client pays when they’ve seen something.

Example structure for a $40,000 website project:

Milestone	Amount	Trigger
Project kickoff	$12,000 (30%)	Contract signed, work begins
Design delivery	$10,000 (25%)	Mockups delivered, revision round complete
Development delivery	$12,000 (30%)	Staging environment delivered, client testing period begins
Final payment	$6,000 (15%)	Site live, final handover complete

The final payment is intentionally the smallest. Clients who drag their feet on final payments are common. Making the last payment 15% instead of 30% means you’re not holding up the project waiting for a large sum, and the client has less leverage to delay over minor issues.

Payment Terms: What “Net” Actually Means

Net-30 means the invoice is due 30 days after the invoice date. Net-15 means 15 days. Net-0 means due immediately (upon receipt).

For agencies, the practical consideration is: what are you willing to wait for? Net-30 with a large client often means Net-45 in practice, because approvals take time, AP departments batch payments, and someone forgets to submit the invoice for processing.

Recommendations:

• New clients: Net-15. You don’t have enough history to know how they pay. If they push back on Net-15, that’s information.
• Ongoing retainer clients: Net-15 or Net-7. You’re billing regularly and predictably; the client should process predictably.
• Enterprise clients: Accept Net-30 if required. Enterprise AP processes move slowly and pushing back often just creates friction. Compensate by getting the deposit and milestone structure right.
• Final invoices: Due upon delivery, or Net-7. The final payment is the one most likely to get slow-walked. A short term on final invoices creates urgency.

Including the due date explicitly on the invoice helps. “Due by June 19, 2026” is clearer than “Net-15” for clients who don’t track invoice dates carefully.

Late Fees

A late fee clause in your contract means late payment has a consequence. Without one, the consequence is you sending a follow-up email that gets deprioritized.

Standard late fee language:

Invoices not paid within the payment period will accrue interest at 1.5% per month (18% per annum) on the outstanding balance. A $35 administrative fee applies to each collection attempt required after 30 days past due.

Whether you actually charge the late fee is your call. Many agencies include the clause but waive it for clients who pay late once and apologize. The point is that it exists, the client knows it exists, and it creates a reason to prioritize your invoice over someone else’s.

In practice, the administrative fee is the more effective deterrent for smaller overdue amounts. 1.5% per month on a $2,000 invoice is $30. The threat of a $35 fee plus a collection call gets more attention.

International Payments

Getting paid across borders adds friction that domestic clients don’t have. Bank wire transfers, SWIFT fees, currency conversion: each creates a reason for payment to arrive late or in the wrong amount.

What to include in contracts with international clients:

1. Currency: Specify which currency all amounts are in. “USD” in the contract means you receive USD and the client bears the conversion risk. If you’re flexible, specify you’ll invoice in either USD or the client’s local currency at the spot rate on the invoice date.

2. Wire transfer costs: SWIFT transfers often come with fees from both the sending bank and correspondent banks. Specify in the contract that the client pays all wire transfer fees so the invoiced amount lands in full.

3. Payment method: Consider alternatives to bank wires for smaller amounts. Wise (formerly TransferWise) charges lower fees than traditional wire transfers. Stripe and similar payment processors support international card payments. For recurring work, a payment method that auto-charges is worth the conversation.

4. Tax documentation: For clients in India paying a US or European agency, TDS (Tax Deducted at Source) may apply. Understand your obligations and your client’s obligations before the first invoice.

Handling Late Invoices

The sequence that works:

Day 1 past due: Send a brief, non-accusatory reminder. “The invoice issued on [date] for $X was due on [date]. Please let me know if you have any questions or if there’s anything I can do to help process this.”

Day 8 past due: Follow up with the late fee notice if your contract includes one. “Per our agreement, a late fee of [amount] has been applied to the outstanding balance. The updated amount due is $X.”

Day 21 past due: Escalate to a phone call if email isn’t resolving. Ask directly when payment will be processed.

Day 30 past due: Pause ongoing work if the relationship is ongoing. This is the most effective lever you have. A client who needs your continued work will find a way to process the overdue payment.

What you’re trying to avoid: the passive-aggressive follow-up chain that goes on for months without resolution. Each follow-up that doesn’t include a consequence teaches the client that late payment has no real cost.

One Change That Has the Most Impact

If you’ve been struggling with late payments and you can only change one thing, change when you invoice. Many agencies invoice at the end of a project phase. Clients who are still evaluating whether they’re happy with the phase drag their feet on payment while they decide.

Invoice before delivery. Send the invoice for the staging environment handover when you’re 3 days from delivery, not after. Send the final invoice when you’re preparing for launch, not after the site is live.

The psychology is different. A client who’s eager to receive the deliverable processes the invoice faster than a client who already has it in hand and is deciding how happy they are.