How do I protect myself from nonpayment before I start working?
How to protect yourself from nonpayment before starting work
Short answer
The best collection strategy is prevention: a signed contract with deliverables defined, a deposit before work starts, milestone billing during the engagement, auto-late fees baked into the agreement, and a credit card or ACH on file for recurring clients. These five things eliminate most nonpayment situations before they start.
A signed contract is non-negotiable for any work above a few hundred dollars. It does not need to be long. A one-page engagement letter that specifies what you will deliver, the price, payment due dates, and what happens on late payment is vastly better than a verbal agreement or an invoice on its own. The contract creates the legal obligation. The invoice documents the amount. Without the contract you may not have an enforceable claim at all in some jurisdictions.
A deposit of 25% to 50% upfront does two things at once. It filters out clients who aren't serious, and it makes sure you are never in the position of having done all the work for none of the payment. The resistance to asking for deposits is usually worse in your head than in reality. Most professional clients expect deposits. Clients who push back hard on any upfront payment are often telling you they plan to pay slowly or not at all.
Milestone billing keeps the outstanding balance proportional to the work completed, instead of letting it pile up at delivery. On a $10,000 project, billing 25% at signing, 25% at mid-project approval, 25% at completion, and 25% on delivery caps the most you are ever owed at one payment period's worth of work.
For recurring clients, a payment method on file (credit card or bank account you can charge automatically on the due date) converts collections from active work to passive. Autopay clients pay close to 100% of the time, simply because payment happens without them having to take an action. It needs consent and usually a written agreement, but most recurring-service clients say yes if you ask at the start of the relationship.