13.5. Deposits, Down Payments, and Retainers

Deposits, down payments, and retainers are all prepayments: money that a customer gives you that you haven’t actually earned. For example, a customer might give you a down payment to reserve a spot in your busy schedule. Until you perform services or deliver products to earn that money, the down payment is more like a loan from the customer than income.

Receiving money for something you didn’t do feels good, but don’t make the mistake of considering that money yours. Prepayments belong to your customers until you earn them, and they require a bit more care than payments you receive for completed work and delivered products. This section explains how to manage all the intricacies of customer prepayments.