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Smarter AR: Three Reasons You Should Always Bill Upfront

Updated: Mar 11, 2022

For service providers, this simple shift can make a world of difference in your business.

For the first several years I worked in the accounting industry, my firm billed in arrears – meaning clients paid for work once it was complete. Of course, it would be unheard of for product-based businesses to operate this way (imagine paying for a carton of eggs after you make omelets). Still, it’s sometimes considered unusual (or even frowned upon) for service providers to request payment before delivering on a sale.

While you may experience some pushback from colleagues or clients, the reality is that billing upfront for your work is better for you, your business, and your clients. If you’re still on the fence about taking money upfront for your services, here are a few reasons to consider making the switch.

1. Deposits and upfront payments necessitate full client buy-in.

When you take on work with no money down, you leave just enough room for clients to remain on the fence about working with you – even if you’ve signed a contract. People are funny, and sometimes we think we know what we want until it comes time to pony up. If a client isn’t fully on board, they may drag their feet on providing what you need to complete the work, add in additional requests and changes to the original scope, or even decide to back out altogether. When you require deposits or full payment upfront, you ensure that clients are fully engaged and ready to compensate you for the job you’re agreeing to do.

2. Billing upfront can accelerate project timelines.

Similar to above, projects billed in arrears can end up with fuzzy completion timelines for both parties. When I took on consulting work at my old firm, I would track my time and bill clients when the work was done. The problem? “Done” was often a moving target. I would be nearly finished cleaning up a year’s worth of accounting and receive an email about additional expenses that needed to be recorded from the owner’s personal accounts. Or I would request a final piece of info – mileage or a missing statement – and hear nothing back for three weeks. Since I billed when the work was complete, my invoices were on hold until the client had done their job.

Truthfully, my clients weren’t the only ones guilty of causing delays. During busy seasons, I would sometimes quote new projects and not get to them for weeks at a time. Clients were left hanging due to my lack of focus on the work they needed me to do. But with a dozen other bill-when-it’s done projects on my plate, it was all too easy to get sidetracked. Once I started asking for payment upfront, I was forced to be more intentional with my promises, and I was able to stack my work as folks reserved my time.

The point: Once money has changed hands, both you and your client are more likely to prioritize the work you’re agreeing to. And because they’ve already paid you, your client is motivated to see a return on their investment – which will heighten both their expectations and involvement throughout the process.

3. Upfront billing cuts down significantly on the time and cost of managing your Accounts Receivable.

One of the biggest headaches (and costs) businesses face is collecting payment for work that’s already been completed. Not only can payment delays and bad debts be devastating to your cash flow, it can also be disheartening to know you’re not getting paid for the hard work you’ve put in. When you bill clients in arrears, you’re probably setting yourself up for both.

While some of this can be mitigated by selecting the right clients (more on that another day), even great clients can forget to pay an invoice. With the demands on your time running an established business, you may not notice when they do. Billing upfront ensures that you can efficiently deliver on your promises and responsibilities without pouring time, energy, and money into collecting on past work.

The long and short of it is that billing upfront is better for your cashflow, creates clearer expectations, fosters healthier client relationships, and is far more efficient for your business than billing in arrears.

If you’re not already billing in advance for your work, consider changing the terms of your contracts. If you would like help assessing the cost of your current AR management system or making the switch to upfront billing, give us a call. Our goal is to help clients structure their finances efficiently and strategically, ensuring you always have the cashflow to make the impact you’re out to make.

At the SLC Group, we offer all-in-one financial support services, from accounting and payroll to tax prep and Profit First implementation.

Got a pressing cash management question, or want to see us cover a specific topic on our blog? Drop us a line at and let us know!



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