Freelance Contract Essentials: Payment Terms, Late Fees, and Kill Fees

A handshake agreement or informal email thread is a massive liability. A clean 2-page freelance agreement sets professional boundaries and guarantees you get paid on time.

1. The Mandatory Upfront Deposit

Never begin client work without an upfront deposit. Standard industry benchmarks:

• Projects under $5,000: 50% upfront deposit upon contract signing, 50% upon final delivery prior to raw asset transfer.
• Projects over $5,000: 33% upfront, 33% at milestone delivery, 34% upon completion.

2. Tight Payment Terms (Net 14 vs Net 30)

Corporate accounting departments default to Net 60 or Net 90. Insist on Net 14 or Net 15 payment terms in your contract. Specify that invoices unpaid after 15 days incur a 1.5% monthly late fee (18% APR).

3. The "Kill Fee" Clause

If a client cancels a project midway through due to internal budget cuts, a kill fee clause ensures you keep the initial deposit plus receive compensation for all hours and milestones completed up to the cancellation date.