The Two Biggest Freelance Retainer Payment Mistakes — and How to Fix Them by Thinking Like a Landlord

Working on retainer can be a great way to earn a stable income as a freelancer — unless you make these two payment mistakes. Then you risk losing countless hours of work and months of income. (Even if you have a rock-solid contract). But the good news is fixing these mistakes is fast and easy. You just have to think like a landlord.

Most freelancers working on retainer make two HUGE mistakes with how they get paid. And it means in the best-case scenario, they wind up out of work with an unpaid invoice looming over them. (Even if they have a rock-solid contract and cancellation policy in place.)

And that’s the BEST-case scenario.

Sadly, most freelancers are in even worse shape. Because they make both of these retainer mistakes at the same time. And it leaves them a month away from being dead-broke — without even knowing it.

Here’s why…

Let’s say you have a client on retainer, and they make up the bulk of your income.

So naturally, you work your ass off for this client every month.

You go above and beyond to exceed expectations. And you do everything you can to make sure they’re happy, before you send them the invoice for your work at the end of the month.

Then a few days later, the invoice payment hits your bank account. Just in time for you to make your next rent payment on time.

Then you start all over again — tackling next month’s projects with a vengeance.

Month after month, this cycle repeats itself:

You do the work. You send the invoice. And the client pays you just in time to cover your bills…

Until one month, when you open up your bank account and see that the client’s payment is missing.

“It’s probably just an accounting mistake…” you tell yourself. (Even though your back is already starting to sweat a little.)

So you call up your client to ask about the status of your invoice. And what you hear from the other end of the phone hits you like an avalanche…

Meet The Two Biggest Payment Mistakes Freelancers Make When Working On Retainer

“Sorry, we’re out of money and we have to shut down — effective immediately.”

The words echo around your brain while you sit there in shock. 

Then your head starts to spin as you think about all the bills you already have piled up…

…about the rent payment coming due in a few days…

…and maybe even which meals you’ll have to skip to make sure your kids still have enough to eat.

All because you didn’t protect yourself from the two biggest payment mistakes freelancers make when working on retainer.

Those mistakes are…

1. Not getting paid for work you complete during the retainer.
2. Not getting paid at the end of the retainer, even if you have a strong cancellation policy.

Now you may think enforcing your contract is the solution here. But in this case, your contract is basically useless.

Because even if you take legal action and win, the client can’t pay you if they’re out of money. So you’d get nothing.

And even if the client DOES have money left in the bank, you need income now.

You can’t afford to wait for a drawn-out legal proceeding. (Not to mention the cost of your legal victory will probably eat into most of what you’d collect, anyway.)

Plus there’s actually a much simpler — and more effective — solution than calling in the lawyers…

It has two steps — and it starts with billing your clients in advance.

Step 1: Avoid Doing Unpaid Work by Billing Your Retainer Clients in Advance

When you work on a retainer, by definition you and the client have a fixed scope of work.

It could be a certain number of deliverables. Like publishing five blog posts, writing copy for 10 emails, or running four A/B tests. Or it could be a certain number of hours you work each month.

Either way, you’re providing a fixed scope of work each month in exchange for a fixed payment from the client. That’s what a retainer is.

Which means the client knows exactly what they’re paying you each month…

And you can charge them that amount before you do any work.

Because when you do that, then at least you can avoid working without getting paid.

Since if your client doesn’t pay you by the first of the month, you can pause all your projects until they process your invoice.

And that’s WAY better than doing work and not getting paid.

But by itself, charging your retainer clients in advance is still not enough.

Why Simply Billing in Advance Doesn’t Prevent You From Losing the Money You Need to Survive

Let’s say you follow the advice of the last section. And now you’re getting paid a month in advance for all your retainer work.

It’s the end of February. And you’re waiting for your client to pay you before you start to work on projects in March.

Then March 1st comes…

…and goes.

And the client still hasn’t paid.

Then another day goes by. Then a few more. And the client still hasn’t paid.

Now the good news is that — unlike before — at least you won’t be doing any work for this client.

So you’ll be able to save that lost time.

But the clock is ticking. You’ve still got new bills coming every day. And you were counting on your retainer payment to keep food on the table.

Not to mention there’s a good chance you turned down other projects to keep space in your calendar for your retainer work.

So when your client tells you they have to cancel the retainer and won’t be paying their invoice, it’s still a massive punch in the gut.

The invoice you’re counting on to pay your bills isn’t coming. You have a huge hole in your project calendar where the retainer used to be. And now you have to scramble to find clients to fill that time — before your bank account bleeds dry.

Think Your Contract Can Help You This Time? Think Again…

Now like last time, a lot of freelancers will rely on the terms of their retainer contract for protection here. They’ll have some type of cancellation policy to make sure the client pays them for a period of time after they terminate the agreement to wind down the retainer.

But once again, your contract is virtually useless in this situation.

Because if the client doesn’t want to pay you under the terms of the cancellation policy, your only remedy is legal action. Which carries all the same problems we talked about already. (Legal action takes too long, costs too much…and if the client is bankrupt, you get nothing even if you win.)

So how can you guarantee that you get paid for the final month of your retainer — even if the client is bankrupt and has no desire to pay you — all without calling your lawyer?

By thinking like a landlord…

Step 2: Use The “Landlord Retainer” to Collect Every Penny You’re Owed at the End of the Contract…Even if The Client is Dead-Broke

The “Landlord Retainer” gets its name from landlords in New York City. They’re notoriously aggressive about the requirements they have for tenants. Before they rent an apartment, they require tenants to submit copies of several bank statements and pay stubs…go through a background check…pay a hefty application fee…and more.

Plus they also collect a HUGE up-front deposit before you move in. Which often includes the first — and last — month’s rent.

Well guess what…you can do the same thing with your retainers!

That’s why I call this the “Landlord Retainer.” Because like a New York City landlord…

• You collect a deposit for a minimum of two months up-front — before you start the retainer.
• And you specify that the last month of the retainer is included in the deposit.

Then after that, you invoice your client accordingly — a month in advance — so you always keep their final month’s payment in your bank account.

Which means…

1. You get paid before you do any work.
2. You’ve already collected the client’s final payment for whenever they cancel — even if they’re bankrupt by then.

And that solves the two biggest mistakes freelancers face when working on a retainer — all without having to call in your lawyer.

Now you can still get into trouble if you use this retainer model…

…But it’s a different kind of trouble. And it’s 100% preventable if you keep an eye on your cash flow.

The One Downside of The Landlord Retainer (and How to Prevent It)

When you use the Landlord Retainer, once your client cancels the engagement, you don’t get to send out any more invoices. Since the whole point is that they paid for their final month up front.

But you’re still under contract to provide your services for them during that final month if they need you.

Which means you have to do a full month of work without collecting an additional payment. (Because it’s already in your bank account.)

And if you’ve already spent the entire up-front payment from the retainer, working for a full month without getting another payment could create problems for your cash flow.

But that’s 100% your fault…and 100% preventable.

Because all you have to do to avoid this problem is have the financial discipline to keep the final month’s payment in your bank account when you get the initial deposit. (Or as much of it as you can.)

That way, when the client cancels the retainer, you can “release” that money into your cash flow — as if you just collected that final payment from a new invoice.

This keeps your cash flow stable. And by following the Landlord Retainer model, you also eliminate the risk of your client skipping their final payment. (Or even worse, doing a month of work without getting paid.)

But now I have to warn you — having an air-tight Landlord Retainer can be a lot harder than it seems at first.

You have to worry about things like making sure the up-front payment is not refundable…

…Ensuring that the timing and frequency of your invoices is correct, so you get paid in advance and keep one month’s payment in the bank…

…And even how to structure the cancellation terms.

(Hint: You can’t just use a 30-day cancellation policy. Because if the contract ends in the middle of the month — but the client paid for the entire final month — they can legally request a prorated refund…)

That’s why I want to give you my copy-and-paste-ready Landlord Retainer template.

Swipe The Exact “Landlord Retainer” Terms I’ve Used to Generate Over a Quarter-Million Bucks in Retainer Revenue

With the Landlord Retainer template, you get the exact payment terms I use in my retainer contract, which has generated over a quarter million dollars in the last two-plus years.

I only share my Landlord Retainer contract template with people on the Freelance Like A Pro email list, though.

So to grab your copy of the Landlord Retainer contract template, enter your first name and best real email below to join the Freelance Like A Pro email list.

When you do, I’ll send you your own copy-and-paste-ready contract template — including all seven paragraphs of my Landlord Retainer billing terms — along with other members-only emails and resources to help you run a more profitable and stress-free freelance business.

Grab the copy-and-paste-ready Landlord Retainer contract template now