Milestone payment schedules for creative studios

The short answer

Split any job longer than three or four weeks into two to four payments, each tied to a sign-off rather than a calendar date: a deposit before work starts, a payment when a stage is approved, and the balance on delivery. 50/50 works for short jobs, 30/40/30 for most mid-sized ones, monthly invoices against the plan for anything over three months. Release final files at full resolution only once the last invoice is paid. Write in the quote that work pauses when a milestone invoice is overdue, and do it when it happens.

How to write the deposit invoice itself is in the deposit invoice guide, and the terms on each invoice in invoice payment terms. This page is about the schedule.

Why studios end up as the client's bank

A small studio's costs arrive every month: salaries, rent, software, the render farm, freelancers. Client payments arrive when the client's process says so, usually 30 days after an invoice, sometimes longer. If the only invoice goes out on delivery, a ten-week job means the studio pays ten weeks of costs, waits another thirty days, and has carried the whole job on its own account for nearly four months.

Large agencies handle this with a credit line. A four-person studio handles it with the payment schedule in the quote. Clients rarely object, because staged payments are normal in every trade that takes longer than a month.

Tie each payment to a sign-off, not a date

A payment "on 15 March" assumes the job is on schedule on 15 March. If the client is two weeks late with feedback, you are invoicing for work they have not approved, and they will push back. A payment "on approval of the animatic" is due when that thing happens, and the client controls the timing by giving the approval.

Good milestones are events that both sides will recognise without arguing:

• Signed quote or contract (the deposit).
• Approved cameras, styleframes or animatic.
• Approved first full draft.
• Delivery of the final files.

Add one safety line for the client who never approves: if a milestone has not been signed off within a set number of days after you delivered it, for example ten working days, the invoice is due anyway. Without it, a client who goes quiet stops paying too.

Common splits

Put more money early when your costs are early. A job that needs a large freelance modelling effort or render farm time in the first weeks should front-load the schedule. A job that is mostly your own time can be weighted towards delivery.

Freelancers move your cash gap

You usually pay a freelancer within a week or two of their piece being approved. The client pays you thirty days after your milestone invoice. So freelance costs go out before the money comes in, and on a job with a lot of freelance work that gap can be larger than your margin.

A worked example. Northlight Motion, a three-person studio, has a 45-second launch film for a bike brand at 24,000.00, over twelve weeks, with 7,500.00 of freelance animation and sound. Payments are 30/30/40, each due 30 days after its invoice.

The table leaves out salaries to keep it simple, and they come on top. On a single invoice on delivery, the same job would be 7,500.00 down at week 11 with nothing in until week 15. With the schedule, freelance costs are always covered by money already received. Run this for your own next job before you send the quote; it decides the split.

Do not hand over finals before the last payment

The last payment is the one most often late, because the client has what they need. Two habits fix most of it:

• Send the final invoice with a preview: watermarked or reduced-size stills, a low-resolution file of the film. The full-resolution files go out when the invoice is paid.
• Say in the quote that the licence to use the work starts on full payment. Clients who need to publish on a date will pay to get the files.

Not every client relationship needs this. A long-standing client who always pays in ten days can get the files on delivery. The point is that the default is written down, so making an exception is your choice.

When a milestone payment is late

Late payments on the middle of a job are more dangerous than on the end, because you are still spending money on the work. Write a pause clause into the quote:

Work continues while invoices are paid on their terms. If an invoice is more than 7 days overdue, work pauses until it is paid, and the delivery date moves by the length of the pause.

Then use it, politely:

1. On the day after the due date, a short reminder with the invoice attached. The payment reminder email has wording for each stage.
2. At seven days overdue, a note that work is paused under the agreed terms, with the new delivery date if it is paid today.
3. Stop work, and redeploy your team to other jobs. Do not let freelancers keep working on it either, since you will pay them regardless.

What to send after that is in the guide on following up an unpaid invoice. In most cases the pause note is enough; it turns a payment that was sitting in a queue into one that somebody needs today.

Retainers for ongoing clients

For a client who sends a steady flow of small jobs, milestones are more admin than they are worth. A monthly retainer, invoiced at the start of each month for an agreed block of hours or deliverables, does the same job: you are paid before the work, and the client gets a fixed cost. Agree what happens to unused hours (usually they do not roll over, or roll over for one month only) and the rate for work beyond the block.

Writing the schedule into the quote

The schedule belongs in the quote, next to the price, not in a separate email later:

Payment schedule
30% on signing this quote               7,200.00
30% on approval of the animatic         7,200.00
40% on delivery of the final files      9,600.00
Each invoice due within 30 days.
A milestone not signed off within 10 working days of delivery
is treated as approved for invoicing.
Work pauses if an invoice is more than 7 days overdue.

The quote template has a notes field for this, and the invoice generator makes each milestone invoice with a reference to the quote.

Doing this in OIO

In OIO the quote and each milestone invoice come from the same project, in the client's currency, with lines in quantity, unit and price, and the schedule in the notes. The quote or contract goes out for signature online, so the deposit milestone has a signed date. For a monthly programme or a retainer, a recurring invoice goes out on the same day each month.

Freelancer fees are recorded on the project as costs in their currency at the day's rate, so the project page shows the budget against what has been invoiced and paid, and you can see the cash gap. If you switch on the money section of the client's password-protected status link, the client can confirm that an amount is OK to invoice, which is often the sign-off the milestone needs. OIO does not process or detect payments; you mark each invoice paid when the money arrives. More on OIO for motion studios.

Questions