There are two moments in every deal.

The first is when the client says yes. Hearing “let's do it” is second-to-none. It feels like a big payoff, simultaneously bringing momentum and relief.

The second moment is when the money actually clears.

Most of us start out by treating these as the same moment. They aren't. They really, really aren't.

There's a distinct gap between them. That gap is the spawning ground of unpaid work.

Here's how it happens: A client makes enthusiastic promises. You, simultaneously wanting to 1) impress the client and 2) not lose the deal, start showing up. You get to work. Block the calendar. Tell your friends and family you'll be working through the weekend.

By the time you realize payment isn't coming, you've spent weeks on someone who was technically never your client.

I call this the eagerness tax. And boy oh boy, have I paid my fair share of taxes. Most founders I talk to have, too. Often, they pay it more than once before they build a system to stop it.

It makes sense, too. Startup founders are, by nature, pretty dang optimistic. It's one of the traits that keeps you going when everything is hard. But optimism without guardrails just results in a lot of unintentional “volunteer” work.

This week: what the eagerness tax actually costs, and the payment framework that protects you from it.

P.S.: When I started writing this newsletter, I wondered if my advice was out of date.

So, I looked into it. It hasn't. If anything, the risk has grown. I'll share why in the next section.

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Brennan Dunn had eleven employees and a problem he couldn't tell them about.

His agency billed $2 million a year. But with great revenue (usually) comes great expenses. His agency's annual overhead was roughly 1.2 million bucks. Heck, it cost a hundred thousand a month just to keep the lights on.

One client, Paul, had booked half of Dunn's team. They were making good progress on a steady cadence. Dunn invoiced Paul twice a month, with net 30 terms.

All in all, it was the kind of arrangement that reads as mature and reasonable.

Then some invoices went unpaid, and Paul hit Dunn with some good ol' nightmare fuel:
“Oh yeah, Brennan, I meant to tell you... I'm out of money.”

Paul operated through a corporation. When corporations run out of money, that's it. Their owners' personal assets are untouchable. This is a good thing in most situations... just, not for Dunn. He was out somewhere between $60,000 and $80,000, with no financial recourse.

“Going up to your team and saying, 'By the way, I don't know if I can make payroll next week,'“ Dunn said later. “That's a hard position to be in.”

That conversation is where the system started.

According to Dunn, “that solved everything, honestly.”

Now, is all this necessary in every situation? No. If your contracts represent a couple thousand dollars per month (or less), points 3 and 4 are absolutely overkill. But if they're getting up to the kinds of numbers Dunn dealt with, the security is worth the awkward conversation.

I'll be honest: when I started working on this newsletter, I was coming from an emotionally-charged place. In an old agency I co-founded, I spent an infuriating amount of time chasing down late payments.

Having this kind of personal experience can cloud a person’s judgment, so I thought I might be assuming this kind of thing happens more often than it does. I expected to find that faster technology and a more sophisticated founding class had made Dunn's rules feel dated.

They haven't. Financial stress and desperation amongst founders is out there, which means the ‘Pauls’ of the world are still out there.

Translation: More companies out there, with less money to spend. They have shorter runways, and are more financially motivated to leave you high and dry. It's up to you to ensure this doesn't happen.

“Build a system” is where most advice around this kind of thing ends. What follows is the actual system, in five steps.

Set a deposit of 25 to 50% of the project value, collected at signing, not at kickoff. Your time is your leverage point.

Add a line to your proposal that reads: “Work is scheduled upon receipt of the signed agreement and deposit payment.” Make this clear.

Clients who are serious won't blink. If you're early into your business, prospects who push back will make you want to flex on these terms. Don't. Their objection has already told you what you need to know.

The principle: the invoice should arrive before the work. How that looks depends on the engagement.

For retainers, bill at the start of each month, before work begins. This is standard practice at established agencies, so most clients will accept it without friction. You're not asking for anything unusual.

For project work, use milestone billing. Collect each payment before the next phase begins, as opposed to after it's delivered. A common structure: 50% at signing, 25% before the midpoint deliverable, 25% before final delivery. Each subsequent phase starts only after the funds arrive.

One more option worth knowing about: 100% upfront, with a small discount as the incentive. Several operators report high acceptance on this, including first-time clients on large engagements. The discount pays for itself in the administrative overhead you eliminate.

Most payment disputes don't start with a client simply refusing to pay. They start with a contract that left room for interpretation.

A client with no clear endpoint to approve against can always find a reason to delay sign-off. Subjective deliverables create subjective payment timelines. In most cases, "subjective" means delayed.

Include language stating that work stops if payment is overdue by more than three to five days. Pair it with a line stating the client only owns what they've paid for. Both take five minutes to add and belong in every engagement.

When the contract value is significant enough that non-payment would materially affect your business, ask the founder or owner to personally guarantee the agreement. This closes the corporate liability shield that lets clients walk away while their personal assets stay untouched. It's a higher-stakes ask, so only employ this one in make-or-break situations. Asking will always be awkward, but you can frame it as standard practice for new relationships at this scale.

If you don't have a contract at all, start with this freelance contract build guide from ClearTimeline. It has a solid foundation for all three elements above.

This is a step most founders skip, but I cannot overstate how helpful this can be for relationship management. Entrepreneurship is a relationship game, and this step means you get to remain the “good guy” in your clients' eyes, even when they're the problem.

Chasing down invoices puts you in an uncomfortable position in a relationship you're trying to keep. Designate someone else to handle late payment follow-ups. A business partner, a VA, a bookkeeper, or a clearly defined process that runs under a different name. The message goes from them, not from you. They reference the contract. They relay the next steps... which often come off like threats.

Dunn used his assistant Ann for years. Kurt Elster, who has talked about this publicly, enlisted his partner to play “credit analyst.” The role doesn't need a job description, it just needs to not be you.

The highest-leverage change on this list is also the one that takes the longest to build. Before you write any proposal, charge for the discovery that informs it.

If you don't have canned offerings, you should strongly consider implementing a paid Roadmapping session as your first step in the professional relationship.

This is a structured engagement where you diagnose the client's situation and produce a brief the proposal responds to. The price can vary from $500 to $5,000 depending on your market and scope. The exact price should be whatever makes it worth your time, but never forget this revenue is a side benefit.

The real benefit is that by the time you send the proposal, the client has already paid you. They're no longer evaluating whether to work with you, but rather, which scope makes sense.

I promise you, the time you spend on unpaid proposals will drop. The percent of prospects who move forward will also decrease, but that's okay. It's extremely unlikely these people would've ended up hiring you, freeing up your time for higher leverage activities.

Try it with your next ten client conversations. Introduce paid discovery as a prerequisite. Track how many proceed. Also track how much time you save on creating proposals, and where you end up using that time.

Those five things, taken together, are the system.

Truthfully, it's just a handful of pieces of advice, but the changes they bring are truly systemic in impact. Dunn paid $80,000 to figure this stuff out. That knowledge is now yours for free. The question is whether you use it before your version of Paul shows up… or after.

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HoneyBook (From $29/month)

Proposals, contracts, and payments rolled into one. Lets you tie agreement signing directly to payment collection, so work never starts without money in. Great all-in-one tool, but if you want to separate these things out, keep reading.

Wave (Free plan available)

Simple invoicing and accounting software. Clean interface, recurring invoices, and basic reporting without the overhead of full accounting software. The free plan is enough for most early-stage operators.

Calendly's payments feature (Feature available from $12/month)

Set things up so your calendar requires payment before a call can be booked. Connect Stripe or PayPal and turn discovery calls into paid sessions, so proposals only happen after a client has skin in the game.