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I could use some other designers insights. I'm a freelancer and often I make purchases for my clients - stock photos, website plug ins, domain names, etc.

50% of the time I simply make these purchases through my own account and put a line item on the client's next invoice for reimbursement. Usually I don't mark it up unless it's printing.

I'm rethinking the way I handle this because 1) At busy times the client expenses can be high and I'm "down" X amount of dollars because I pre-paid this expense for the client. 2) It's more work for me entering expense invoices.

I wonder if I should just request Credit Card details for each client for these kinds of purchases. I don't mind #2 so much above, but #1 can be a pain in the butt for large purchases.

4

In general, ask for a down payment to cover some parts of the expenses. You can charge these expenses at 100% of their value + the rest of the down payment you'd usually charge.

Don't ask for credit cards numbers, that could give you more issues and not many clients are willing to share these info. Plus that also forces you to guarantee these info are kept in a secure manner.

Also, depending where you live... keep in mind that all the expenses you get paid for and get refunded still count partly as a revenue for you. Usually you also get a tax credit for the expenses but the revenue will still increase. Sometimes and for taxes reasons, you might want to stay below a certain bracket to not get in a higher one to save taxes. So whenever possible with big expenses and if your country has different levels of taxation, that can be another reason why it might be better to let the client pay directly for his/her own expenses.

For stock pictures:

I do as Ted Angel, and charge a flat amount. Don't charge exactly what they cost you since as you said, there's time you spend to manage this and there's transaction fees too sometimes. If the client wants to save, they can freely open their own account at a stock picture site and send you the high resolution.

Use the comp or low resolution until the project is fully approved. Then send the full invoice before sending the final files that includes the high resolution. This way you never get stuck buying stock images and not being paid for them.

For plugins & hosting:

Let the client open his own account where you purchase the plugins. You can explain them that this way, they keep full control of the updates and it's their property as well.

This way, you won't have to deal with the renewals either and the client can share his account details with you or add you as an admin on this.

Prints:

Calculate a 20-30% margin added to the real costs of the prints, and order only once you got the payment sent to you.

In general:

Add an extra that will include the management required to deal with the expenses and the extra paperwork.

  • "Don't charge exactly what they cost" - yes, if you don't mark up the cost to you then it's going to cost you money. "Let the client open his own account" - well, this really depends on your clientele. I've sometimes spent more time doing support and explaining what to do than if I'd just done it myself (for a fixed low-cost fee). – MrWhite Mar 10 '16 at 12:14
  • Thank you for the tips @go-junta! Really appreciate it. The tax portion was also something I was curious about. I don't think it's a big concern for me but I do handle print jobs now and then. If it's over $100 I typically require payment up front. However that print bill gets added to my gross income - most of it gets deducted back out as an expense and a small portion (my markup) to net income. I was under the understanding that any expense gets wholly deducted from your gross income -- so I should come out even doing this, except that it might change my tax bracket? – streetfire Mar 10 '16 at 14:56
  • @streetfire It's not a problem for the few $100 dollar expenses but it can become one for the expenses that can cost a few thousands, for example Infusionsoft subscription or prints. You're right, the expenses are deducted but some countries that have extra services taxes will still calculate the total as the income and then require you to fill extra monthly reports and charge to your clients extra taxes based on this. It's more an issue if you operate as an individual. Ask your accountant, that's very basic stuff for them and it depends where you live! – go-junta Mar 10 '16 at 21:10
  • @w3d Yes I agree, depends on the clientele. Sometimes it's worth simply opening the account, paying the first months or year, and then giving the login details to the client. What makes it easier is when you can use a shared email for that kind of thing (eg. subscription@clientdomain.com) instead of their own business email. Some websites have security features that are very annoying when you try to access the member area from another IP! – go-junta Mar 10 '16 at 21:17
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There are several issues with this:

At busy times the client expenses can be high and I'm "down" X amount of dollars because I pre-paid this expense for the client.

Never pre-pay with out final approval, preferably in writing, from the client. The approach you currently take could be very costly one day. If you're working on a website project with an out-of-pocket domain, hosting and source files purchase and the client walks you're out of luck.

It's more work for me entering expense invoices.

There are plenty of routes you can take without actually forking out the revenue.
Depending on your workflow, if for instance you need to make expenses of X amount during a certain stage in the project, you can incorporate this into the initial brief as material costs. In the initial brief you should be asking about the content anyways and if they say they want stock photography, ask them what budget they have in mind and if they have one you might try asking for that amount up-front.

In the design you should usually use watermarked version of stock photos, allowing you to submit the full design so that the client can sign off on both the design and the photos to be used before you (or they) make any purchases.

I wonder if I should just request Credit Card details for each client for these kinds of purchases. I don't mind #2 so much above, but #1 can be a pain in the butt for large purchases.

Personally I would never do that. You would open yourself up to all sorts of legal issues that could get you fined or even arrested and can have a negative effect on your good name. The issue might not even be your fault, someone in the company might say "I didn't authorize usage of this card" after the fact, making you look bad until they find out person A gave you the authorization but they didn't go through the correct steps meaning the authorization was effectively invalid.

  • Hi and thanks for your feedback :) I appreciate it. There are certainly risks to having credit card details given to you and I've never really been comfortable doing it... except for one client who I do part time work with and have for several years. The deposit for this type of thing could work. I generally only require a deposit for brand new clients. If they are a repeat client - which most of mine are - and pay on time, I don't require one unless I'm certain there will be a significant costs involved during their project. Any stock photos I always have approved before purchase. – streetfire Mar 10 '16 at 0:24
  • Anytime and welcome to the site. If you do find any of these in fact answer your question please mark it as the accepted answer. – Mᴏɴᴋᴇʏ Mar 10 '16 at 4:52
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For my freelance design business, I generally pay for resources and bill the client. For things like stock photos, I charge a flat fee ($15 - $20) per photo. Since I have subscriptions to stock sites, I end up making a small profit, which basically pays for my subscription and puts a bit extra in my pocket. Then again, there are months where I might not use enough photos to pay for my subscription, so it probably evens itself out.

For items like themes, plugins, fonts, etc., I pass the cost on to the client, without a markup. With things domain names, I ask the client to purchase the domain themselves, then provide me access to manage the domain.

I've had clients offer me a credit card to make purchases, but generally that's something I avoid. Something I really don't want to be responsible for. If resource charges are adding up, I'd recommend asking for a deposit up front for the project.

  • 1
    You should get a deposit for the project up front regardless. – Cai Mar 9 '16 at 23:45
  • I would like to welcome you to the site but since you're new I would encourage you to remove your domain link in your answer(s) and apply it to your profile by making an edit. If you keep answering questions that include your freelance link you will get flagged for spamming and we will have to remove them. Also, you can experience downvotes if you keep including your freelance design business because there are several other designers on this site that could do the same but dont. It's in their profile.. – Mᴏɴᴋᴇʏ Mar 9 '16 at 23:47
  • Got it, sorry. Removed. – Ted Angel Mar 10 '16 at 0:08
  • Thanks @TedAngel. Sounds like we do it similarly. The idea of having a deposit may work in some cases. I've also thought about putting it on our CC rather than having the amount pulled straight from my bank account. That would give me the opportunity to get the client's payment. Of course I wouldn't suggest doing this if someone wasn't in a position to make the CC payment when it came due. I would never pre-pay for something if I was not sure the client was reliable. – streetfire Mar 10 '16 at 0:29
  • Thanks for the contribution and welcome to the site! Let us know if you have any questions – Zach Saucier Mar 10 '16 at 3:20

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