5 Important Facts About Taking Deposits
Now that you are thinking about taking deposits, here are 5 important facts about taking deposits, how they work and some legal requirements to keep you financially secure.
- Your contract clause:
Add a clause to your contract that states the exact amount of the deposit and who it should be made out to. I always like to specify that the deposit is due with the returned contract and the date they are both due back. Make this date no more than 14 days from the date you sent the contract. That’s plenty of time for them to receive it, review it, sign it and make out a check and send it back. If the deposit is due on a different date, separate from the contract return date, then specify that date in this clause. Sometimes it’s necessary to have a different deposit due date.
- What to do with the deposit check?
Deposits are supposed to be put into an escrow account. This account is supposed to be separate from your regular business checking or savings account. It is important to separate this money, so you won’t spend it either intentionally or accidentally.
- Deposits remain untouched until the date is played.
Your deposit money is a guarantee on your contracted date. It guarantees that you’ll show up and play the date and the venue will promote the date and pay you the balances due. The deposit is not travel money to pay for airline tickets to get to the gig. It is not money to pay for anything until the date is played.
- Once the date is played:
Collect the balance due and perhaps any percentages above the balance, then you may do whatever is necessary with the deposit money. So, if your agent collected the deposit check and held it, they may now take their commission from that money and send you the rest. If you collected the deposit and need to pay your agent their commission, now you may do so. After the date is successfully finished, you may take the deposit from the separate account it was held in and do with it whatever you want.
- What if the date was cancelled or did not happen?
This is exactly why you need to hold the deposit and not touch it until the date is played. You may need to return the deposit if the cancellation is legit and in accordance with any cancellation clause you have in your contract. If the date is rescheduled, then you may continue to hold the deposit until the new date is played. If the venue cancels and there is a problem with the time frame in which they cancel, you may be able to keep the deposit even though you won’t play the date—if, and this is a biggie, if you have a cancellation clause in your contract that is specific!
I know some of this can get a bit involved understanding the legal aspects of deposits, but after all, it is your livelihood. If it’s necessary to protect your bookings in order to build a successful career, then let’s get professional, and having a touch of legal business savvy, couldn’t hurt! I hope these 5 important facts about taking deposits makes it easier for you to implement this practice into your business.
Do you already do any of the above practices? How has it made a difference in your professionalism and venue relations?
Leave me a comment below
I can’t wait to hear about your success.
Now, thanks to the band Curfew for providing the biz booster theme music, “Future Dance.”
And for more career boosting tips, information, books, tele-seminars and online courses, visit Performingbiz.com