Payment on Final Approval Is How Freelancers Do Not Get Paid

Why is 'payment on final approval' risky?

A term providing that the final payment falls due on the client's final approval of the deliverables does not say when approval must be given, what it is assessed against, or what happens if it is never given. A client who simply stops responding has not breached anything obvious, and the freelancer is left waiting for a condition that may never be satisfied.

The version tied to the client's satisfaction is worse, because it adds a subjective standard. Whether work is satisfactory to a particular person is not something you can demonstrate, which makes the term difficult to hold anyone to.

In practice the clause rarely fails through a dramatic dispute. It fails when the person who commissioned the work leaves the company, the project is deprioritised, or the budget is frozen. Nobody rejects the work; nobody approves it either.

What does Indian contract law say about approval clauses?

The Indian Contract Act, 1872 does not prohibit approval or satisfaction clauses. Section 29 makes agreements void where their meaning is not certain or capable of being made certain, but an approval clause is not usually void on that ground. A court asked to interpret it may read it as requiring the client to consider the work honestly and within a reasonable time, and Section 46 implies a reasonable time for performance where none is specified.

Section 53 also helps in a narrow case: where one party prevents the other from performing, the prevented party can treat the contract as voidable and claim compensation. A client who refuses to review deliverables at all may fall within that idea.

The difficulty is that all of these arguments arrive after the fact, in a dispute, at your expense. A clear clause gives you a date. A general legal principle gives you an argument. The first is worth far more to a freelancer owed ₹80,000.

What should replace it? A deemed acceptance clause

The fix is a deemed acceptance mechanism. The client has a defined review window, commonly seven or ten business days, in which to accept or to give written comments identifying specific failures against the agreed scope. If nothing is received in that window, the deliverable is deemed accepted and payment falls due.

Sample wording: 'The Client shall, within 7 business days of delivery of each Deliverable, either accept it in writing or notify the Freelancer in writing of specific respects in which it does not conform to the Scope of Work. The Freelancer shall correct any such non-conformity within a reasonable time and redeliver, and the same procedure shall apply. If the Client does not respond within 7 business days of any delivery, or uses the Deliverable in its business, the Deliverable shall be deemed accepted. Fees for an accepted or deemed accepted Deliverable are payable within 15 days of acceptance.'

That single change does three things. It gives the client a fair opportunity to review, it gives you a defined date, and it turns silence from a strategy into acceptance. It is an ordinary term that professional clients recognise and rarely resist.

Clause wording compared

How does acceptance connect to the MSMED payment clock?

There is a second reason to define acceptance. If you are registered on Udyam as a micro or small enterprise, Section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 caps the agreed payment period at forty-five days from the day of acceptance or deemed acceptance, and sets fifteen days where no date was agreed in writing.

Under the Act, if the buyer does not object in writing within fifteen days of delivery, the day of delivery is treated as the day of deemed acceptance. A written objection moves acceptance to the day the objection is removed. So a contract with a clear deemed acceptance window, and a written record of delivery, gives you a date you can identify. For a registered supplier, that turns a general entitlement into something concrete, including compound interest under Section 16 if the client is late.

Revisions are the same problem

• Cap the number of revision rounds included, usually two, and price additional rounds, for example ₹5,000 per round.
• Define a revision as a change within the agreed brief; a change of direction is new work.
• Tie revisions to the agreed brief rather than to preference.
• Require revision requests to be consolidated and in writing rather than arriving piecemeal on WhatsApp.
• Provide that the revision window closes when the review window does.
• State that using the deliverable in the business counts as acceptance.

What if the client uses a vendor portal or purchase orders?

Larger clients often pay only against a purchase order and an invoice uploaded to a vendor portal, and the portal may have its own 'goods receipt' or 'service entry' step that someone inside the client must complete. If that step is never done, your invoice sits unpaid even though nobody has rejected the work.

Ask at the start who completes that step, and tie your deemed acceptance clause to delivery rather than to the portal status. Keep copies of the purchase order, the uploaded invoice and the delivery email together, so you can show the date of delivery if the internal process stalls.

Structuring the money so no single approval holds it hostage

Beyond acceptance, reduce the amount exposed. A deposit before work begins, milestone payments through the engagement and a final balance on acceptance means no single approval decision holds the whole fee hostage.

A worked example: a ₹3,00,000 brand identity project. Instead of the whole fee on final approval, the contract provides ₹1,20,000 (40 per cent) on signing, ₹90,000 on deemed acceptance of the logo concepts, and ₹90,000 on deemed acceptance of the final brand guidelines. If the client goes quiet after the concepts, you have been paid ₹2,10,000 for the work done, not nothing.

For a first engagement with an unfamiliar client, a deposit is not an imposition; it is the ordinary way professional services work. Clients who object to any advance at all are telling you something about how the rest of the engagement will go.

What should a complete payment clause say?

Putting the pieces together, a freelance payment clause that protects both sides usually covers five things: the fee and how it is split into milestones, the deposit, the acceptance process, the payment period after acceptance, and what happens if payment is late.

Sample wording: 'The total fee is ₹3,00,000, payable as follows: 40 per cent on signing; 30 per cent on acceptance or deemed acceptance of Milestone 1; 30 per cent on acceptance or deemed acceptance of Milestone 2. Invoices are payable within 15 days of acceptance. Overdue amounts carry interest at 18 per cent a year, or at the rate under Section 16 of the MSMED Act, 2006 where it applies. The Freelancer may suspend work on 5 business days' written notice if any invoice remains unpaid beyond its due date.'

The 18 per cent figure is a contractual choice, not a statutory one; pick a rate you are willing to enforce.

A short email that starts the review clock

How you deliver matters as much as what the clause says. A delivery email such as the following creates a clear record: 'Hi Priya, attached are the final homepage designs (Milestone 2) as per the Scope of Work dated 5 May. Under clause 6, please share any written comments within 7 business days, by 21 June. If we do not hear from you by then, the milestone will be treated as accepted and I will raise the invoice for ₹90,000.'

It is polite, it cites the contract, and it tells the client exactly what happens next. Most clients respond within the window. Those who do not have accepted the work on the terms they signed.

What to do if the client has already gone silent

• Send the deliverable again by email, stating the delivery date and the scope item it satisfies.
• Ask for written acceptance or specific written comments by a stated date, such as seven days away.
• If nothing arrives, write again confirming that you treat the work as accepted and attaching the invoice.
• Record any evidence of use, such as the design appearing on the client's website or app.
• If you are Udyam-registered, refer to Section 15 and Section 16 of the MSMED Act in your follow-up.
• For significant sums, have an advocate send a legal notice before considering the Facilitation Council or a civil claim.