Projects are not confirmed until the client has paid the upfront invoice. In the event the upfront invoice is not paid, there is no payment to anyone. It is the responsibility of team members, and the creative director to confirm the payment is made.
Client cancels after paying upfront invoice:
We've set up a financial structure so that once a client has paid the upfront invoice, team payments for the first part of the project are covered regardless of whether the client cancels at any point. There is additional team budget for the iterations that is paid proportionally, see the point regarding interim invoices for more details for what gets paid in this scenario.
In the case of a client not paying a final invoice:
We've set up a payment structure so that Deep Work can cover costs but not cover Creative Directors as the result of the final invoice not being paid.
In the result of a client not paying a payment stage or interim invoice:
In extreme cases, a client may cancel or not pay at an interim payment stage. In this case:
Creative Directors (and any management roles) do not get paid
Team members are paid as normal, unless:
The project fees that have been invoiced to the client and paid do not cover the team members' costs. In this case, it is the responsibility of the creative director or finance management to calculate proportionally paying each team member a lower rate. They will send you instructions on how much to invoice.
A project has three stages of payment: Upfront $20,000, Milestone $10,000, Final $10,000
The total team cost (facilitators, product designers, and user researchers) is $25,000
The milestone payment is not made and the project can't cover costs by $5,000
The rate paid to the team is $5,000 less, shared between their rates proportional to the total team cost amount.
E.g. Facilitator rate $5,000, product designer $15,000, and user researcher $5,000.
They would each be able to invoice $4,000, $12,000, and $4,000 respectively.