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At what point does the tide shift to the extent that YOU have the power to determine the terms, not them? EVER? Because I have had a spate of clients in '08 that are 30 day net, 45 day net, or whatever, and it's been a frustrating year of naming the terms in the proposal (50%, 25%, 25%) and then having the client say "We'd liek to move ahead, but we can't pay up front"
It's nice to have work, but I think I have wound up worse off because it feels like I am working hour after hour for money that is 60 days away.
At what point does the tide shift to the extent that YOU have the power to determine the terms, not them?
In a few cases, like government work, they may never be able to bend the rules no matter how much they want to work with you. So it's just a matter of deciding if you want that work or not.
Once or twice it's been an issue. Once with a large university on the West Coast, but we knew they would pay. If clients have insist on 30 days net, we will split the difference and go for 15 days. But it still means that they pay before we deliver, we just send the invoice out 15 days early. Some of these were Fortune 500s.
In our years of business we have never not been paid for a project or relationship. That's really nice.
Sometimes it's worth pushing the client a bit. Often just pushing out the milestones a bit to make space for the invoicing will work. If they really want to work with you, nothing is written in stone.
[edited by: Jack_Hughes at 4:00 pm (utc) on Nov. 14, 2008]
You might try a different pricing structure for part pre-payment customers and pay at the end customers to reflect the extra risk involved with bad debts. That way they have an incentive to pay part up front.
One company we work with has gone to such a pricing structure. We know and trust them and have worked with them on many aspects of our website. They now give us 10% off invoice if we pay up front, 5% if we pay 50% up front, and then normal terms if we so desire. It's a nice incentive -- when we know we are going to have the work done, when we must have the work done, why not get 10% off? We'd have to pay in the end, so if we cut the check at the start, they drop 10% and then there is no more hassle or negotiation. They stick to the original estimate as a result and everyone goes home a winner.
Government agencies and the like have budgets to balance like everyone else and if they decide the pull the plug, you will need to fight to get what you are owed for the work done to that point.
The previous point from Jack_Hughes about charging them for the cost of cashflow is a good one. You can even factor the payment to a third party who will pay you now and then chase the company for payment. Just add the costs of the company to your bill.
So far, we've never had a problem getting paid (eventually) by our government clients. In a few cases, they retroactively added some additional hoops for us to jump through to get paid. Sometimes we jumped through the hoops, sometimes we told them to remove the hoops if they wanted the finished product.
One good things (although it can also be a double-edged sword) is that the bureaucracy created in government and large companies means that there is almost always a higher-up person to whom you can take any complaints about billing.