
Ask HN: What is the typical time your contracting invoices are paid? - Inc82
We have net 30 terms that we pay our engineering contractors. Most seem to get nervous if we haven&#x27;t paid in 10 days though. If you are a contracting engineer how long is it before you usually get paid from companies you are working with?
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philiphodgen
That's the wrong question.

You have contracting engineers. They get nervous if you pay slow.

Presumably they are good people. You want to keep them. You want to attract
more, better engineers.

Pay them in 2 hours.

Imagine what happens then.

Happiness.

Ability to recruit.

Improvement to your cash flow. You don't have to pay more if you remove
collection risk from your engineers' brains. And they have instant cash.

Pay instantly and frequently.

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brudgers
When I can, they are paid before I send them because I stipulate a retainer in
the contract and further stipulate that the retainer is to be applied against
_final_ invoice. Likewise, my default terms include _payment is due upon
receipt_ and failure to pay is grounds for stopping work.

The only one that really matters is the retainer, because that's the one about
who owes who what and it means I owe work instead of the client owing me
money. It prevents clients from using me as a bank.

That's not to say that some clients have well defined invoicing processes and
that I wont' work with _some_ of those. I say 'some' because some other client
side well defined payment processes include partial payment or slow payment or
no payment. And those are clients I generally want to avoid.

One of the things a retainer does is that it demonstrates how the client
really views the idea of paying me. If they struggle with the idea of writing
me a check during the honeymoon, it probably ain't going to get any easier for
the client as the project proceeds and when it snags in the middle or when the
client has what they want. And deeper down, the basis of good client relations
is less contracts and more mutual trust. Clients who default to not trusting
professionals tend not to be worth the effort of trying to earn their trust.

Good luck.

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vram22
>It prevents clients from using me as a bank.

Not clear what you mean by this, please explain.

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brudgers
A company can go to a bank and ask for a few thousand dollars to be repaid in
30, 60, or ninety days. The bank will charge fees in return for the providing
the money. That is the bank's business and how it turns a profit.

On the other hand, there are no fees if the company does not pay me for 30, 60
or ninety days and so it is economically rational for a company to improve
cash flow by not paying me rather than using a bank. Worse, collecting delayed
payment takes my time and energy and does not produce additional profit for
me. Just additional work. Even worse, holding my payment creates cash flow
problems for me that provide the company leverage to renegotiate for pennies
on the dollar.

At worst, I have learned in one of the harder ways that I don't want to loan
money in the form of delayed payment to businesses with cash flow problems. A
company that cannot write me a check before the project starts does not have
sufficient funds to complete the project. Better I forego fantasy profits and
play the odds.

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vram22
I get it now, was not clear earlier because the fees are not present in your
case, so the analogy did not seem exact, though I did think about it before
asking. Thanks for the detailed answer. Makes good sense. I've had a few cases
like that too, as a consultant, and have learned from them.

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nibstwo
I have found people typically have a certain way of paying. Some companies pay
late on principal, some pay early on principal, some pay late due to
dysfunction or cash problems, some pay on time on principal. Over time I think
you learn to set prices accordingly, offer _small_ discounts for timely
payment, and big discounts for prepayment.

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techjuice
In my contracts I normally require half up front before works starts and
payment within 2 business days after work completion. If it is a long range
project (two or more weeks) I require ACH direct deposits every Friday morning
before 7AM. When doing this clients will normally insure they have the payment
scheduled to be paid on time automatically.

If the client is late paying they are charged 10% or more interest depending
on the value that is charged on a monthly basis. If they are not paid up in
full within 60 days I take out a Judgement Lien on their personal and business
properties to recuperate any losses I may have had to incur due to the none
payment.

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sdfjkl
7 days. I'm not in the money lending business. If you're late, I'll send you
an angry owl picture (cute and worked well so far), or if I think you'll get
it, a video clip of Malcolm Reynolds saying "I do the job, and then I get
paid" (sorry, too slow internet to look that one up on youtube for you).

If a client is regularly very late, I send a more serious email and if they
can't get a grip on it, I dump them.

So far I've never not gotten paid and only ever dumped one client who was a
pain in the ass in many other ways too.

Oh, forgot to mention, I invoice weekly.

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richardknop
In my current contract I'm invoicing weekly. First invoice is paid 5 weeks
after I submit it and from there on I get paid every every week.

So when I started the contract there was 1 month period before my invoice from
first week got paid. After contract ends client will continue paying me for 4
more weeks to pay all my invoices.

This is usually also same with monthly invoicing. Invoice for my first month
would get paid one month later after I submit it. So first invoice is paid 2
months after I started working for the client and from there on I'm paid every
month. When the contract ends I'll get paid for one additional month as all
invoices were shifted by a month.

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djchung23
When I was a contract iOS engineer, I've had the following payment situations:

\- Paid 1x/week at a design agency with regular hours \- Paid 1x/2weeks at a
company with regular hours \- 50% of contract value down with next 25% paid at
project milestone and remaining 25% paid at completion.

As a contractor, getting paid on a regular, expected time schedules relieves
so much stress. If you can commit to regular payment schedules, I guarantee
your contractors will be happier, at least related to receiving payment.

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dsacco
I use net 30 terms. Average time between invoice delivery to invoice deposit
in my bank account appears to be approximately 2 weeks, depending on whether
they decide to pay by snail mail or ACH transfer.

I've never had a client be late with payment. I wouldn't say I get "nervous"
if they don't pay within 2 weeks, but given that I'm spoiled by the average
I've experienced, it would probably prompt my attention if they'd not at least
started the process within that time frame.

From what I can tell most of the companies I work with appear to be eager to
get the invoice process over and done with.

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superhans2
Depends on the client. Some clients pay within 3 days and some delay the
payment for weeks. Some companies even have policies to pay invoices only
after the second reminder (for cash flow reasons...). For me, early payments
are sign of reliability and trustworthiness. I get a bit nervous and stressed
if I have to remind clients to pay my invoices. Clients who repeatedly forget
or delay payments go way down my "want to work with again"-list and get sorted
out this way sooner or later.

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chrisbennet
I contract direct. I allow 30 day net terms with a 25% discount for paying
within 15 days. All my clients have opted to save $50hr instead of borrowing
my money for a month.

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gt2
Much larger discount for early payment than I've heard of.

At this large of discount doesn't it sound like the original rate is just
obviously marked up to account for this offer?

Related, but wouldn't this lose potential clients that think the rate is too
high, unless/until you quickly explain there's a discount for early payment or
without their being confident that they will always be able to take you up on
that offer?

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chrisbennet
Yes, it is a much larger discount than normal. In reality it is a disguised
punishment for paying late but cauched in nicer terms. The bill paying arm of
a companyee prefers to effectively borrow money from people they owe for 30
days. It isn't because they _can 't_ pay promptly. The $50hr difference
changes that calculus for them. I did have a client that couldn't get its act
together and pay promptly and I was actually happy to get paid late - at the
higher rate.

As for the rate, I'm a software developer with a skill set that, while not in
high demand, is rare enough to let me charge $20 more than I was being billed
out at 10 years ago (of which I would get half).

As far a losing clients based on the rate: It hasn't happened yet but if it
did, that would be a good thing. A client who can't appreciate/profit from the
value I bring to the table is a client I don't want. I just don't want to work
for a client I can't make happy. That just doesn't do anyone any good and
since my reputation is livelihood, I actually can't afford to make unhappy
customers.

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malux85
I've worked in several places as a contractor in London and it was pretty
normal to get paid 1 month after you invoice.

Now that I run a company about 50% of my customers wait 1 month before paying
and about 50% pay immediately. The ones that pay immediately are always much
better clients as a whole and this is a good indicator of their general
business health.

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arthurjj
As someone who's only hired freelancers through Upwork, something I really
like was that they required I pay them every week. Once the first payment went
through the freelancer knew I was legitimate. It also made it easier for me to
budget since I had small numbers I could extrapolate out for how much the
project will cost.

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nik736
I usually get paid within 5, max 10 days.

I pay other contractors and basically any invoice instantly. There is no
reason for me to wait 30 days to pay them. If they have the money the next day
they are happy and will gladly work for me again.

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zapperdapper
Depends. Some contracts I get paid weekly and the money is in the bank within
a few days of the week end.

Getting paid monthly I would normally expect to have the money cleared in the
bank by 10th at the very latest in the following month.

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cm2012
I always negotiate net 15 and usually am paid by 10-15 days.

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atsaloli
I get paid in 30 or 60 days usually.

