
Ask HN: As a freelancer how concerned are you about how fast you get paid? - michaelflux
Multiple part question for you guys,<p>1) When you submit your invoices, what are your typical payment terms - net 30, 60, 90 etc<p>2) Would you be willing to give your client a small discount (e.g. 2-3%) in exchange for the invoice being paid immediately, so you have the money in your account same day.<p>3) If you have to choose between clients, assuming all else is equal, are you more likely to work with the client who will pay you faster.
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Torwald
1) I have indivualized this. Before even writing the invoice I will have a
long and sup-friendly chat over coffee with the accounting person or whoever
takes care of thee billing in that shop. I let them explain in detail their
process. I always learn something interesting about how the real world works.
I listen. I listen to their woes, I sincerely try to understand them, their
problems act everything. I establish rapport with that person. Finally I ask:
"OK, now, how are we going to go about this?" At this point I normally have
enough of an idea about their process to understand what kind of dates and
other terms would make it work. I always highlight mutual respect.

2) First of all, normally I do not start to work before I received the money
upfront. Well, the money for the current milestone of the project. This is the
best way to make sure you don't waste time with people who don't want to pay.

Second, I am not only willing to give a discount, I always use this to sell
the offer I want them to buy the most. But I never do an unreal number like
"2%". What is that? Have you ever seen a 2% running in the wild? I don't know
any bank or corporate office that work so fast that they give you the money on
the sam day. Unless you are talking about "small" clients who work via pay-pal
and the like?

3) I don't understand the question?

~~~
michaelflux
Re 3) - Assuming at any one time there are two different clients with who you
can work - the projects will pay the same, will take a similar amount of time
etc. But you know one client will take say a month to pay, the other one a
couple days after you submit your invoice.

Of course based on your answer with 2, I see it wouldn't really apply if you
just take your payments upfront ... :)

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brudgers
For perspective: I started doing contract CAD work in 1990. I started doing
freelance residential and commercial design in 2002. I started practicing
architecture in 2007. The tl;dr: If I have doubts about a potential client
paying quickly or at all I will validate that doubt by requiring a check
rather than just hoping I am wrong.

Typically, I require a substantial retainer to be applied against _final_
invoice. By substantial, I mean big enough to cover all the billings up to
_payment_ of the first invoice. Payment terms are always "Due on receipt of
invoice." I am not in the no-interest short term unsecured loan business. This
means:

1\. I will not be upside down where I am owed money for work I have done.

2\. I will not discover that the client does not have funds to pay me.

3\. I will avoid potential clients with a strong propensity not to pay without
investing much time.

4\. I will avoid potential clients who will use me as a bank.

5\. I will avoid potential clients who believe that since they did not build
it, they should not have to pay.

The most significant characteristic of a good client is that they pay quickly
and well. Here, "well" can mean a lot or regularly, but preferably both.
Writing a check before we start is a good indicator.

There are exceptions of course. Bureaucratic organizations have their payment
procedures. On the other hand, if the person who I am talking to cannot
authorize a retainer, then I might not be talking to the right decision maker
about the financial aspects of the contract.

Good luck.

~~~
michaelflux
Fair enough, thanks for the feedback Ben, appreciate it.

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DamonHD
1) I try to have slightly weird terms so that I don't slot neatly into any
standard way of ignoring invoices.

2) Yes, in principle, though (a) it complicated taxes and (b) none have ever
taken me up on the offer. You could go to a factor to do it for you though.

3) Unless it's a huge difference, no.

When I started at RBS in 2008, having escaped Lehman Brothers just in time, I
was glad that I had been switched to weekly invoicing (without being asked)
since RBS' share price halved live while I watched in the first week and I
wasn't sure that RBS would be alive to pay me in week 2!

~~~
michaelflux
1) Weird how? Any examples?

2) Have you ever used factoring services before? What was the experience like?

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DamonHD
1) 21 days or 8 days or 17 days. NOT 30 days or a multiple thereof.

2) No, though I have been tempted occasionally. In one case the accounts dept
was sympathetic with me over their MD being slow _every_ invoice signing off,
so I'd go and have tea with them for an hour each Friday afternoon and book it
as paid time "OH:Admin". We reckoned that that easily covered any interest
costs to me, and made Friday so much better!

~~~
michaelflux
Have you found any change in how people pay the invoices after you started
doing the nonstandard days?

~~~
DamonHD
I generally end up getting to know the relevant people in accounts when they
ask me "Uh, what do we do with this?" and talk to them and build enough of a
relationship that payments are made as well as they can be. (Or else, in some
spectacular cases, an accounts person being stupid to me gets fired.)

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noir_lord
1) 30 days.

2) Probably

3) Always, clients who pay on or before time get priority all other things
been equal, cashflow trumps pretty much everything else.

If I have more clients than I have time then the clients who get dropped of
the list are the ones who pay late, I've done the work I shouldn't have to
chase you for the money.

I just took a full time job though as freelancing is way too much not-
programming and I 'just' want to be a programmer for as much of the day as
possible.

~~~
michaelflux
1), 2) - so if they offered to pay same day, how much would you be willing to
knock off? 5%, 10%, more?

3) Were invoice related things the primary time drain that took you away from
dev work, or was it a combination of everything - marketing yourself,
interacting with clients etc ... ?

~~~
noir_lord
Probably 5% I don't think I'd go to 10% as that would be a fairly big hit.

Invoice related things were not the primary _time_ drain since I paid the
accountant to chase invoices however late invoices where a major concern
because underlying cash flow is what makes or breaks you.

The other thing that becomes an issue is the classic "project management"
issue, doesn't matter how good your process is if the people on the other side
simply don't get it and that causes a lot of problems (projects stall because
you can't get the data/information you need), fixed deadlines loom close and
you are stalled waiting for information.

In the end if you care about producing high quality work it's incredibly
stressful and frankly after 4 years I'm sick of it, I'm _really_ looking
forwards to working on internal systems for a big company, replacing "every
client is a boss" with "this is your boss" sounds lovely to me.

~~~
michaelflux
Hypothetically speaking, if you didn't have to spend money on the accountant,
and if your invoice was paid immediately 100% of the time, would that get you
closer to be willing to give up up to 10%?

~~~
noir_lord
Theoretically yes a lot closer but solving the problem of small/medium
businesses paying freelancers/contractors on time isn't a simple problem.

~~~
michaelflux
Cheers, thanks for the feedback :)

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antoinevg
1\. Payment is due on receipt of invoice

2\. I give a 10% discount for invoices paid on the same day as receipt

3\. I will not do repeat work for someone who did not pay on time

~~~
michaelflux
1) Have you run into any issues with bigger companies with it being due on
receipt? - While it's ideal, most companies would have their own fortnightly
or monthly payment cycles no?

2) Is the cashflow that much of a factor, or do you up your original invoice
by 10% just to cover that possibility without taking a hit?

3) So if they pay you say within 2 weeks, would you not want to do repeat
business?

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GrumpyNl
1) 7 days 2) nope 3) i do the work on you terms, you pay me on my terms. ( im
not cheap, minimum is $80 an hour)

~~~
michaelflux
Have you run into any issues where you would want to work with an otherwise
good client, but they would only be able to pay on net 30?

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GrumpyNl
I will never work for 30.

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michaelflux
Gotcha, thanks for the feedback. :)

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joshdotsmith
I don't think he understood the question. "For 30" sounds like he meant "$30
per hour" and not "on net 30 terms."

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mattbgates
1) net immediate but invoice is sent on the first of every month

2) 10% discount if paid on same day and any (Paypal) fees removed

3) I document my work and send an invoice to the client - I expect payment
within a week and would prefer those clients who see the work is done and want
to pay their bill immediately

When I send an invoice, I usually put payment due upon receipt, however, for
clients that I do daily work for or updates once a month, I only send an
invoice once a month.

I've never had issues with clients paying because I have showed them purposely
what happens when I don't update their websites... they actually crash after a
while. WordPress is great, and will almost always work to an extent even when
outdated, but massive plugins that are database intensive and rely on user
input usually start failing after a few months of not being updated.

So yeah, if they don't pay, I don't update their website, and it starts to
break, and by that time, I usually charge them more to figure out what went
wrong, and they learn that paying my invoices on time, will save them money in
the long run.

I have only ran into a problem once.. a client forgot to pay me and I let it
slide for the entire month. I sent her an email reminding her that she had not
paid the invoice and if she would like to continue my services to please pay
her invoice. She paid within 24 hours.

I also usually offer my clients two options:

1) pay me hourly and be sent an invoice every month

2) pay me yearly and receive a huge discount

So for example, if I build a website for someone, on the invoice, I display
separate monthly maintenance pricing and per hour, it might be $30/hr, while
paying me yearly might only cost them $1000 for the entire year.

So what are the benefits and disadvantages?

Charging hourly is for clients you know who are going to demand your time and
are picky and sometimes want custom work. You can determine how they are going
to be when building their website. They will nitpick and probably argue with
you more often than you'd like. These clients will milk you for your time when
they can, getting you on phone calls, emailing you, wanting to know
everything, asking so many questions, etc., so best not to even offer the
other option.

Charging yearly is for clients you know who might call upon you once or twice
a month, but pretty much you are just providing some support and maintenance.
This is for clients who are much more laid back and less demanding. It is best
to offer this plan and the other one.

I've had a few clients pay me yearly and most of the time, I haven't really
had a loss. For some, I may have done a little more work than I would have
liked, but it is also the gamble I take when offering clients those options.

On the bright note of being paid yearly, you get paid immediately upfront so
you see the money right away, but you risk your client needing more work and
you end up getting paid less than if you had charged hourly. You obviously
can't take this back. So it is good to know your clients well and their
demands before offering such an option.

The bonus is that if they don't use your services that much.. you made some
good money for doing very little work, sometimes no work at all, if they don't
call upon you for the entire year. Easy money.

~~~
michaelflux
1) Were there any clashes with their own payment cycles? - e.g you send out
the invoice on first of month, expecting immediate payment, but their own
cycle pays out all outstanding invoices at the end of the month?

3) With the yearly payments, is there any clause e.g. you get upto 50 hours of
work, after that it's hourly rate' or the like to prevent abuse?

~~~
mattbgates
1) For one client who runs a business she sometimes takes a week to pay it. I
don't think I've ever had trouble with a client paying except that one I
mention.. she got busy and didn't see my invoice email but once I sent a
reminder it was paid immediately.

2) I probably should do that but like I said you feel the client out and their
needs. I have had to go back to a client and raise the amount I was charging
telling them I had to be fair with my pricing and due to their needs was
increasing it.. it was only about $300 or so.

Once I made the mistake of charging $500 to a client to do her website and she
nitpicked everything to the point where it is now almost 4 years later and the
website still has not gone live. I obviously made no money on it, but after
reaching out several times, I can't even get a hold of her. I charged that
little as a favor to my brother, who recommended her to me, and because she
was looking for a "cheap" website -- this was a red flag. She runs a million
dollar business but did not want to invest in her website, but wanted to
nitpick like she paid thousands of dollars for one. So yeah.. it took me
almost a year to get money from her... and when she paid.. she nitpicked even
more and the website never even went live.

I always say to my clients: "if you are fair with me I will be fair with you."
This statement here seems to make people understand that I am human trying to
make a living just as they are. I'm not trying to rip anyone off or anything
considering my client base is usually small business owners trying to make it
as well.

~~~
michaelflux
Gotcha, thanks Matt :)

