
Screw you. Pay me.  - privacyguru
http://venturebeat.com/2011/04/15/screw-you-pay-me/
======
edw519
Oh the horror stories I've heard:

\- a software house whose biggest client found out that they were 75% of their
business. So they just stopped paying their bills and waited them out until
the source code ended up in receivership.

\- A contractor that bid a time and material job, deployed it successfully,
and got paid. He was then called back in to change a few things for which he
was not paid because, "We paid for it to be right in the first place."

\- a local trucker that made 500 successful deliveries buy screwed one up, so
he got paid nothing. He blocked the parking lot with his truck in order to get
paid. (The company would rather pay him that get the bad press from the local
newspaper.)

\- bounced checks, checks without signature, checks where the 2 amounts didn't
match, checks with next year's date: too many to mention

Also, I'm surprised no one has mentioned a controversial practice I know that
others have used: time bombs in the software. It goes something like this:
Here is your working version which we will make permanent when you're paid in
full.

I have never resorted to something like this and I hope I never do. Has anyone
ever tried this? What are the ramifications, financial, business, and legal?

~~~
crikli
"Also, I'm surprised no one has mentioned a controversial practice I know that
others have used: time bombs in the software. It goes something like this:
Here is your working version which we will make permanent when you're paid in
full."

If you have to resort to this practice, you have already failed. Tripping the
time bomb will get you sued, not paid, and you will lose. You may even go to
jail.

~~~
icey
I think it's a matter of perspective. We do this with enterprise software,
except we don't call it a "time bomb".

"We've deployed your installation with a provisional, expiring license. We'll
issue your permanent license once you've confirmed the software is installed
and configured to your liking."

Then when they send the check, we send the license. It's never been a problem
for any of the parties because we've always been very up front about how the
process works. No surprises.

~~~
crikli
Sure...I guess when I hear "time bomb" I think of something that wipes source
code or data. Something that alters the bits and bytes. That's the thing that
will cause you a world of hurt. What you're talking about is of course totally
legit.

~~~
artmageddon
Yeah, using that kind of "time bomb" would be ridiculously bad. I've always
looked at that as breaking into the premises and manipulating / burning the
books.

I sold a piece of software to a local business a few months ago that works on
expiring dates. Each payment I get from the owner pushes back the expiration
date until I get the full amount, at which point it's theirs forever(it's
worth mentioning that so far things are great).

We didn't agree to a contract for the work I did, so I can only hope I don't
get screwed over some how in the future. It was my first freelance job though,
so I guess there's a lesson to be learned.

------
crikli
My small firm has never had cash flow problems and we've never had a client
successfully avoid payment. (EDIT: We've had cash flow problems in the
beginning due to being a startup, but never from non-payment).

There are a few things that we do that have created this scenario:

1) __Stipulate a 10 day payment policy. __We don't really expect people to pay
that quickly, but prospects/clients always bring it up. It give us the
opportunity to communicate how serious we are about getting paid. We then flex
the policy to something more realistic, although we make them fight to get the
time beyond 10 days.

2) __Payment is made regardless of the client's invoice status. __We work with
a lot of creative agencies so we're not always contracted to the ultimate
payer. We make it very clear that we will be paid on time regardless of the
status of their invoices. This is a really big thing to look out for it you
work with agencies; they want to try to wait to pay you until they've been
paid. We make it crystal clear that we will not allow their collection issues
to become our collection issues.

3) __Meet with your clients face-to-face and build relationships and in some
cases friendships with them. __It's a lot harder to screw over someone you
have to look in the eye. Also, in my case I'm a pretty big dude, ex-lock
(rugby), and it's also harder to screw over someone who could break you in
half. It's primitive, but it works. :)

4) __ALWAYS ALWAYS ALWAYS get money up front. __We have a sliding scale for
this based on total contract size, but it ranges from 25-50% as an initial
payment.

5) __Don't start the clock or work until you get paid. __We guarantee delivery
time, however our clock doesn't start until we've deposited payment, and our
contracts stipulate this.

6) __Follow up on invoices. __We follow up on invoices at 15 day intervals.
This is a good thing for so many reasons. It reminds them you're serious. It
allows you to communicate before you have to go to the mattresses. It keeps
you on top of your A/R because it's too easy to go "oh, it'll be okay, they'll
pay" and go back to the IDE.

~~~
gte910h
>) Payment is made regardless of the client's invoice status.

That's a good way to state that. I hadn't thought of that way to state the
exact sentiment.

~~~
crikli
Thanks. Our language on the matter is very specific, and we are very explicit
about that policy both in the contract paperwork and in our verbal
communications.

Even so, I'd say 3 of 5 clients try to pull the "we haven't been paid yet, we
can't pay you" bit. At which point I remind them of their initials on the
contract acknowledging that they understood that particular point.

Bottom line, I refuse to let their cash flow issues become my cash flow
issues.

------
jgarmon
During my consulting days, this was a hard issue to get across to many
clients. (Part of the reason I don't do much consulting anymore.) My time has
a value. You're paying for my time. Whether you extract value from my time is
up to you, but I'm going to be paid for it either way.

My consulting colleagues often disagreed with this philosophy, trying to walk
some careful balance of not asking to be paid too much so the client will use
you again. use being the operative word here. If the client is the type that
doesn't value your time, you don't want them to hire you. It never ends up
being worth it.

------
eli
When I got my first real job at a small consulting firm, I was shocked at how
many clients just refused to pay their bill. They didn't even really seem to
have any specific reason for not paying.

Law firms were they worst. I guess because whaddya gonna do? sue them?

~~~
jbooth
Yeah, having seen some friends get stuck in that situation, I've decided if I
ever get into contracting, I'm never starting out on a contract without the
"you pay my legal fees if I have to sue you for collection" clause in the
contract.

Once you've got that clause.. hey bring it on. Pay me or I'll just hire a
buddy for my lawyer, have him rack up the bill and consult with him over a
steak dinner.

~~~
Tyrant505
Correct me if I'm wrong, but I did not think that was possible(legal).

~~~
delinka
You can put anything into a contract. And in this case (client pays fees,
including legal fees, associated with collection of invoices ... Or somesuch)
it's certainly enforceable.

~~~
ams6110
I'm unconvinced that the "client pays legal fees" clause is really a sure
thing. All the client has to do is make the argument on some other basis, and
suddenly it's not a collections issue but a dispute over something else in the
contract. In most states, each side will pay their own legal freight in such
civil complaints.

~~~
jbooth
I've personally been on the wrong side of it with some opportunistic a-hole
lawyers and a 30-day late payment on my condo fees. Maybe it wouldn't have
held up if I wanted to dump 5 figures to fight it all the way, but then that's
the point, right? Once you threaten someone with legal fees, they're likely to
get a lot more cooperative. Personally, I ate it rather than fight it.

------
michaelpinto
My lawyer once pointed out to me that "contracts are only as good as the
people who signed them" and what I've learned over the years is to go out of
my way to avoid doing business with anyone who seems to be a flake. Granted
that things can go south, but this strategy works well. And I say this as
someone who went to court once and still couldn't collect.

~~~
oomkiller
That's like "pulling out" instead of using real contraception. It's usually
effective, but when it fails, it can be disastrous. That's why you should
always have a good contract, just in case.

~~~
jongraehl
You misread. He didn't say "don't have a contract".

------
ihumanable
As someone getting started in the Freelancing / Consulting world and trying to
figure out how you are supposed to do things the "right way" this was a really
accessible, fun, and valuable piece to watch, definitely worth the time.

I do have some questions for the HN community if anyone has some advice,
thanks in advance.

What's the best way to go about contracts, especially form contracts. Most of
the work I do is the same kind of thing and normally the only variables are
rate / duration / deliverables. Is the best way to go about this to find a
lawyer and have him draft something that I can just drop "$rate / $time" for
"$durationOfProject" into.

Is it best to go to the lawyer with some sort of draft in hand already or
should you let them do all the work? Can anyone point to some good resources
for boilerplate contracts?

Anyways, it's all very new and confusing and exciting, just trying not to fuck
it up too badly. Thanks for any advice.

~~~
ra
At $250 it's not cheap, but there's a lot of really great process and
information in the Sitepoint Web Design Business Kit; including sample
contracts.

It's kind of like a franchise kit for freelancers.

~~~
wtn
Obie Fernandez has one as well, for $100. He also has a few lectures on the
topic on Vimeo.

------
tomkarlo
I once had a client ask if they could just not pay a $2M bill (after 18 months
of work) in the name of the "relationship" (because presumably there were much
bigger deals down the line.) My boss, to his credit, didn't miss a beat before
saying "that's not the kind of relationship we want."

------
blazamos
Any particular reason you changed the title? Some people might find it
offensive, but they've already semi-censored it with the title "F*ck You. Pay
me."

~~~
mgrouchy
Because thats the title on Venturebeat I imagine.

~~~
CWIZO
But the title of the video is "F*ck you. Pay me.". If you ask me this
submission should point directly to the video and the title should be that of
the video.

~~~
mgrouchy
Well, we could argue that about many of the posts on here. But as it is, this
links to the VentureBeat article which links to the video, So I think the
title is okay.

~~~
cjeane
Is this what we are calling an article? Five sentences plus a warning that the
video is offensive. If this was posted on any no name blog, there would be a
lot more pressure to link to the original video only. I call double standard.

~~~
chopsueyar
Time to get back in the DeLorean?

------
leftnode
Just had to send out a Fuck You, Pay Me email this morning. That's the #2
piece of advice I'd give to graduating computer science/engineering students:
always get paid. #1 is don't build that idea the business major across the
street has for free, which ties in nicely to #2.

------
rabble
There's a ton written about running a startup, but there is amazingly little
written about doing a professional services design / development firm. Anybody
know of good sources for running a good services firm?

~~~
gersh
The basics are: 1) Get good clients. Low-end clients typically aren't worth
your time, and it will be hard to make money. 2) The best way to get new
business is via referrals. The best business can found through happy customers
3) Don't try to compete on price, or hire the cheapest the employees. It
doesn't work well in this business. 4) Have contracts and get everything
agreed to in writing 5) Pay careful attention to your costs, and learn basic
accounting. Overhead for offices and such costs money. You also need to
overhead to cover downtime, sales, project management, and collections. You
may need 100% overhead.

If you agree to do a project for $3000, make sure you can really get it done
for that prices. You also need to figure out how to deal with change-requests.
If you allow too many free change requests, you will lose money.

When setting the prices, you need to think like a businessperson. A lot of
designers and programmers don't understand how to price their work very well.

~~~
billswift
>If you agree to do a project for $3000, make sure you can really get it done
for that prices.

Yes, and to repeat another point you made earlier, the price you need to
charge includes the associated overhead. I have seen many people start in
consulting only to fail because they didn't take their overhead costs into
account, or at least enough into account, when billing. The only real
difference between failing to bill for overhead costs _at all_ and not billing
_enough_ is how long it takes you to fail.

------
jnhnum1
Don't people usually deal with this sort of thing by signing a contract ahead
of time?

~~~
pavel_lishin
Sure. Some clients still refuse to pay.

This happened a few times at a previous employer's. It usually wasn't worth it
to take them to court, and since we also hosted their website, after a certain
time, we'd simply take down their website and e-mail accounts.

About half of the non-paying clients suddenly found room in their budget to
pay us for our work and hosting fees. Funny how that works, but unfortunately,
that doesn't work for design firms. :/

~~~
tomjen3
There is a Danish support company which figured out that if all else fails a
public foundraising event will shame most companies into paying your fee.

It supposedly works on IBM.

~~~
forensic
What's a public foundraising event and how does it get people to pay?

I don't really understand what you mean, sounds interesting though.

~~~
tomjen3
You pretty much have a fundraiser even like a politician would.

Obviously the company is in need of money, seeing as it can't pay its
bills....

------
sleight42
Tangential but I'm hugely impressed with the camera work in this video. The
alternate long and close-in shots of Mike, the speaker, and the use of
contract gave it a decided Hollywood feel for me.

~~~
martey
The original source link at Vimeo (which, as other commenters have stated,
should probably have been linked to instead of VentureBeat) states that the
camera work was by <http://whitmoreprod.com/> , which seems to be a
professional film production/design firm.

------
ElliotH
Wish I had seen this about a year ago. Learnt some of it the hard way already
sadly.

------
daimyoyo
This question might seem naive and if it does I apologize. I live in Vegas but
in all likelihood the vast majority of projects I'll be taking will be for out
of state companies(especially in CA.) Should I retain a lawyer here, or should
I look for one based in California? Thanks for any insight.

~~~
joshuaheard
If you are going to sue a company in CA, you will need a lawyer licensed
there.

For contracts, you can hire a local lawyer if they put Nevada as the
jurisdiction in the contract. Also, you can then sue them in Nevada.

------
canadiancreed
This is something that, as someone that is looking to get into the whole
consulting business (yes I must be insane), found quite interesting. Thanks
for sharing.

------
michaelochurch
This wouldn't work in New York where you can call cabs from the street, but I
lived in a town in Minnesota where there was a "non-payer" phone-number list
that cab companies used. If you didn't pay the driver, your phone wouldn't get
through to any cab company until you paid it back, plus interest and a
processing penalty.

It seems like a "bad client" list would be, at least, a partial solution.

~~~
AdamGibbins
What stopped people companies blacklisting you for personal grudges?

~~~
eru
The urge to make money?

