
Ask HN: Would freelancers concider using a smart contract for fees on services? - Aegaeus10111
As a freelancer I spend a lot time dealing with late payments and no payment at all. I&#x27;d love to try a smart contract that would include milestones and escrow for each milestone - so my risk is reduced to small batches - and offer my client a discount.<p>I&#x27;m wondering if other freelancers - in any field - might consider the same thing?
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chalst
Asking for (part) payment in advance [1] is really common, so, say, you could
ask for 1/3 before work starts, 1/3 halfway and 1/3 on completion.

If these are not paid in time, you are in a good position to pester your
client before the job finishes, because you have the very real threat of
walking out before the job is done, likely leaving them with essentially
worthless WIP. The threat is so obvious you don't need to allude to it, just
say that if you don't get paid soon, you will need to take other work to tide
you over.

No need for escrow, which is tricky in the same way as PIA if there are
milestones: what if the client agrees to the escrow contract, puts in the
first installment, but then fails to put in later installments? Don't you
still need to dangle the possibility that the job won't get done anyway?

If you do want escrow, there are a number of problems with smart contracts:

1\. They are notoriously difficult to phrase in an exploit-free way

2\. Your client may be suspicious of the technology

3\. Cryptocurrency-based contracts are exposed to high volatility; there is an
element of gambling

There are more traditional escrow services that are not too expensive, such as
[https://www.escrow.com](https://www.escrow.com) \- of course you are exposed
to risks from the escrow service provider, but with a reputable company these
should be small.

[1]: [https://due.com/blog/10-invoicing-terms-need-
know/](https://due.com/blog/10-invoicing-terms-need-know/)

~~~
Aegaeus10111
Thanks for your reply and from the tone, am I correct in guess your answer to
my question would be "no"? :-)

For a more detailed response see below:

I've been working freelance on and off for 15 years in the EU and 10 years
before that in the US. Believe me, I have explored simple solutions. I don't
leap into unnecessary complexity just because it's there.

I don't know any client who would pay in advance. Here it's common that I work
until the end of the billing period - 1 month usually, then send an invoice.
That is payable in 20 days (big companies usually have ridiculously long
periods - 60-90 days) So I work for another month before getting paid for the
first. That's the norm here. On a short job, 1-2 weeks I can invoice on
delivery - but I still have 20 day payment terms.

Probably half the problems I get are client cash flow. Either I'm forced to
wait or they exaggerated (lied) about it and never had the cash - hoping to
make enough by the time I needed to be paid.

Escrow would prove that they have the money they promise.

Having milestones - say weekly size ones - reduces the risk for both sides.
Client front money for a small deliverable and freelancer can work on it in
confidence. At end, client accepts the work - thus freeing the payment. Client
then funds the next deliverable. And so on. There can be variations - this is
a basic example.

If the client doesn't accept a deliverable both sides are motivated to come to
an agreement - he doesn't get it. I would build a clause into the contract
that if there is no agreement the payment is frozen for x months, then split
50 / 50\. This increases a motivation to agree.

And if any agreement isn't acceptable to the freelancer - she doesn't need to
carry on - but her risk is much, much smaller.

To add to difficulty here - the legal system is pretty much pointless. It can
take several years to sue and if you win it can take years to get any money.
The losing party can declare bankruptcy or force payment plans that drag on
for years. So traditional contracts are pointless.

Escrow.com looks ok - except that it's in the US and I didn't see anything for
freelancers (if I want to sell a boat I see I'm covered :-) ). I didn't see
any functionality like I'm talking about. But thaty's an option, maybe.

1\. Nothing is exploit free - reducing risk is a good thing even if that
reduction is not to 0. As for writing it - legal contracts are difficult too -
but we use them all the time.

2\. I'm not asking clients here :-) Nor would I demand it of a client. But
there may be those motivated by something I can offer - like a discount? fun
with new tech? granular control of acceptance & payment?

3\. Crypto _can_ have volatility risk. Or you can use stable coins or simply
convert to fiat immediately. Again - if a smart contract option reduces one's
risk it's good, even if that reduction is not to 0. There is an element of
gambling in every single choice one makes, especially going into business.

~~~
chalst
> freelancer can work on it in confidence

Mm, that is different for copy-editing, which is what I do: I need to share
what I am doing as I go along. OK, escrow looks a better fit.

> Escrow.com looks ok - except that it's in the US and I didn't see anything
> for freelancers

The category is "contracted services": see [https://www.escrow.com/learn-
more/how-escrow-works/professio...](https://www.escrow.com/learn-more/how-
escrow-works/professional-services-escrow)

They allow contracts to be denominated in Euros.

> But there may be those motivated by something I can offer - like a discount?
> fun with new tech? granular control of acceptance & payment?

Ah! Yes, I guess there are people in the smart contracts crowd who would be
interested in talking. Since your story didn't get very far here, maybe
Twitter is a better avenue?

~~~
Aegaeus10111
Thanks for the Escrow link. I don't do twitter much. I assume this will be a
crown with a higher density of freelancers - so I thought the question might
be more relevant. Maybe I'm wrong. Cheers.

~~~
chalst
Well, I've linked to your story from Twitter now:
[https://twitter.com/txtpf/status/1102324815757799424](https://twitter.com/txtpf/status/1102324815757799424)

------
chalst
I see that there is a smart contract in the Solidity docs:

[https://solidity.readthedocs.io/en/develop/solidity-by-
examp...](https://solidity.readthedocs.io/en/develop/solidity-by-
example.html#safe-remote-purchase)

Doesn't mean it is bullet-proof, but certainly good enough for trying out.

