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Ask HN: What is the typical time your contracting invoices are paid?
7 points by Inc82 70 days ago | hide | past | web | 22 comments | favorite
We have net 30 terms that we pay our engineering contractors. Most seem to get nervous if we haven'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?

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.


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.

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.

>It prevents clients from using me as a bank.

Not clear what you mean by this, please explain.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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?

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.

Maybe the rate is marked up but I'll be damned if that's not a great cheap tactic to really incentivize people to pay on time.

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.

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.

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.

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.

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

I get paid in 30 or 60 days usually.

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