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.
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.
Not clear what you mean by this, please explain.
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.
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.
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.
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.
- 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'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.
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?
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.
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.
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.
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.