An additional wrinkle is that oftentimes it can take a while to set up the mechanics of payment with a first-time client. So even if there is goodwill on both sides and a willingness to pay an initial deposit, you might not see the money until you've done quite a lot of work.
Since a lot of contract work is time-sensitive, waiting for payment to clear before starting work or handing over an initial milestone might not be an option. There's a tension between the desire to make a good impression on a first-time client and the desire to make sure they're not taking you for a ride.
Fortunately there are often warning signs when a client is going to be particularly difficult, and there are far more decent clients than unsavory ones.
oh man, this. So I've been doing contracting forever; usually direct to smaller companies or through a middleman who was also pretty small. And most of the time, smaller companies are pretty good about paying on time, and pretty responsive if you say "Hey, this is really important to me, I've gotta pay the power bill." (my power bill, well, let's just say it could buy my car every month.)
At my first contracting gig using a body shop way larger than I was, well, they'd kinda sort of start thinking about paying me 30 days after they got my net 30 invoice. This /really/ bothered me. In fact I made a lot of unprofessional noise to the client, and ended up staying home, once, until they paid me. The thing was, I was really worried that they weren't going to pay me at all.
It did not occur to me that this was just standard operating practice, and that they were planning on paying me; they just wanted to stretch it out a bit.
They might not even be trying to "stretch" it (a large company could give a crap about the float on an indie consulting invoice); they might just run accounts payable on a state machine in which the part that elapses a timer hasn't started yet. There might be all manner of reasonable reasons for doing it that way; for instance, if they accidentally release payment early, they may screw up projects by blowing expectations.
In any case, yeah: some of your best clients will do a terrible job paying you on time. 'slife in the big leagues.
I once worked in a bank doing tech support and occasionally fixed a few things in the sealed-off internal finance room. The place was littered with red final notices - including utility, phones, everything. As a bank they could easily put to use any extra cash they had, so the official policy was to pay everything late. No doubt everyone knew they would pay eventually, but when you're big you don't have to.
When I freelanced one of my customers moved the accounting to SAP, which had the unfortunate consequence that they didn't pay me for four month.
It was, however, a reputable, well known firm and I had no reason to believe that they where playing games or trying to bullshit me.
I was right and got payed in full when the glitches got ironed out. Nevertheless, it was a tad annoying and part of the perils of a freelancer, I guess. Thankfully, while being persistent with their accounting department I never blew up and always stayed civil.
Very much second that setting up the invoicing for a new supplier can take time, especially at multinationals or other large firms. I can understand this due to the fact, that procurement is one of the most sensitive areas when it comes to fraud and dodgy invoicing. Thus firms set up a lot of safeguards before actual money flows.
What do you think of putting less than +30? I've only ever done any large work with long standing clients that pay quickly. Would the majority of clients not agree to it? Could be a way to ensure that it ends up being +30 even with the client dragging their feet.
You can ask for whatever you want. You'll only run into problems with BigCo's if you do one of two bad things:
* Refuse to sign unless the BigCo agrees to your payment terms.
* Actually expect the BigCo to perceive time elapsing in a way that will get you paid in 30 +/- small n days.
They won't get offended when you ask for net+15. They might even agree. But you're getting paid when the stars align, not when you think the contract says you're getting paid. Established consultancies devote a small but palpable bit of effort managing this issue.
I did business with a department which was in the process of spinning off from a big Fortune 100 company. They had plenty of funds, but there was a lot of bureaucracy during the transition. As such, they told me they 'required' net-60
I asked for clarification, and they were apologetic about it. They could only run payments on a 60 day schedule. Solution: I billed net-30, 15% monthly surcharge for late payments, which they happily paid.
The lesson was that sometimes a client has no choice but to drag their feet, so be sure to give them that option (for a fee).
Good point. Its hard to believe how long it can take to get set up as a vendor in QuickBooks/with accounting, (i.e., "get you in the system"). But once its taken care of (after you've been paid once) payments become more timely.