Oh the horror stories I've heard:<p>- 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.<p>- 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."<p>- 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.)<p>- bounced checks, checks without signature, checks where the 2 amounts didn't match, checks with next year's date: too many to mention<p>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.<p>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?
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).<p>There are a few things that we do that have created this scenario:<p>1) <i></i>Stipulate a 10 day payment policy.<i></i> 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.<p>2) <i></i>Payment is made regardless of the client's invoice status.<i></i> 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.<p>3) <i></i>Meet with your clients face-to-face and build relationships and in some cases friendships with them.<i></i> 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. :)<p>4) <i></i>ALWAYS ALWAYS ALWAYS get money up front.<i></i> We have a sliding scale for this based on total contract size, but it ranges from 25-50% as an initial payment.<p>5) <i></i>Don't start the clock or work until you get paid.<i></i> We guarantee delivery time, however our clock doesn't start until we've deposited payment, and our contracts stipulate this.<p>6) <i></i>Follow up on invoices.<i></i> 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.
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.<p>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.
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.<p>Law firms were they worst. I guess because whaddya gonna do? sue them?
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.
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.<p>I do have some questions for the HN community if anyone has some advice, thanks in advance.<p>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.<p>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?<p>Anyways, it's all very new and confusing and exciting, just trying not to fuck it up too badly. Thanks for any advice.
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."
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."
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.
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?
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.
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.
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.
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.<p>It seems like a "bad client" list would be, at least, a partial solution.