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Ask HN: As a freelancer, how do you ensure clients pay?

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Re: Ask HN: As a freelancer, how do you ensure clients pay?

#31

Post by unsquare »

orthecreedence wrote: post #24

1. Get good clients. 2. Get a deposit (ideally one month's pay) up front. If your client doesn't want to put down a deposit, find another client 3. If client doesn't pay you for more than a month, ALL WORK STOPS until you have their money in your bank account . Problem solved. If your clients are in town and aren't paying, feel free to drop by their office and remind them that you aren't working until you get paid. A…

"2. Get a deposit (ideally one month's pay) up front. If your client doesn't want to put down a deposit, find another client"

Same here , if they aren't willing to pay a % up front , the discussion ends there. Move on to the next client.

Re: Ask HN: As a freelancer, how do you ensure clients pay?

#32

Post by DrJosiah »

jeromeparadis wrote: post #25
julienmarie wrote: post #15

First thing is the payment schedule. I usually do 45% deposit, 45% at the end of the work, 10% when the site goes live. This ensure that I get at least 90% of the contract. Also, have complete Terms and conditions. One important point is all the intellectual property that goes with your work => until complete payment, the work is yours, and usage of it is illegal. With final payment, I usually issue a letter transfer…

What he said... That's what I've been doing since the 90s. It works well. And, to answer the question what steps to do when they don't pay: not much you can do other than asking. There aren't any worthwhile legal resources for businesses or freelancers to be paid. However, to not get there, make sure the payment schedule covers your work hours including profit and if they don't respect the schedule, stop working and…

You should watch the video linked in the parent post. A lawyer pays for themselves.

Re: Ask HN: As a freelancer, how do you ensure clients pay?

#33

Post by IsaacL »

patio11 wrote: post #20

Be picky about clients. Payment risk is not equally distributed across all clients, all work, or all contracts. Exercising a bit of professional discretion upfront will save you grief later.

This.

The ebook career.fork() that came out recently had more on this. Basically, you can learn to spot "clients from hell". There are certain traits that are the equivalent of pointy horns and a whiff of brimstone:

- excessive cheapness in initial negotiations

- "but we can just find a guy on odesk for $5/hour" (reply: OK, you do that, and come find me when it falls apart).

- no effort to understand technical issues. Of course, lots of good clients don't understand technical issues (that's why they hired you), but at least show some interest in what you're doing.

- unrealistic expectations (I want the next Facebook!)

- very vague ideas about what they want. "I need a website made!" Lots of good clients also have vague ideas, but its your job to help them figure out exactly what they need. Try sitting down with them with a pen and paper and listing what pages they need and an outline of the content for each one.

Now, some clients will happily sketch out Balsamiq type mockups, wheras others will just give you a brief list of the pages they need and let you work out the details. Both are fine. But if the client refuses this exercise, stay away.

My big surprise when freelancing was that most clients are not from hell. If you just avoid the jokers, there are plenty of good clients that value your work and pay on time.

Other tips:

- taking a deposit at the start is always good. It's like the client has "broken the seal" and will be more willing to pay in future.

- it's hard asking for payment. It's the social norm against asking for strangers for money. One advantage of paycheck employment is the only time you need to discuss money is in the interview. After the first few invoices, it gets easier.

- avoid getting desperate. When you only have one week's rent in your account, you might be tempted to take on a bad client. Easier said than done, but maintain a buffer of savings and start looking for gigs before your current one finishes.

- be a bit cynical. Even if the clients are the nicest, coolest people in the world, if your code is on their server and your money is in their account, it's quite easy for them not to pay you. If you control the code, and some of the money (ie, a deposit), you're in a much stronger position.

Re: Ask HN: As a freelancer, how do you ensure clients pay?

#34

Post by IsaacL »

julienmarie wrote: post #15

First thing is the payment schedule. I usually do 45% deposit, 45% at the end of the work, 10% when the site goes live. This ensure that I get at least 90% of the contract. Also, have complete Terms and conditions. One important point is all the intellectual property that goes with your work => until complete payment, the work is yours, and usage of it is illegal. With final payment, I usually issue a letter transfer…

"Until you sign the contract, you have to be the mum of your clients, reassuring him, explaining things, understanding him. Once signed, you are his father : you are here to reminds him the terms of the contract. It means that you have to be thorough on revisions, delivery dates for contents, and of course, payments."

Funny analogy. I like it, however...

I've recently been skimming the book "Million Dollar Consulting". In there, the author says you should avoid the temptation to treat the client like a parent ("I'd better hide this problem, or the client will get mad!") or like a child ("I'd better hide this problem - the client is too helpless to deal with it themselves").

Instead, treat them like a partner ("we have a problem. What should we do?").

Re: Ask HN: As a freelancer, how do you ensure clients pay?

#35

Post by scotty79 »

Don't do anything beyond talking before money is on your account.

If you suspect that client might be opposed to paying all of the money up front double the price and take 50% up front. You can give discount afterwards if everything goes well. I noticed it improves relations with the client.

If your project is large and can be split into stages then do that and take all the money for each stage before starting it.

Re: Ask HN: As a freelancer, how do you ensure clients pay?

#36

Post by scotty79 »

Amazingly most people do pay (eventually) and the worst thing you can do is obsess about the ones that didn't pay.

When people owe you money it makes strange things to your brain. People may keep you hostage by withholding your money from you. You'll feel terrible. Best thing you can do is chalk up the ones that didn't pay as a cost of doing business and paid learning experience that tunes up your anti-asshole filter. My sanity immensely once I understood that sometimes you get screwed on your investments, it's impossible to avoid that in all cases and it's ok.

Re: Ask HN: As a freelancer, how do you ensure clients pay?

#37

Post by porlw »

rhizome wrote: post #14
AdamGibbins wrote: post #2

Reward early payments.

This is what I do. I only have one main client, and it's a more-or-less ongoing arrangement, but I invoice on the 1st & 16th and give a percentage discount if they pay within 10 days.

This is a much better idea than trying to impose a late payment fee - set your rates 10% higher, offer a 10% discount on early payment.

Re: Ask HN: As a freelancer, how do you ensure clients pay?

#38

Post by porlw »

jeromeparadis wrote: post #25
julienmarie wrote: post #15

First thing is the payment schedule. I usually do 45% deposit, 45% at the end of the work, 10% when the site goes live. This ensure that I get at least 90% of the contract. Also, have complete Terms and conditions. One important point is all the intellectual property that goes with your work => until complete payment, the work is yours, and usage of it is illegal. With final payment, I usually issue a letter transfer…

What he said... That's what I've been doing since the 90s. It works well. And, to answer the question what steps to do when they don't pay: not much you can do other than asking. There aren't any worthwhile legal resources for businesses or freelancers to be paid. However, to not get there, make sure the payment schedule covers your work hours including profit and if they don't respect the schedule, stop working and…

One problem is preventing the client from making use of the software when there is a dispute about payment.

Due to the laws regarding unauthorized access to computer systems, it may not be legal for you to remove or even communicate with your software once it has been deployed to the client. For internal systems it might not even be physically possible.

To combat this, I like to incorporate a "dead man's switch". This means that the software will stop working within a certain amount of time (say 30 days), unless I actively intervene. The switch is only disabled once final payment has been received.

A notice somewhere on the site or in the app will say "Evaluation software - nn days remaining", so the client is aware and gets a countdown.

The switch doesn't have to be super sophisticated but it should incorporate some element of encryption - that way if the client attempts to circumvent it you can threaten them with a DMCA claim.

Re: Ask HN: As a freelancer, how do you ensure clients pay?

#39

Post by kaisdavis »

> What steps do you take to ensure clients pay you on time and what actions do you take when they don't?

1. I only work with clients that I trust. How do I find out if I can trust them? Extensive interview process. Is their business sustainable? Have they worked with freelancers before? Do they have references for me?

2. I have clients pay me up front. No, seriously. I have a contract that lists my rate and asks for the money up front. If they want different payment terms, we can negotiate from there (and usually to a point that we're both happy with).

3. I don't let myself get 'underwater' with a client. I use Harvest to monitor the time I spend working on client projects. It sends me a notification when I get within (80%) of the time allotted on the contract. I have a text expander snippet that I fire off to the client with something like 'Hey, we're at 80% of the time you've paid for on the project' and let them know if I think we'll need more time or need to reduce the scope.

4. I attempt to collect in this order:

(a) Phone call to the company [the person I'm working with on their side] confirming they received my invoice (10 days after due) (b) Phone call to the person who signed my contract confirming they received my invoice (15-20 days) (c) Repeat phone call to the person who signed my contract (30-40 days) (d) Letter from my attorney

How often have I had to use these? Once. Why so infrequently? Because I follow points 1, 2, and 3 with new clients.

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