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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?

#21

Post by chime »

I invoice weekly. I include a detailed list of tasks completed in each invoice and the time taken per task. I use toggl.com and bill in tenths of an hour. When working with clients with multiple employees/project-managers, I include who commissioned the work and for which project.

Since I check in my code, static files, documentation, and all resources along with the weekly invoice, the payment is due immediately. The client is aware of my progress on a weekly basis and knows exactly how many hours I have spent on which feature. I've worked like this for over a dozen clients and not one of them has ever had a problem with it.

I do not work on fixed-cost contracts but rather fixed hourly rate contracts. I give detailed estimate (Statement of Work) before the contract is signed and if I go over the estimated hours for any task through no fault of the client, I eat the overage costs (teaches me to quote better). If I am under the estimate, I bill exactly for what I worked on.

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

#22

Post by hoodoof »

j45 wrote: post #19
hoodoof wrote: post #7

Warranty is valid only if invoice paid on time.

This is a great idea.

We NEVER get paid late using this approach, in 8 years of doing business. Admittedly we are not doing software development but the principle works as long as you can get a warranty defined in your terms that does not commit you to doing free feature work rather than bug fixes. Shoud be do-able.

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

#23

Post by sgdesign »

This kinda goes against the trend of selling yourself as providing value and not merely your time, but you can also ask to be pre-paid for a certain amount of time.

Similar to a pre-paid cell phone plans, ask your client to buy 10 hours (or 5, or 20) of your time, work those X hours, repeat.

This is the system I've been using myself for the last couple years, and I've never had to worry about getting paid. And I know I'm going to raise some eyebrows with this, but I've never had clients sign contracts either.

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

#24

Post by orthecreedence »

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. An in-person reminder is a lot more influential than a piece of paper with a number on it.

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

#25

Post by jeromeparadis »

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 mention there will be a delay in delivery. As he said, choosing well your client by avoiding people who are too difficult from the start usually avoids the worst kind of clients. As soon as your guts sees a red flag, don't ignore it and walk away. Your instinct is rarely wrong when sizing trustworthiness.

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

#26

Post by hluska »

Unfortunately, the longer you freelance the greater the odds that you'll find one who doesn't pay you.

In general, I think that being nice to people, having fair billing practices, and doing good work are the best ways to make sure your clients pay on time. As well, when I'm preparing an invoice, I like to email a client and say that I'm preparing an invoice...I usually do net 30 but I wanted to know if there was anything I could do to make things more convenient.

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

#27

Post by sheraz »

In the famous words of Ben Affleck's character in Good Will Hunting, "RETAIIIINER!"

(for levity) - http://www.youtube.com/watch?v=5hWIr9_noRo

Just as with other professional services (Law, Advertising, Accounting), I use a retainer model.

This works for me and filters out the clients who I feel value my work.

For example:

  * $10000 put into an account that draws down against hours worked / daily / weekly output.
  * Invoiced weekly through freshbooks 
  * As retainer moves below threshold in retainer it gets replenished.
This keeps all of us honest, and it keeps me in a cashflow positive situation (usually).

Also, read up on patio11's posts here on HN. He's a smart guy and offers a lot of insights into what it is like to consult for a living.

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

#28

Post by raintrees »

Sorry, Major edit. I did not answer the question as posed first.

We are primarily a service business that also sells hardware and software, and we design custom databases. The software almost always has "pay as we go" milestones in the contract. This keeps us funded and forces checking in with the client at logical points to make sure the design is going the right direction.

All of our invoices show Due on Receipt, we grant 30 days, then either a cheerful reminder, or a late fee and reminder.

Too many late invoices (three - we are rather forgiving) with no communication ahead of time gets the client dropped.

On the service/sales side:

With new clients or large orders, we ask for deposits or retainers.

We also offer reduced rates of blocks of hours if paid in advance (can help with starting cash flow).

As an aside, we use referral fees paid to people who refer clients to us. Arbitrarily I arrived at 30% of first hour and %50 of second hour (None beyond that) charged to the new client is paid to the referrer (Service work only).

First, it gets us more referrals for work, and second we get to take advantage of the reputational value of the reference - Few people want to flake on their invoices if it is going to make it back to the referrer.

YMMV.

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

#30

Post by timjahn »

It generally starts with the type of client you're dealing with. There's a type of client that will pay all the time and there's a type of client that will haggle with you every time. The better you get at learning how to spot them, the less trouble you'll have getting paid.

With my new startup matchist (http://matchist.com), we're actually tackling both these problems (finding the clients that will actually pay on time, every time, and guaranteeing that they will). We vet all clients and escrow payment so that you know you will actually get paid when work is complete.

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