Ask HN: How do you actually get paid the money?

#1

Post by Hanzo » Sat, Jan 17, 2009, 10:47 PM UTC

Please excuse the noobish nature of this question, and if it's covered before, then it was missed and any link/articles would be appreciated; "long time reader, first time poster" status aside, wondering: what would an options matrix of payment possibilities look like for automatically and instantly getting paid BY COMPANIES, not individuals, look like?

In other words, let's say you were a startup of 3-5 people who need to work on product full time and can't spare the time needed to start a "billing" department to harass big companies to "pay their bills on time" which they never seem to do.

We don't want to be at the mercy of a large customer's whim about when they feel like "sending a check" and our local banker doesn't seem to know what to make of this question (probably because their main issue is small businesses that accept VISA/MC etc.).

So what are some options for, say, a software service with a monthly or quarterly subscription?

You know, assuming you don't want to come off as amateur and give a big client your paypal account?

Give them your company's checking account number and tell them, "When we see a deposit, that's when we activate the service?"

What are some options/tradeoffs? What have you used if you ever sold consulting/software/design services aside from "send a check for the amount of ...".

Is there some thing like a "corporate credit card" that we can just charge?

The ideal would be an account we can see and if such and such client deposited "x" money that month, they continue with it, if they were late, service shuts off until they deposit it.

And it's actually there, as in our side not, "it's making it's way through our accounts payable and will get to you soon, we promise."

Any ideas/experiences would be much appreciated, thank you.

Re: Ask HN: How do you actually get paid the money?

#2

Post by russell » Sun, Jan 18, 2009, 12:58 AM UTC

I do consulting and I get a written agreement giving rates, total amount, and other terms. Usually the company issues a purchase order and I invoice against the purchase order, usually net 30 days, 15 if I can get away with it. They send me the checks. I dont give discounts. I havent worked with mom and pops. My clients are multi-million to multi-billion corporations and I havent had any collections problems. It's may be more problematical with sole proprietorships and such. My billings are typically 5 digits per month. If you are talking a few hundred per year, the purchasers usually expense it on a credit card because the PO process is so cumbersome.

Getting large companies to pay on time hasn't been an issue, but you need to agree to their idea of a schedule. Sometimes 15 days works, but one insisted on 45 days and the 45 days was when they put the check in the mail.

See http://news.ycombinator.com/item?id=438740 for another perspective.

Re: Ask HN: How do you actually get paid the money?

#3

Post by RobGR » Sun, Jan 18, 2009, 1:09 AM UTC

I am not the best person to give advice on this, because I have had only a few customers that were big companies.

However, the standard for payment is still a check via US Mail. If you anticipate slow payment, bill early and include some standard text on the invoice about net terms of 30 or 90 days, whatever is appropriate, and if you wish specify that late payment is subject to a 2% per month late fee. This is fairly common, although there is a wide variety of practices.

If they wish to pay with a credit card, I send an invoice using the Google Checkout email option. This costs me 2% of the bill, but it is probably worth it to get paid early, and I eat that 2% (but treat it as a business expense).

Some companies and some industries are known for ill treatment of contractors and vendors, such as habitual late payment, suggesting that they will only pay the outstanding bill if you agree to some future work, etc. I suggest you simply cut off all business with anyone who starts treating you like that, one of the advantages of being a startup is that you don't have to put up with shit from "long term customers", so don't get fresh new shitty customers.