Do you nickel and dime your clients?

Getting paid can be a stressful thing, and can make some web developers/professionals do things that lack judgement.

Here’s an example:

I referred a videographer to a colleague of mine recently, to shoot a commercial for him. The videographer did a good quality job with the shoot.

But then he started demanding payment — after two days after the shoot. Now he won’t finish editing until he is paid.

Meanwhile, the client works with a $100 million corporation known for paying on time. But he can’t pay for 30 days, as is customary.

But the client will never hire the videographer again, because of his approach to collecting his money. And I look like an idiot for referring this guy to him — even though my experience has been more positive.

What should have happened here is:

– The videographer should have specified his payment terms up front as part of a written contract. Part of that contract should have included a clause for 25-50% paid up front before the shoot, Y% immediately after the shoot, and Z% after final delivery.

– The videographer should have been more professional and patient in insisting on payment. Two days is not a big deal. (I suspect that the videographer has been burned before, and so gets a bit paranoid about payment).

If you have had times when you want to react with emotion/fear/anger about payment, please first be sure that you have acted professionally to protect yourself and communicate with your client.

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  • Dread_

    I’m a web developer so maybe its a little different but I always insist on a 50% up front payment before work begins. I then ask for the other 50% before i hand over the code and it still resides on my servers. The 50% deposit weeds out any of those clients that dont intend to pay and lets me have some financial security too.

  • http://www.vodkafish.com VodkaFish

    Andrew, while an unpleasant experience, this definitely isn’t nickel and diming. I was expecting to read about someone charging for every minute thing and going and going with it.

    Either way, I’ve been in your position before. It’s not a fun one, as there’s usually little you can do but live and learn.

  • http://www.eleytech.com beley

    Yeah, have to say I was expecting a different post too. However, I completely understand. I am usually more lenient with payment terms than I should be. I don’t want to put too much pressure, but I make it clear what my terms are (some products/services are 100% up front, some net 15, some net 30), but I still get clients who think they can just pay when they feel like it.

    I have a family to feed solely on my income, so I can get nasty if I graciously extend net 30 and a client still can’t pay on time. Usually, I’ll just cut them off and every request thereafter will be up-front payment.

    I know it’s not much, but I still have $3000 from various clients that is well over 30 days (30 days PAST the due date, mind you) that will probably go to collections or small claims court soon if I can’t get a payment.

    I’ll extend some leeway and respect up to a certain point, but it’s a two-way street. I put my foot down when it comes to consistently late payments… It’s disrespectful and causes my business and family financial problems.

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  • http://diigital.com cranial-bore

    2 days isn’t long. IMO it’s a bit much to expect such immediate payment if you don’t spell it out before hand. It’s by no means a normal payment term in business.

  • Lola_Designa

    In business there has to be a level of trust, which is why if I don’t feel that I can trust someone to pay me, I do not work for them. Like you said, its important to get everything in writing including payment terms-it saves a lot of headaches in the end : )

  • _theworks

    I’ve recently had an experience like this…. i made an agreement with the client
    on a 40% upfront fee but then once the date we had set arrived he decided he didnt want to pay anything until after the job, me (having being burned like this before) acted in a irrational manor and refused to work for him. he seemed to think i would take the 40% and run away (even tho i had already made a template he liked and disgussed the structure of the system into full depth with him and was ready to start…)

  • http://www.bigroom.co.uk/ riclo

    I generally require one third up front from new clients, one third at some mid-point milestone, and the rest on delivery with 30day terms on the latter two payments. With existing, trusted clients I may do otherwise.

    The strangest one I had was a developer who wanted to subcontract part of the job to me, said the client would pay me on completion, and refused to put me in touch with the person at the client who would be responsible for payment. Needless to say I didn’t do the job.

    I find contracts are sometimes difficult, particulary when a development company subcontracts work out to me – many don’t want the bother and expense of getting a lawyer to draw up a contract. In these situations I tend to send a letter detailing exactly what we agreed before I start the job – it’s not as strong as a contract but is better than nothing and it does avoid missunderstandings. I’ve only been burnt once and ended up forcing the company concerned into bankrupcy – I had offered to sort out a payment plan they could manage but they wouldn’t talk to me about it.

    I’ve found most companies in the UK are very honest and will accept any reasonable payment arrangements if you ask them, but if you don’t ask they’ll expect to pay everything 30days or more after the job is complete because that’s what’s best for them. It’s been three years since I even had to send out a reminder, let alone do any serious chasing.

  • shadowbox

    I don’t think this is nickel and diming, simply poor communication between client and vendor. All this stuff should be written into the contract and both parties should have gone through the contract together and confirmed they understood all the terms. If this had been the case and the client was ‘whelching’ on their part of the bargain, I can see no problem in the guy starting to play hard ball.

    Personally, I never release anything until I get that balancing payment, this is made clear from the very start, and that balnacing payment is actually collected by myself personally on-site at the end of each project – I usually combine this visit with a small CMS training session and also get them to sign an official site approval document. I don’t leave that office without the payment- I then pop into the bank on the way home and then set the site live.

  • al toman

    Jeepers-Creepers I can’t log into this forum comment thing, so I’m posting anonymously using my login name, al toman, which IS my name. Dang! Speaking of nickel-n-diming. Are we still using cookies in this day and age?

    Anyway …

    When I was first learning scripting I gave web sites away. No problem collecting cash there!

    As of Sept 2005, I’ve modified my approach from reading the words of wisdom from long-established web designers, such as the max design people (and others).

    Today, my projects are phased in. I assess a start dollar amount before any (real) work begins.

    Then I setup milestones. For each milestone that the client signs off, I request payment. I don’t do any further work until payment is received (and banked). This is clearly stated in the contractual agreement, backed up with many sublime reminders through the course.

    I allow X number of minor modifications to each phase, otherwise, additional charges. The additional charges are due payable as they occur for each phase.

    The same with 3rd party expenses such as if I hire Mr. Neitlich or need to pay for software license, etc.

    This way, the client has tangibles in hand and I have cash in hand at most all times.

    I allow about 10% at the end of the project for client final review. Once the client signs off on the project, and I get the final cha-ching, the project is released and published.

    It seems to work quite well. Weeds out the “build me a web site even though I don’t intend to pay you a dime” types.

    Of course, there is always that option to call Grand Father Mafioso.

    Kind Regards, Break a Leg, and Get Paid,
    Al Toman

  • xtreme1

    I have a payment collection plan that works well and is spelled out in the contract. I am pretty sure some fo the other designers here do the same thing.

    50% up front
    25% after 30 days
    25% after 60 days

    Past experience I have had clients not provide content for several months so at least now I am not waiting on them. Now obviously if it is a very large project that cannot be finished in 60 days, I use other appropriate terms.

  • Wolf_22

    That sounds like a good path to take xtreme1…

    I’m still a bit cloudy on the term “nikel and dime”. Can anyone elaborate on this for me?

  • basia

    I have permitted 20% payment after delivery. It was big, even public company. We have received money 14 months after due date, after making gratis site only about their payment habits. Everything was clearly written on paper contract.
    And it was not small money to wait…
    I have impression, big ones are just often willing to screw small business dust.
    Back to your story. It is great pity, you have not consulted the problem with the videographer after hearing about the payment procedures problem, if you feel responsible for your relation with the main customer. Perhap he would be more comfortable, if you gave him YOUR warranty.

  • ooba tuba

    “Nickel and dime” refers to the practice of charging for every little thing, typically without actually indicating your intent to do so upfront. It’s typically seen in situations where there’s a too-good-to-be-true price for something, with lots of fine print. Imagine you book a hotel room advertised as $50/night, only to find out after you check in that they charge for the room key, elevator access, bed rental, sheets rental, towels, soap, hot water usage, etc.

    In that sense, the situation described in this thread isn’t really nickel-and-diming…it’s just bad communications, as has been noted.

  • dsandall

    Hi I think the issue has to do with industry practices. What was described by the videographer is quite typical for those in that trade. Having said that, the communication of those billing practices needs to be clear and upfront.

    Dwayne

  • Jens

    The videographer should have been more professional and patient in insisting on payment. Two days is not a big deal: WRONG! He should have used factoring!

  • http://www.lunadesign.org awasson

    That’s just strange Andrew.

    Two days in our industry isn’t even on the clock. Yes a deposit is required, usually between 30% and 50% depending on the job but final payment is always (for us) 30 days after completion.

    Net 30 works for our clients and I would expect it’s the same for any professional service provider.

  • http://www.initialz.com LiveWire

    Quoting awasson
    Two days in our industry isn’t even on the clock.

    So true, I don’t blame the client for not wanting to conduct any future projects with him.

  • Indy Developer

    This topic is very close to my heart. I have a small start up web development business which has been growing nicely over the past two years.

    I feel like I’ve seen it all. I have a contract that clearly states 1/3 down to begin, 1/3 at an agreed upon milestone and 1/3 due upon completion. I read SitePoint’s article on a bullet proof contract (recommended) which also addressed several issues that I have come across over the 2 years.

    Starting with smaller budget clients I have noticed that some of them (not all by any means) are less professional in terms of payment. I actually lost a client because I had waived the initial late payment fee and sent and sent a friendly reminder then at 45 days a sent the late payment fee of $15. The client went completely flipped out and said nobody ever charges him late fees. I have had several instances where I have to way the benefits of sticking to the contractual payment structure or risk loosing a good referral. I feel like a client shouldn’t give you a bad referral when they are very happy with the services you’ve preformed but don’t make payments according to the agreement they have signed.

    Now that I’m working with lager projects and more professional companies I don’t come across this as often. A few times on rush projects I require full payment upon delivery and still get the “my billing manager is out today can we just drop it in the mail tomorrow”.

  • http://www.adesign.co.za adesignrsa

    I agree with everyone that has commented that this is more a case of bad communication.

    We take 50% up front alongside the signing of the spec, contract and quote.
    Depending on the length/size of the job (normally complete within 30 days) we take the remaining 50% on completion.

    The contract states that we will work on a project, and if the client exceeds 45days on any content deadlines, we “reserve the right” to cancel the job and retain the deposit as liquidation damages. This tends to light a nice little match under their bums when you are waiting for content and they are procrastinating.

    This has worked thus far with the exception of a company that went into liquidation themselves 2 thirds into the project. Luckily we had 2 thirds of the money, so we kept the system and we now have something resellable.

    I recently fired a client (liberating feeling). They were a VERY large restaurant franchise and my reason for firing them was that they nickel and dimed me. They were (self proclaimed by them) my “best client”, but they were constantly disorganised, they paid late (30 days was given, but most of the time, after 35 days I had to stop working on things to get them to cough up the money). They have done unmeasurable damage to my company and to be rid of them is going to be a blessing.

    Nickel and diming can swing both ways… rather learn to communicate, and if the client is the one that either did not read the contract or just choosed to disregard ethics… set them free… Trust me, it’s for your own good.

    Andrew… tell the guy you sent the referral to get his sh*t together and learn to communicate or else you won’t bother to send people his way.

  • ts

    Whilst i agree that the client has the right to be offended at the contractor, and not use him again – I think this post is misleading and is potentially tarnishing to our industries’ image.

    Sure, 30 days may be acceptable in certain industries, or circles – but this contractor obviously had his own payment terms, which he has every right to do so.
    If he didn’t make these clear at the start – then his bad. But if it was your colleage just refusing to budge from his standard 30 days, or even worse waiting for his clients payement before paying his contractors then i think this is bad practice on his behalf.

    In my experience contractors should always be paid promptly, and unless stated upfront, the payment should be irrespective of their clients payement. What would happen if the client didn’t pay up? Would your colleage turn around to the contractor and say “sorry mate, no money!”. Of course he wouldn’t. He would abosrb the cost as it was HIS client, not the contractors – therefore HIS risk.

    And you mentioned that your colleage’s client was a big company and a reputable payer. Fair enough, but was the contractor informed of that? And even if he was, it should be taken with a grain of salt. In my experience, the bigger the company, the longer they pay – and the further removed the accounts dept is from the client contact!!

    As stated above a few times Andrew, this post is about payment expectations, not nickel and diming. I would think nickel and diming is more relevant to a post about contractors charging for phone calls, emails etc. like lawyers :)

    Unless the mechanic is your mate, i’ve never driven out of a garage without paying. Never walked out of a supermarket without paying etc etc etc.

    Contractors technically should be no exception. Remember, 30 day terms are CREDIT, which should be earned. If its a first time job, fair enough to expect payment on delivery, or upfront payments. Saying that though, it sounds like a communication issue, which if you can’t establish a good rapport with a contractor best to find someone else anyway!

  • Gospel

    Clearly the videographer’s not interested in fostering goodwill here. Which suggests he’s also not particularly interested in further collaborations. Perhaps there’s something he knows that you don’t? I’ve gone broke several times on the promises of multi-billion dollar corporations. And I’ve learned that a deal is only as good as the money in your back pocket.

  • asprookie

    If the client can’t bother with a contract then consider this as “under the table” work, that is 50% upfront and 50% on delivery tax-free.

  • asprookie

    Oh yes, I forgot to add, it’s not because there’s a big name behind it, that one can expect to be paid fairly, anyway, the videographer is the little guy and the corporation is the big guy, it’s the company that has the responsability to *first* spell out the contract, the videographer was trying to do his friend/collegue a favor, at this point, the videographer is the artist and the corporation is the business, now the little guy is always the first to be blamed, when it’s obvious, the company is being real cheap.

  • http://www.dannyfoo.com/minifolio/ dannyFoo

    I recently had one client tell me off because I was kinda demanding payment and his website isn’t working at a 100%. There’s a weird Flash problem some of his clients experience which has us baffled.

    I’ve been burned before so that was why I wanted to collect payment. I was collecting not only payment remainder but for the updates done they’ve requested me to do earlier.

    Anyway, so I’ve decided to just give in to the client and try to solve his weird Flash problem. If you’d like to know how weird it is, have a read at my topic in the forums:

    http://www.sitepoint.com/forums/showthread.php?p=2834077