Company Fixed Payout Date

[x[E]nOn]

I have a client who says that it is his company's rules that they only pay out on the 12th of each month.

He will often email me with a set of updates and then I will give him a quote. However, he wants to updates to be live once it is all done even before the payment is made. And very often, he will delay the payment to like 3months. Within the 3months, he would have extra changes which he expected to be done without extra charges. Whenever I quote more, he will say leave it to the next month's 12th, which will again delay and delay.

I mentioned that the updates will only be live after payment but he insisted that it cant be this way as the company only do payouts on 12th.

What do you guys usually do in such situations?

[TheRedDevil]

Put him on a retainer, that way he will have x amount of hours each month to spend on updates and most important you will get the money each month.

However its important not to let him "bully" you around, if you say to him that the work wont be done before the invoice has been paid, then you need to stay with that. If you still do the work, the person will see that he can get away with it and still get the updates.

Larger companies sometimes has NET 60 or possibly NET 90 payout rules, but those are usally not enforced 100%. If you have something that the company wants, they have no problems "speeding" up a payment. Though if you want to play ball with the larger companies, its advisable that you follow their payout rules at least after the initial payment.

[jervin69]

I would put forth an arrangement where you either get a retainer or get paid half up front for each project. 3 months is not acceptable unless you are the server admin and can reverse changes if they don't pay.

[Shyflower]

He certainly has the right to run his business his way and you have the same right to run your business your way. I would invoice him once a month and be sure he has it in hand by the 12th of the month and simply let him know (as diplomatically as possible) that once you have invoiced him, all further service will be suspended until that invoice is paid.

Although some businesses may pay on a policy of net 90 (which I think is an incredibly long time) their vendors have the right to set POD, net 10, net 30 terms and to not provide service until their invoices are paid.

The other solution, as mentioned above is to put him on a retainer. When that money is used up, let him know that service will be suspended until he funds his account again.

[dvduval]

I would add that if you are just starting out with this customer, make sure that they get the first payment to you before you start racking up hours.

[Sagewing]

He certainly has the right to run his business his way and you have the same right to run your business your way. I would invoice him once a month and be sure he has it in hand by the 12th of the month and simply let him know (as diplomatically as possible) that once you have invoiced him, all further service will be suspended until that invoice is paid.

Although some businesses may pay on a policy of net 90 (which I think is an incredibly long time) their vendors have the right to set POD, net 10, net 30 terms and to not provide service until their invoices are paid.

I agree with this. A client runs their business however they like, as does a vendor. You need to decide what this business is worth to you and what you're willing to do to keep it.

I have clients on a Net 60 and they are late every month for 5 years, but with a 10k+/month client that always pays within 120 days and continues to send me business I am willing to let that slide. After all, just one of those clients pays for my vacation house or my kids college fund.

If an annoying client that was spending $600/month asked me for a Net 90, I'd refuse.

Figure out what is best for you, balance the risk and financial exposure and make a business decision that is best for you. Anyone who gives you a dogmatic answer like 'xx days is too long' etc. isn't thinking about what is best for YOUR business.

Clients can be in a lot of financial pain and cashflow problems are everywhere. If you are able to give clients more flexible payment schedules without hurting yourself, that is a real competitive advantage. But, if you are spending time and money chasing invoices it's not worth it so you really need to be clear on what you are doing!

[Sagewing]

FYI just for the record my company processes all payables on the first Friday of every calendar month, without exception. If a vendor can't handle that an complains, I usually just assume that they are cash poor and can't wait a few weeks and will find another vendor. To each his own!

[Fergal]

I have a client who says that it is his company's rules that they only pay out on the 12th of each month...

That wouldn't concern me to be honest, lots of businesses will only pay their invoices once per month, because it allows their office to run more efficiently.

..And very often, he will delay the payment to like 3months...

That's a bigger problem. Do you know why they delay payment?

Have you asked yourself what would happen to your business if your client's business went bankrupt?

I do like the idea of a retainer.

Maybe you could also give them a credit limit that you are comfortable with. Make it clear to them that once they go over that limit, you will not be able to provide them with further services.

[x[E]nOn]

I wouldn't mind so much if he eventually pays the money on the 12th of each month.

However, there is a problem that is before the 12th, he would give additional updates or changes to do which he do not expect to have an increase in the pay. And when these additional updates and changes aren't completed, he will not pay up and would drag to the next month again. This is how the payment is always delayed.

For eg, the job was given to me on the 9th of Jan. Since the updates were not completed yet, he will not make any payment on the 12th of Jan. On 15th of Jan, the tasks are all completed. Between 16th Jan to 12th Feb, he tries to send in as much other updates and changes as he could, apparently trying to make his money really worthwhile. And since there are new changes and tasks, it is obvious that it would not be completed by 12th Feb and therefore he would delay the payment to the next 12th March. And in the month of March, the same thing would happen. If I do not do the new changes he had between 16th Jan to 12th Feb for him, he wouldn't pay at all. And since the previous updates are already put live on his site, he knew I would be at the loosing end if I don't do the new tasks he requires me to.

I have mentioned about an increase in the fees due to the new tasks he required but he would often just insist that he would pay the additional fees next time when he ask me to do updates for him again, which again, will delay and forever has such problems.

[tke71709]

However, there is a problem that is before the 12th, he would give additional updates or changes to do which he do not expect to have an increase in the pay. And when these additional updates and changes aren't completed, he will not pay up and would drag to the next month again. This is how the payment is always delayed.

You work 10 hours in the month, they pay you for 10 hours on the 12th. If he adds more hours in for the next month, that's great, they can pay you for those hours next month.

None of this delaying payment by adding costs BS is acceptable in the real world.

If you're on a deliverables-based payment schedule (20% on mock up, 20% on prototype, 60% on delivery for example) then you need to treat the changes as new projects if they're jerking you around for payment. Once you've delivered the original specs, you get paid, then they can add more items and you will work on them.

And since the previous updates are already put live on his site, he knew I would be at the loosing end if I don't do the new tasks he requires me to.

And of course, NOTHING goes live until payment is received. If he balks then have him take them down as you still own the copyright to the code as you haven't been paid yet.

[Sagewing]

Yea it seems like a simple problem. Just do progress billing for all the work/hours that are completed in a billing cycle (in this case, ending on the 12th of each month). If the client doesn't like that, then tell them that you are just looking to be compensated in a reasonable manner and having pay days arbitrarily moved isn't reasonable. Another option is for him to go fixed-bid and have to pay 50% up front, and of course a fixed bid should be bid at the projected hourly cost x hourly rate + huge padding premium - that all costs him MORE money.

Certainly there is a middle ground here.

[x[E]nOn]

If you're on a deliverables-based payment schedule (20% on mock up, 20% on prototype, 60% on delivery for example) then you need to treat the changes as new projects if they're jerking you around for payment. Once you've delivered the original specs, you get paid, then they can add more items and you will work on them.

He is not able to pay in this manner as he could only do payment on the 12th of each month. Neither does he want to pay when the job isn't done yet.

And of course, NOTHING goes live until payment is received. If he balks then have him take them down as you still own the copyright to the code as you haven't been paid yet.

He demanded for the updates to be put live once he has confirmed that everything is right even before the payment. I have told him before that I could only put the changes live when the payment is made but his reply was that the changes are urgent and has to be put up early. And if I do not put the updates up, it may look as if I am delaying him and not providing a good service for him.


He is someone who will pay but would delay for a long long time and during this delay, he will milk as much as he could to make his money worthwhile, which is also something which I dislike.

[amf45]

Hmm.. slavery is back in style now? Who knew??

My point is that you are running a business, so you get to decide your terms. If the client does not want to abide by your terms, you have a choice of abiding by the client's terms OR dropping the client.

Complaining is not really one of the choices, since it doesn't really accomplish anything in your relationship with the client.

So... what's your choice?

[ccburns]

People are talking about a retainer (which I thought was a monthly payment of $x). How about a pre-paid plan. Pay for 10 hours upfront and then when it gets down to 30% of the total hours remaining send him another invoice for another maintenance block. The number of hours will depend on the volume of work.

This way you both win. You get your money upfront, he/she gets their work done quickly and instantly published and you don't have to worry about the monthly invoice run around.

[Shyflower]

People are talking about a retainer (which I thought was a monthly payment of $x). How about a pre-paid plan. Pay for 10 hours upfront and then when it gets down to 30% of the total hours remaining send him another invoice for another maintenance block. The number of hours will depend on the volume of work.

This way you both win. You get your money upfront, he/she gets their work done quickly and instantly published and you don't have to worry about the monthly invoice run around.

It's my understanding that a retainer is sort of a pre-paid plan. For instance, you hire a lawyer and before he does any work, you need to pay him a certain amount of money. When that money is gone, you'll need to re-fund the pot to get him to continue. However, I may be wrong.

[tke71709]

He is not able to pay in this manner as he could only do payment on the 12th of each month. Neither does he want to pay when the job isn't done yet.

It really doesn't matter what he wants. You ned to understand something here, he is taking you for a ride. He's going to continue to get you to work for free forever. At the rate that you're going you'll never get paid a dime.

He demanded for the updates to be put live once he has confirmed that everything is right even before the payment. I have told him before that I could only put the changes live when the payment is made but his reply was that the changes are urgent and has to be put up early.

If the changes are that important, then he can pay for you making them. If the site is going live (and thus everything is correct) then he needs to pay you. Period. End of story.

And if I do not put the updates up, it may look as if I am delaying him and not providing a good service for him.

Oh my lord, he's taking advantage of you.

Stop thinking like a serf and start thinking like a businessman.

Anyway, if you do want to keep working like this send me a PM, I'll keep you inundated with change requests for the next 20 years and not pay you if that's how you want to do business.

[Fergal]

You have a bigger concern than this client. That concern is yourself. You are giving this client control of your business and you are letting him dictate how you do things.

Up to now you have decided to allow this to happen. You are deceiving yourself if you put all the blame on the client. You will empower yourself and take more control of the situation if you take personal responsibility for this situation.

I'm not saying that you should try to have everything your own way. Doing business is about give and take and negotiation. But that is not what is happening here, instead you are being dictated to and you are allowing your client to tell you how to run your business. You are not helping yourself or your business by allowing a client dictate to you in this way.

You need to sort yourself out before you can sort out this client. When I say "sort yourself out" I mean that you need to clarify in your own mind, what you will accept and what you will not accept. You need to have the confidence to know that you won't starve, as a result of putting your foot down and not allowing your client to treat you and your business in a way that is unacceptable to you.

Think of a successful business person you know personally or through the media. Do you think that he or she would allow themselves or their business to be treated in this way? Ask yourself what would they do in your situation.

Sorry if any of that sounds offensive, it's not meant to be. Personally I've allowed myself to get into worse situations and I hope I've learned from them.

Good luck with it and your continued business success.