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  1. #1
    SitePoint Zealot LinuxFreelancer's Avatar
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    How to deal with deadbeat customers.

    I charge my customers after the work is done, something I am starting to rethink. My problem at the moment is that I setup and configured a dedicated server for a guy and migrated his data and all of that. He was in a huge rush to get it done but ignoring my requests for payment.

    I have root access to the server I setup for him, should I change the root password until he makes his payment and possibly suspend his website, which I do not think makes any money?

    Or would that be too shady? It is only like $50 but I want my money.

  2. #2
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    How long has it been?
    The fewer our wants, the nearer we resemble the gods. Socrates

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  3. #3
    SitePoint Zealot LinuxFreelancer's Avatar
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    Approx 2 days now. He was very fast to respond to emails, until I requested payment. He gets them on his Blackberry, so I know he is seeing them. I know he is happy with the work, because he said "...it looks great!".... and went on to say, "I also will give you my work if you want it. I had a guy that was great but he left me high and dry. I am very sorry for all of the extra work. I will need the site updated and some other changes very soon so if you want we will go over that next week."

  4. #4
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    2 days isn't very long...
    not even long enough for the average check to arrive somewhere in the mail.

    are you sure he is a deadbeat? I don't even notice a late pay unless it's been 30 days, and I don't care unless it's been 60-90... maybe everything is fine!
    The fewer our wants, the nearer we resemble the gods. Socrates

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  5. #5
    SitePoint Zealot LinuxFreelancer's Avatar
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    Payment is via paypal and he is not replying to any emails; though I checked the apache access log and he's been on his site since my emails. I will give him another day I guess, to at least reply. I understand people might be late, but would be nice for him to be polite and let me know, though.

    I could be wrong in my philosophy, but a first time customer should pay promptly to build that trust level. I did 8 hours of free work for him as a show of good faith, on top of the migration that the bill is for.

  6. #6
    SitePoint Zealot LinuxFreelancer's Avatar
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    Ah, he finally responded. Seems to be trying to buy time, but as long as he is not dodging me, I can wait.

    Thanks for the advice Sagewing.

  7. #7
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    Quote Originally Posted by LinuxFreelancer View Post
    I could be wrong in my philosophy, but a first time customer should pay promptly to build that trust level. I did 8 hours of free work for him as a show of good faith, on top of the migration that the bill is for.
    I think you could refine your philosophy a bit. Free work is appreciated, but it doesn't always produce the effect you want - you can actually send the wrong impression or look unprofessional by doing free work under some circumstance.

    Further, paying 'promptly' means different things to different people. If someone sent me a bill and then called 2 days later to see what the payment status was, I probably wouldn't do business with them again. I don't even do payables every week anymore, so a 15 day term is a fast as I can do.

    Good faith goes both ways. Give the client a chance to pay.
    The fewer our wants, the nearer we resemble the gods. Socrates

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  8. #8
    SitePoint Zealot LinuxFreelancer's Avatar
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    Very good insight. That is exactly why my title doesn't say "Business Guru" lol

    Thank you, much food for thought regarding professionalism!

  9. #9
    SitePoint Wizard cranial-bore's Avatar
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    Yeah, agree with Sagewing. Having a 7-30 day payment term gives a better image of professionalism whereas wanting immediate payment is a bit like a kid desperate for money for the weekend (no offence intended!)

  10. #10
    SitePoint Zealot LinuxFreelancer's Avatar
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    Quote Originally Posted by cranial-bore View Post
    Yeah, agree with Sagewing. Having a 7-30 day payment term gives a better image of professionalism whereas wanting immediate payment is a bit like a kid desperate for money for the weekend (no offence intended!)
    Thanks, I never looked at it this way. I got so used to people paying me via paypal instantly after my work is done that I didn't stop to think about the customers who deal with invoices and the like.

  11. #11
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    The longer I wait for invoices, the more money I seem to make. Little tiny clients pay quickly, but are usually not that lucrative. Larger, busy businesses can't deal with immediate payments and get annoyed with pesky developers who won't wait for their standard payable runs which are usually weekly. The really huge businesses routinely take 30+ days to pay and sometimes lots more but they can be incredibly lucrative.

    My biggest client for 10 years now usually pays in 60 days, sometimes up to 100. But wow over the years that client has paid for my kid's college Sometimes waiting isn't so bad!
    The fewer our wants, the nearer we resemble the gods. Socrates

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  12. #12
    SitePoint Zealot LinuxFreelancer's Avatar
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    This puts a new light on things. I have gotten fairly large companies on board, performed the work perfectly and had no idea why things would come to a stand still. No complaints were ever raised, just no more work after a while.

    So the moral of the story is to save up money to have a strong business savings reserve and just be patient for payments.

    Though 60 days does seem awefully excessive. But, I guess with late fees it becomes worth it.

  13. #13
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    Nah 60 days is nothing in some circles. If you do government work it can be much longer. There are some contracts that are so huge that there are multiple layers of subcontractors, etc. and each has terms with the next that require them to get paid before they pay the next person in line, and it goes on and on.

    Sure, it's not really that fair or pleasant to deal with.

    But there is another game going on that makes it worthwhile - that is the 'easy money for business that aren't cashpoor' game that you see on huge projects. If you are one of the vendors and you constantly complain about your 30 day-term being violated, you are considered an unprofessional vendor who is desperate for cash. If you just wait, and wait, and wait until it's been 90 days before you even mention the payment, then you start to be friendly with the PMO office since they are struggling to manage cash just like everyone else.

    And if you can keep 2 or 3 subcontractors on salary and make sure they get paid even if you don't, you are in a position to make some real cash.

    Once again, cash is kind and a well capitalized business has so much advantage over one that is scraping by.
    The fewer our wants, the nearer we resemble the gods. Socrates

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  14. #14
    SitePoint Zealot LinuxFreelancer's Avatar
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    Wow, thanks for the lessons here. I might be a good coder, but this stuff is what I needed before I new how to code. lol

  15. #15
    SitePoint Zealot LinuxFreelancer's Avatar
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    I have another question, I just ready this:

    How to Be a Bulletproof Freelancer SitePoint

    a great read!

    But something I am curious of, is... is it wise to take a deposit on large projects? If so:

    What is a standard percentage?
    Should it be refundable?
    Will it turn off good clients? I know the "itty bitty" clients do not trust deposits.

  16. #16
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    It depends on how you define 'large' projects.

    You'll get varying answers to your question, but my answer is the same. Larger clients are more accustomed to standard billing (i.e. 30 day terms) and less accustomed to giving deposits. Of course, someone will tell us that they had a 'big' client and they got a deposit and I'm sure that happens all the time - but it sure seems to me like the most successful contractors/freelancers/shops don't take deposits from large, trusted clients.

    Unless there is some risk that a client won't pay, I don't bother with deposits at all. And, I don't deal with clients who may not be able to pay so this never comes up.
    The fewer our wants, the nearer we resemble the gods. Socrates

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  17. #17
    SitePoint Zealot LinuxFreelancer's Avatar
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    Outstanding advice. So only charge if there is a risk, or just do not accept the risk. Thanks Biz Guru!!

  18. #18
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    This has always been a concern for me as well. I have seen in the past some clients pay the lancer 20% up front. Why this may be the case? Perhaps trust issues or just to give the lancer some funds to feed the family. - thanks sagewing!


    Quote Originally Posted by LinuxFreelancer View Post
    I have another question, I just ready this:

    How to Be a Bulletproof Freelancer SitePoint

    a great read!

    But something I am curious of, is... is it wise to take a deposit on large projects? If so:

    What is a standard percentage?
    Should it be refundable?
    Will it turn off good clients? I know the "itty bitty" clients do not trust deposits.

  19. #19
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    Quote Originally Posted by sidemail2 View Post
    This has always been a concern for me as well. I have seen in the past some clients pay the lancer 20% up front. Why this may be the case? Perhaps trust issues or just to give the lancer some funds to feed the family. - thanks sagewing!
    Probably because the freelancer asked or demanded the deposit. Many freelancers deal with bad clients who aren't good payers so they start to ask for deposits out of habit. Others deal with better clients who are good payers and aren't as concerned about it.

    If a freelancer has to ask for a deposit to feed their family, they should probably get a regular job instead of being a freelancer
    The fewer our wants, the nearer we resemble the gods. Socrates

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  20. #20
    SitePoint Zealot LinuxFreelancer's Avatar
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    Quote Originally Posted by Sagewing View Post
    If a freelancer has to ask for a deposit to feed their family, they should probably get a regular job instead of being a freelancer
    Good point, that is how I started many years ago and quickly learned that one needs a financial buffer. I think 20% is fair, when trust is in doubt.

    Plus, if I am coding a $5000 project, I want to make sure they can make a payment to prove they are not going to rip me when I am done. People I trust, I just say to pay me when they can.

    I do get a lot of recurring customers that I have a trust thing with, most of them give me some $$ upfront without me asking for it. Those are my favorites. lol They know I go above and beyond their project's scope so they give me bonuses too.

    Sagewing, would you recommend business college courses or any other type of courses for learning this material or is learning online just as good?

  21. #21
    Life is short. Be happy today! silver trophybronze trophy Sagewing's Avatar
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    You can learn a lot online, sure, but the best way in my experience is to establish a relationship with someone who has been very successful in your field.

    The problem with internet forums when it comes to general business advice is that there are about 100 less experienced people asking questions for every 1 person who's been through the whole success/failure cycle. And yet, on the Internet anyone can be 'an expert' as it's relatively anonymous so you get lots of varied answers.

    For example, if you ask the question 'should I take a deposit' you'll get answers from people swearing that you never work without a 50% deposit under any circumstances. Then you get answers from other people who say that if you have great clients and good cashflow then you don't have to worry about deposits. Which answer is right? Well, they are both 'correct' in the right context but you have to ask yourself which of the answers comes from someone who has been very successful in business, and which comes from someone who is still playing defense against bad clients.

    If you can find a mentor, that is usually very high value and you can see for yourself how successful someone is before you start taking their advice.
    The fewer our wants, the nearer we resemble the gods. Socrates

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  22. #22
    SitePoint Zealot LinuxFreelancer's Avatar
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    That is a great idea, I had one once but he turned out to not do things the right way and got himself into a world of trouble. Not a good choice on my part.

    Thanks mate, your advice is priceless.

  23. #23
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    The first thing to do when dealing with deadbeat customers is not to refer to them as deadbeat customers when they're taking longer than a few days to pay My experience is people who express negative feelings towards customers privately normally end up unintentionally giving negative vibes to their customers. Remember, every business owner is in customer service!

    Secondly, as others have mentioned, 30 days is completely standard. Companies have cash flow cycles that are dependent on this 30 day schedule and the last thing you want to do is come across as a 'needy' person to do business with.
    www.ChineseImporting.com Guide to importing products from China.

  24. #24
    SitePoint Zealot LinuxFreelancer's Avatar
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    Thank you, there was quite a bit more involved for me to phrase it that way, but I understand your message.

    Yeah I understand the "looks like desperation" thing, I was just used to doing business at some of the other boards where payment within 48 hours was the norm, not being the best policy as I have learned, but I no longer use those boards now. I am in no means desperate, I definitely do not want to give that feeling to customers. Typically I am very friendly and thankful to my customers, but this one customer was, shall we say, "not the norm" for me... wanted a lot more work done than was even part of the job.


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