Stop Waiting to Get Paid! How to Collect Even when Your Client Delays

John Tabita
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In January of this year, I traveled to our New York sales office to conduct a week-long sales training session. Mid-week, one of the newly-hired reps made a follow-up call to a client she’d sold adverting to the week before, reminding him to send the ad content.

Not only did her client eagerly email his logo and photos, he also sent her a text message, letting her know he’d done so, because he knew she was out of the office all week.

Is that a common scenario for you, clients enthusiastically sending content in a timely manner? I didn’t think so. Her off-handed comment after she’d read his text message was: “I train my clients.”

The advantage to newspaper or Yellow Page adverting is that there’s a deadline. Clients know if they delay, they risking missing the publication date. With the Internet, no such urgency exists. But you can create a sense of urgency by implementing Action Step #5.

Action Step #5: Stop Attaching Payments to Production Milestones

What this Solves:

Waiting to get paid because of client delays

Our industry has fallen into the trap of attaching payment schedules to production milestones. I once waited seven months to get paid for a site that was 95 percent complete, sans content—all because I didn’t require a deposit and foolishly stipulated “payment upon completion.” It took some time to figure out a better way, but once I gained some experience, I knew I could produce a custom site within 60 days, tops. So here’s what I did.

First, whatever document my client signed (i.e., contact, proposal) included a project time table:

  • Apr 1: Client provides all content
  • Apr 10: Developer presents site mockup for client review
  • Apr 10-30: Client reviews design, requests changes; developer submits revised mockups
  • May 1: Client approves final design
  • May 15: Designer presents working site for client review
  • May 15-30: Client reviews site, requests changes; developer makes revisions
  • Jun 1: Client approves site

Next, I structured by payment schedule like so: one third up-front, one third in 30 days, and final payment in 60 days. If all goes well, you’ll notice that the client will be approving the final design approximately the same time payment #2 is due; but, again, it’s not a milestone. Dragging his feet on approving the mockup doesn’t mean he gets to drag his feet sending me a check.

Perhaps the client still hasn’t sent the content; but I used stock photography to create a design, so I’m still good. I’ll use the 30-day payment benchmark to remind him I’ll need content very soon.

At the 60-day final payment benchmark, if I’m the one who’s behind schedule, I can choose not to invoice him just yet. But if the site’s incomplete due to his inaction, he’s getting a bill.

Most clients delay because they’re busy, but some delay intentionally. One developer had a client who purposely delayed final payment by taking weeks to review the site. Another had a client who refused to pay the full amount upon completion to insure the developer would provide technical support. If you’ve not been paid a dime at this point, you’re in a poor position to demand payment, because you risk losing it all. If, however, you used my three-step payment method, you already have two-thirds of your money. If things go south at this point, you have a lot less to lose.

Remember my story of how I waited months to be paid because one of my first clients took so long to send content? Years later, one of my very best clients asked me why several pages of their site were incomplete. I told her because her predecessor never sent content. She seemed surprised and assured me she’d send something right away. I’m still waiting … but not for my money.

It’s not too late to get my free guide, 27.5 Must-Ask Questions for Consultative Selling. Just follow me on Twitter and I’ll send you a link.

This is part 7 of the series Putting a Stop to Abusive Client Behavior:

  1. Stop Client Abuse of Web Designers Now!
  2. Stop the Abuse! 7 Steps to a Well-Trained Client
  3. Stop Wasting Time with Prospects Who Aren’t Serious
  4. Stop Giving Away So Much Free Information!
  5. Stop Writing Proposals to Win Business
  6. Stop Doing the Same Things and Expecting Different Results
  7. Stop Waiting to Get Paid! How to Collect Even when Your Client Delays
  8. Stop Getting Walked on and Set Some Boundaries Already
  9. Stop the Slippery Slope of Scope Creep
  10. Stop Making Endless Design Changes
  11. Stopping Abusive Clients: The Complete Process

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  • http://faxauthority.com Fax Authority

    Good list! It’s too easy as a developer to get sidetracked when a client changes their priorities / demands / objectives.

    It also helps to make sure that you include how fast the bill is payable once invoiced (or at least be aware of a client’s policy) – some companies (usually the larger bureaucratic ones) have bad practices of paying bills 60-90 days after the invoice date on purpose, simply because it’s the way they operate to manage their cash flow.

    Know a company’s policy ahead of time can make a huge difference especially if you’re having to pay subcontractors (or just want to get some food on the table close to when you’re done the work).

  • Ross

    Excellent that it works for you, however my clients simply don’t pay if the project isn’t complete, regardless of what timescales I put into a signed document.

    Granted, I get my 50% up front to create a mutual bond of responsibility, but there’s nothing I can do to force a client to pay the other 40% and 10% on the dates I specify if the work isn’t complete regardless of who (i.e. they) hold things up.

    • http://smallbusinessmarketingsucks.com/ John Tabita

      You’re right. You can’t force a client to pay on specified dates. But when you have a wife with bills to pay who’s wondering why you haven’t been paid for that job you started nearly 6 months ago, you figure out a way.

      At the of the article, I mentioned the client who asked why some pages on their site were empty, but I didn’t mention that the site had been built two years earlier. Should I have waited all that time to get the final payment?

      You don’t force clients; you gain agreement. As I posted above, when the client won’t agree to your terms, you decide if you can negotiate or if you must walk away.

  • Shoaib Shaikh

    That sound almost very good. But i think it might click client that he has actually given half of the amount at the when he has just approved the mock and nothing he has seen practically and working. I find it hard that any client would easily accept these terms, i have no experience of it but in agile development this trick might not be easy to use. what do you say?

    • http://smallbusinessmarketingsucks.com/ John Tabita

      Actually, the client has paid two-thirds at the mock-up approval stage, not one-half.

      You might find it hard to believe that a client would accept these terms, but I don’t. That’s because I’ve done it numerous times, with clients all across the county, many of whom we never met face-to-face.

      Remember, it’s all about managing expectations. I don’t bury this on the back page of a contact that I’ve emailed to a client and assume he read it. I sat down with every client and went over each point of the contract, including this one, and explained why it is a part of my terms and conditions. When I explained how not receiving content delays getting paid, most clients understood it completely.

      In a previous article, I said that closing a deal was a series of “yes-es,” and that a “no” was a potential deal-breaker. You ought to know beforehand what you consider negotiable and what’s non-negotiable. If a client was concerned about having paid two-thirds by the mock-up stage, I certainly wouldn’t lose the deal over it, but I wouldn’t capitulate either. I’d simply suggest a different percentage spread, such as 20/20/60, or half up-front and the remainder in 60 days. But I still wouldn’t base payment on production milestones.

  • http://www.pricklypearmedia.com/ Angelos

    Your steps seam a little complex. Consider this.

    Ask for 50% upfront, which covers support and maintenance for the year. Considering the support and maintenance amounts to 20%+ of the amount.

    The contract is valid for 3-months, whereby when the time passes you leave the project or ask for full payment to continue. Around 30-days prior to this 3-month deadline I let them know that this will happen just so they don’t become overwhelmed with the idea.

    Because we work on an hourly basis I ensure that the contract contains all the estimated working hours. Once the agreement expires, our company & the client have no relationship until they sign another agreement is signed giving the full amount for the project stipulate with the working hours necessary to complete the website. This was written in the first contract when agreeing to a website, so they understand that their contract would no longer be valid after this time period.

    If they do not pay or do not agree they will loose their deposit and considering 20+% of that is after support they loose that too. Simple, only two payments needed. and I am protected whatever happens.

    I feel a 3 phase payment system would only relay things. As you’re likely to keep starting and stopping the project waiting for payments.

  • http://www.stauffer.com Jacob Pitassi

    I am really enjoying your series of articles. I can see the good your payment timetable does, but how would you handle change requests in this instance? Do they get added onto the 60 day final payment?

    • http://smallbusinessmarketingsucks.com/ John Tabita

      Yes, simply bill for any additional work beyond the scope of the project.

  • http://www.malarts.net mal

    ugghh, this is happening right now, with a client I presumed to have a pretty upfront relationship with.
    Great articles. And nice addendum from CMD Dude..

  • http://www.carricdesign.com carricdesign

    Enjoying your articles – thanks.

    I have been working in this industry for a number of year and have always used a 40/30/30 schedule of payment (sometimes 40/60 on small jobs) and never had a client even ask me about it.

    The final payment has been ‘upon completion’, and your article has given me some food for thought.

    I had one client who delayed sending content and got mad at me when, a year after and ‘incomplete’ launch and quite a few emails/phone calls, I asked for payment or I would just take my files from the site back (basically take the site down). He was concerned that if he paid me, I wouldn’t finish the work. I struck a deal with him and agreed to finish any pages that were currently marked ‘under construction’. He reluctantly paid, but never – ever – sent me any more content.

    Ironically, this same client told me that he was getting good leads from the website, even though it wasn’t complete.

    From then on, a new clause went into my client agreement – that if a website was launched at the client’s request when the content was not complete, they would have 3 months from the date of launch to provide the content and it would be installed as per the project. After 3 months, regular service rates would apply. This has worked well for me.

  • http://www.webmosis.net CMD Dude

    I think there’s an important aspect of this that hasn’t been touched on … and that’s building in “fudge factor.”

    I believe you should always build enough padding in to the cost, so that you will be fully paid for your work by the time you’ve completed 2/3 of it. And generally speaking, that final 1/3 payment will go straight back to the client … because I will simply tell the client that the last part of the work “took a lot less time than I expected,” and that I’m waiving the cost.

    This allows you to accomplish 2 important things:

    1) You get paid even if they drag.
    2) You leave the client on a positive note. They feel like they’ve “gotten a deal,” even though they really haven’t (it’s all about perception). And it sets the stage for the next project.