Turning Down Work in a Down Economy
When I go to the local mechanic to have my Jeep worked on, he charges me 72 dollars per hour and expects payment at the time services are rendered. When I get sick and go to the doctor, they to expect payment at the time services are rendered. Why then, in the world of web design, do many companies insist on paying you 30 days after the work is completed? I know, I know. Most accounts payable departments work on that schedule and that’s just how they do things. Deal with it. Well, I generally don’t.
One of my old bosses taught me a lesson that another business leader in the same field agreed with. Not all money is good money, and sometimes you have to refuse work because you know the client would be more of a pain than they are worth. Maybe it’s not the client themselves, maybe it’s just that they don’t agree to your terms. Maybe, that’s enough.
Recently I was contacted to do project for a large company where I used to work full-time. When the opportunity came up, I was their first choice. The project would have been easy for me, but it required that I buy some new software and take a week of my time to have meetings with the company and actually do the work. Their policy is to only pay after the work is completed and then on a 30 day billing cycle. My general policy is to receive an initial deposit to cover costs, and the remainder of payment to be collected upon project completion.
I agreed to similar (net 30) terms for a different project earlier this year. Upon completion, I billed the client and waited 30 days. After 30 days, I called the client, and re-billed them. They were slow payers, and it ended up taking almost 4 months for me to collect my money. I don’t like waiting. Especially when it comes to money!
I hate to turn down any work, especially when it comes from a large, well established local corporation. But I have been raked over the coals enough times to know to stick to my guns. I have a waiting list of projects, and each client has paid or will pay me a deposit before any work is actually started.
I think my policies are simple and fair. But am I wrong? Should I bite the bullet and get used to doing work in advance?
I am a bit conflicted about my recent decision to turn that work down. Now, someone else is going to do the project.
Feel free to comment on this post and offer me some advice.
on June 16, 2009 at 6:35 pm
Joann Sondy said:
Jason, I agree with you. I've operated on the invoice when complete and wait… wait… for payments. A model that I adopted from my former agency days; a model that doesn't work well in today's econ climate. I'm also becoming more strict about "giving" service away. I'm talking about pro bono projects/clients, but rather "can I have that on disc when complete?" NO, unless you pay me.
on June 16, 2009 at 6:42 pm
jmarshall74 said:
Thanks for the support! For an independent designer it is easy to get abused by clients. Not that they intend to abuse, but freebies here and there can add up and suck away your time.
on June 16, 2009 at 7:10 pm
DevGrl said:
Jason, I'm glad I'm not the only one!! My policies are the same as yours, but you always have those clients who take weeks and sometimes months to pay an invoice. In most of my cases the work has been completed, it's live on the web making revenue for that customer, while I sit waiting for a check. Aggravating, and with the current economy, you run the risk of the customer going out of business and you never get paid.
on July 6, 2009 at 10:27 am
yashesh said:
devgrl, that is spot on, with current market conditions the biggest fear is not about receiving payments but about the company to whom you've rendered the services going bankrupt.
we've lost a bit of monies and become wiser i guess by having a very strict limit on outstanding payments. i.e. if the company has a policy of net30 we have a policy of max outstanding of 1.5k, so the customer may choose to hold on for 30 days before continuing work or payup 1.5k due and restart the cycle.
on July 6, 2009 at 3:08 pm
jmarshall74 said:
I really like your policy of 1.5k max outstanding. I think I will adopt a similar policy. It seems to be a way to protect yourself and still be able to work with companies with a net30 payment policy. Thanks for the comment!
on July 7, 2009 at 9:55 pm
natebalcom said:
I feel your pain man. With the last freelance project I worked on the company waited 3 months to pay. I believe they legally have 90 days before they absolutely have to pay you and a lot of companies will do just that. It's just that much more annoying in a down economy to not get paid. It's a fine line to walk though.