MrQwest

Payment Terms

I recently spent a couple of hours revising my paperwork and the more administrative side of things relating to freelancing as the next 6 months looks like it may get a bit busy for me.

I hate dealing with contracts. I really hate dealing with them. I hate writing them, I hate issuing them and I hate getting clients to sign them. I know they’re necessary but to me, it feels like there’s no trust in an agreement and the relationship feels like it gets off on the wrong foot.

oh hai, I can build you a website, but I don’t trust you so sign this so I know I’ll get paid.

Doesn’t feel right.

Anyway, I digress. My payment terms needed some TLC. Currently, they’ve been 14 days from date of invoice which has worked nicely on small projects. I’ve tended to request 50% at midway through the project and the remainder on finish. This has always been open to negotiation though and if I know the client well, it’s often been 100% on completion. But as I said, this needed revising.

twitter to the rescue! A posted a tweet earlier asking how others mapped out their payment terms and after a flurry of replies, I managed to get a rough idea of how others do it.

So, in this entirely unscientific process of garnering responses, the outcome seemed to be an percentage up front, x after mid point and the balance on completion.

Some others also suggested a deposit and then an invoice every week or two as the project progresses. Andy Clarke mentioned that he bills 2 weeks in advance which is his deposit and then weekly afterwards so he is always 2 weeks ahead.

Makes perfect sense if you’re working on a time-based project as opposed to a fixed sum basis.

Speaking of which, the general consensus of people said they expected their monies within 7 days of invoice. I agree with this and John O’Nolan made a very good post about this very topic.

So for me, I think I’ll be revising my terms to this: –

25% upfront, 50% on design sign off, 25% on completion. All payments due within 7 days of invoice.

Invoice increases by 5% after every month of delayed payment upto a maximum of 15% increase.

How do you do it?


Why not join the discussion?

  1. James Young | Feb 29, 01:17 PM | Permalink

    Payment terms are a personal thing, I see nothing wrong with planning on a 30 day turnaround. I’ve worked with a wide range of agencies and clients and it’s a reasonable number to start you off but if you’re clear in your terms and they agree good luck.

    Be very clear and unapologetic about penalty terms and kill fees in your contracts though. If you’ve not thought about them, make sure you have something in place too.

    I enjoyed John’s post, in my experience he’s lucky getting paid by massive corporates in only 7 days, typically they have their own billing payment cycles and some take as long as 60 days to pay. It’s rubbish but from time to time don’t be surprised if your 7 day demands fall on deaf ears – because they will.

    As for the trust thing, don’t be shy about protecting your business with an agreement. It’s for both parties and it’s not something to be ashamed of!

    If you need an invoice template or a contract doc, feel free to hit up http://docpool.co :)

    Useful post bud!

    James.

  2. Paul Davis | Mar 20, 06:12 PM | Permalink

    I adopted payment terms from my biggest supplier, which is simply 50% upfront deposit before any work starts, and the final 50% before delivery of work. Both payments have to hit my account or at least shown to be on my side of the fence before I consider it paid.

  3. Paul Mist | Mar 30, 02:16 PM | Permalink

    Here’s a question regarding payment before delivery.

    What do you actually retain from delivery until the payment is made?

  4. MrQwest | Apr 1, 09:35 AM | Permalink

    What do I retain? Hmm, that’s a difficult one because the work has already been completed… So I don’t actually gain anything from keeping the work until the payment has been made, but it’s a leverage tool isn’t it?

    If I pass over content & deliverables to a client before they’ve paid, I’m leaving myself open to being burnt by the client. They could (and have done in the past) just not paid. They’ve got their website, they’ve got what they want – there is no longer a reason to pay.

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