- a software house whose biggest client found out that they were 75% of their business. So they just stopped paying their bills and waited them out until the source code ended up in receivership.
- A contractor that bid a time and material job, deployed it successfully, and got paid. He was then called back in to change a few things for which he was not paid because, "We paid for it to be right in the first place."
- a local trucker that made 500 successful deliveries buy screwed one up, so he got paid nothing. He blocked the parking lot with his truck in order to get paid. (The company would rather pay him that get the bad press from the local newspaper.)
- bounced checks, checks without signature, checks where the 2 amounts didn't match, checks with next year's date: too many to mention
Also, I'm surprised no one has mentioned a controversial practice I know that others have used: time bombs in the software. It goes something like this: Here is your working version which we will make permanent when you're paid in full.
I have never resorted to something like this and I hope I never do. Has anyone ever tried this? What are the ramifications, financial, business, and legal?
I was subcontracting a few years ago and the parent company asked me to code a kill switch into the web app because the client was not paying their bills. I told the parent company they could just give me a call and I could shut off the web server at any time. They said they would rather just have me code the switch because they didn't want to involve me in the situation. I thought that was nice of them. I don't know if they ever had to use the switch.
"Also, I'm surprised no one has mentioned a controversial practice I know that others have used: time bombs in the software. It goes something like this: Here is your working version which we will make permanent when you're paid in full."
If you have to resort to this practice, you have already failed. Tripping the time bomb will get you sued, not paid, and you will lose. You may even go to jail.
I think it's a matter of perspective. We do this with enterprise software, except we don't call it a "time bomb".
"We've deployed your installation with a provisional, expiring license. We'll issue your permanent license once you've confirmed the software is installed and configured to your liking."
Then when they send the check, we send the license. It's never been a problem for any of the parties because we've always been very up front about how the process works. No surprises.
Sure...I guess when I hear "time bomb" I think of something that wipes source code or data. Something that alters the bits and bytes. That's the thing that will cause you a world of hurt. What you're talking about is of course totally legit.
Yeah, using that kind of "time bomb" would be ridiculously bad. I've always looked at that as breaking into the premises and manipulating / burning the books.
I sold a piece of software to a local business a few months ago that works on expiring dates. Each payment I get from the owner pushes back the expiration date until I get the full amount, at which point it's theirs forever(it's worth mentioning that so far things are great).
We didn't agree to a contract for the work I did, so I can only hope I don't get screwed over some how in the future. It was my first freelance job though, so I guess there's a lesson to be learned.
We use an open source product with a paid support contract. I took over admin of this tool last year and was shocked to find that we get a license year-to-year for the product based on renewing our support contract.
So, a free tool has a provisional, expiring license. I think this is kind of bull, personally. Especially given that we pay a 5 figure support contract in an effort to support dev efforts on the product. We generate minimal support requests.
I recently found a bug in their product, their first line of support couldn't figure it out even though I sent them a detailed explanation along with a pointer to their source code where the fix should be. Maybe next year, I'll just fix my own bugs and not bother with the support contract . . .
That's not a time bomb, and if it is written in the contract, you are golden. But pop up a surprise denial of software, and you may be looking at felony computer intrusion charges.
I guarantee you that a halfway decent lawyer would still find a way to sue you and win. Any lawyer could find a way to sue you and the ensuing legal scuffle would consume more money than you made on the project.
Just one of many points they'd raise - once the client pays, that kill switch is still present and could be tripped by the developer, the developer's employer, a hacker, or accidentally.
1> When you make time limited software: You provide a different version that's just the demo - killswitch for the final delivery after final payment.
2> You don't delete their data ever. That's their data. It's their work. Nothing can make it your work. Use of the demo to make their work can be an implicit acceptance of any contract making them pay you, but don't ever screw with their data/work.
In california, it's like 20 bucks[1] to put a lien on someone's property, business etc. Attorneys do this all the time as well as just turn the bill over to an agency to collect.
My small firm has never had cash flow problems and we've never had a client successfully avoid payment. (EDIT: We've had cash flow problems in the beginning due to being a startup, but never from non-payment).
There are a few things that we do that have created this scenario:
1) Stipulate a 10 day payment policy. We don't really expect people to pay that quickly, but prospects/clients always bring it up. It give us the opportunity to communicate how serious we are about getting paid. We then flex the policy to something more realistic, although we make them fight to get the time beyond 10 days.
2) Payment is made regardless of the client's invoice status. We work with a lot of creative agencies so we're not always contracted to the ultimate payer. We make it very clear that we will be paid on time regardless of the status of their invoices. This is a really big thing to look out for it you work with agencies; they want to try to wait to pay you until they've been paid. We make it crystal clear that we will not allow their collection issues to become our collection issues.
3) Meet with your clients face-to-face and build relationships and in some cases friendships with them. It's a lot harder to screw over someone you have to look in the eye. Also, in my case I'm a pretty big dude, ex-lock (rugby), and it's also harder to screw over someone who could break you in half. It's primitive, but it works. :)
4) ALWAYS ALWAYS ALWAYS get money up front. We have a sliding scale for this based on total contract size, but it ranges from 25-50% as an initial payment.
5) Don't start the clock or work until you get paid. We guarantee delivery time, however our clock doesn't start until we've deposited payment, and our contracts stipulate this.
6) Follow up on invoices. We follow up on invoices at 15 day intervals. This is a good thing for so many reasons. It reminds them you're serious. It allows you to communicate before you have to go to the mattresses. It keeps you on top of your A/R because it's too easy to go "oh, it'll be okay, they'll pay" and go back to the IDE.
Yes. I've been following each of these for a few years (except for the big & threatening thing, I'm pretty short) and no client has ever completely escaped payment on me.
Everything stated here is the gospel. If you run a consulting business, follow this to the letter. You will always get paid, eventually.
My policy is that when it comes to getting paid, I am aggressive as hell. I treat every invoice as if the client will be delinquent. You can be the nicest person to work with, but be the most vicious asshole on the planet when it comes to billing. Establish that up front, and they will always pay.
Thanks. Our language on the matter is very specific, and we are very explicit about that policy both in the contract paperwork and in our verbal communications.
Even so, I'd say 3 of 5 clients try to pull the "we haven't been paid yet, we can't pay you" bit. At which point I remind them of their initials on the contract acknowledging that they understood that particular point.
Bottom line, I refuse to let their cash flow issues become my cash flow issues.
During my consulting days, this was a hard issue to get across to many clients. (Part of the reason I don't do much consulting anymore.) My time has a value. You're paying for my time. Whether you extract value from my time is up to you, but I'm going to be paid for it either way.
My consulting colleagues often disagreed with this philosophy, trying to walk some careful balance of not asking to be paid too much so the client will use you again. use being the operative word here. If the client is the type that doesn't value your time, you don't want them to hire you. It never ends up being worth it.
When I got my first real job at a small consulting firm, I was shocked at how many clients just refused to pay their bill. They didn't even really seem to have any specific reason for not paying.
Law firms were they worst. I guess because whaddya gonna do? sue them?
Yeah, having seen some friends get stuck in that situation, I've decided if I ever get into contracting, I'm never starting out on a contract without the "you pay my legal fees if I have to sue you for collection" clause in the contract.
Once you've got that clause.. hey bring it on. Pay me or I'll just hire a buddy for my lawyer, have him rack up the bill and consult with him over a steak dinner.
You can put anything into a contract. And in this case (client pays fees, including legal fees, associated with collection of invoices ... Or somesuch) it's certainly enforceable.
I'm unconvinced that the "client pays legal fees" clause is really a sure thing. All the client has to do is make the argument on some other basis, and suddenly it's not a collections issue but a dispute over something else in the contract. In most states, each side will pay their own legal freight in such civil complaints.
I've personally been on the wrong side of it with some opportunistic a-hole lawyers and a 30-day late payment on my condo fees. Maybe it wouldn't have held up if I wanted to dump 5 figures to fight it all the way, but then that's the point, right? Once you threaten someone with legal fees, they're likely to get a lot more cooperative. Personally, I ate it rather than fight it.
My original mentor told me there are three types of clients never to work for: lawyers, doctors, and the government. The rationale: lawyers can sue you as easily as you can write code, doctors don't pay, and the government can impose a 7 year wait on any check they issue.
This is why you demand a percentage up front, before you write a line of code. If they aren't happy with this, walk away - they aren't sincere and you're walking away from a world of hurt.
Lawyers aren't a protected group. Just like men, white people, and rich people.
Having said that, don't be surprised if a lawyer massages his way into your building and trips on a wet floor and sues you for $50,000. That is their special talent.
Depends on your jurisdiction, in some places equality law specifically says you can't discriminate based on gender, race, nationality, etc. However I'm not aware of any equality law that includes professions, so you'll be fine
My lawyer once pointed out to me that "contracts are only as good as the people who signed them" and what I've learned over the years is to go out of my way to avoid doing business with anyone who seems to be a flake. Granted that things can go south, but this strategy works well. And I say this as someone who went to court once and still couldn't collect.
That's a variation on my own (painfully acquired) General Operating Principle about what really matters: It's not what's on the table - it's what's in the chairs.
This is especially true when it comes to small contracts (below $25K)... in many cases, the overhead of those situations makes actually going to court onerous, even if you win. You want to either get paid up front, or ramp up your relationship with someone to minimize the risk if they decide to just not pay you.
That's like "pulling out" instead of using real contraception. It's usually effective, but when it fails, it can be disastrous. That's why you should always have a good contract, just in case.
As someone getting started in the Freelancing / Consulting world and trying to figure out how you are supposed to do things the "right way" this was a really accessible, fun, and valuable piece to watch, definitely worth the time.
I do have some questions for the HN community if anyone has some advice, thanks in advance.
What's the best way to go about contracts, especially form contracts. Most of the work I do is the same kind of thing and normally the only variables are rate / duration / deliverables. Is the best way to go about this to find a lawyer and have him draft something that I can just drop "$rate / $time" for "$durationOfProject" into.
Is it best to go to the lawyer with some sort of draft in hand already or should you let them do all the work? Can anyone point to some good resources for boilerplate contracts?
Anyways, it's all very new and confusing and exciting, just trying not to fuck it up too badly. Thanks for any advice.
I am not a lawyer, but what mine did for my firm is create a Master Services Agreement (MSA) that I use as a starting point for all my clients. Some of the things that I think are important to include are:
* Stipulation of ownership and licensing for the deliverables.
* Confidentiality
* Disclaimer of warranties (Software provided as is)
* Limitation of liability
* Acceptance terms for deliverables
In my experience the money that I spent having a qualified lawyer who understands small business and intellectual property prepare and support my use of this agreement has been very helpful. The right lawyer will have a draft that he can start with and modify for your requirements.
You can also work with your lawyer to determine the right way to organize your firm (LLC/S-Corp/etc).
At $250 it's not cheap, but there's a lot of really great process and information in the Sitepoint Web Design Business Kit; including sample contracts.
It's kind of like a franchise kit for freelancers.
Okay, the lawyer in that clip explains nicely how mule's stock contracts have points designed to be negotiated in them that are "nice to have protections" that aren't mandatory.
Another way (especially if you're not working with sophisticated counter-parties) is to have very little of those if any, but instead try to keep it short and sweet.
When you go to a lawyer, it really depends on what you ask for: Their legal ethics somewhat dictate for them to be overprotective. So if you are afraid of scaring the hell out of people, you have to tell them to tone down the parts you want to be more toned down, how you want more X then Y, etc, and get across your actual goals of the process.
I once had a client ask if they could just not pay a $2M bill (after 18 months of work) in the name of the "relationship" (because presumably there were much bigger deals down the line.) My boss, to his credit, didn't miss a beat before saying "that's not the kind of relationship we want."
Any particular reason you changed the title? Some people might find it offensive, but they've already semi-censored it with the title "F*ck You. Pay me."
But the title of the video is "F*ck you. Pay me.". If you ask me this submission should point directly to the video and the title should be that of the video.
Can we please just write the damn word down as it is? Everyone knows what the word is, and if someone gets offended by seeing it, that's his very own special problem.
Well, we could argue that about many of the posts on here. But as it is, this links to the VentureBeat article which links to the video, So I think the title is okay.
Is this what we are calling an article? Five sentences plus a warning that the video is offensive. If this was posted on any no name blog, there would be a lot more pressure to link to the original video only. I call double standard.
Just had to send out a Fuck You, Pay Me email this morning. That's the #2 piece of advice I'd give to graduating computer science/engineering students: always get paid. #1 is don't build that idea the business major across the street has for free, which ties in nicely to #2.
There's a ton written about running a startup, but there is amazingly little written about doing a professional services design / development firm. Anybody know of good sources for running a good services firm?
The basics are:
1) Get good clients. Low-end clients typically aren't worth your time, and it will be hard to make money.
2) The best way to get new business is via referrals. The best business can found through happy customers
3) Don't try to compete on price, or hire the cheapest the employees. It doesn't work well in this business.
4) Have contracts and get everything agreed to in writing
5) Pay careful attention to your costs, and learn basic accounting. Overhead for offices and such costs money. You also need to overhead to cover downtime, sales, project management, and collections. You may need 100% overhead.
If you agree to do a project for $3000, make sure you can really get it done for that prices. You also need to figure out how to deal with change-requests. If you allow too many free change requests, you will lose money.
When setting the prices, you need to think like a businessperson. A lot of designers and programmers don't understand how to price their work very well.
>If you agree to do a project for $3000, make sure you can really get it done for that prices.
Yes, and to repeat another point you made earlier, the price you need to charge includes the associated overhead. I have seen many people start in consulting only to fail because they didn't take their overhead costs into account, or at least enough into account, when billing. The only real difference between failing to bill for overhead costs at all and not billing enough is how long it takes you to fail.
This is what indieconf was set up to help address last year, and we'll be doing another one this fall. Videos of some of the sessions will be coming soon - http://indieconf.com and sign up on the email list to be notified (yes this is a bit of a blatant early plug!)
This happened a few times at a previous employer's. It usually wasn't worth it to take them to court, and since we also hosted their website, after a certain time, we'd simply take down their website and e-mail accounts.
About half of the non-paying clients suddenly found room in their budget to pay us for our work and hosting fees. Funny how that works, but unfortunately, that doesn't work for design firms. :/
A lot of freelancers and small artists are afraid to be "aggressive" by asking for a contract.
This is the same dynamic as occurs when someone is young and eager and underprices his or her services. It doesn't make people like you or get you respect. It leads people to take advantage.
Always get a contract. And everyone who works independently in any context needs to watch or listen to the video. (I'm doing that right now.) It's worth the 38 minutes.
He talks a bit about the importance of getting the right stuff into the contract. E.g. forcing the client to pay your legal bills if you have to drag the contract to court to get them to pay you, and termination fees if they cancel the project without a good reason.
Tangential but I'm hugely impressed with the camera work in this video. The alternate long and close-in shots of Mike, the speaker, and the use of contract gave it a decided Hollywood feel for me.
The original source link at Vimeo (which, as other commenters have stated, should probably have been linked to instead of VentureBeat) states that the camera work was by http://whitmoreprod.com/ , which seems to be a professional film production/design firm.
This question might seem naive and if it does I apologize. I live in Vegas but in all likelihood the vast majority of projects I'll be taking will be for out of state companies(especially in CA.) Should I retain a lawyer here, or should I look for one based in California? Thanks for any insight.
This is something that, as someone that is looking to get into the whole consulting business (yes I must be insane), found quite interesting. Thanks for sharing.
This wouldn't work in New York where you can call cabs from the street, but I lived in a town in Minnesota where there was a "non-payer" phone-number list that cab companies used. If you didn't pay the driver, your phone wouldn't get through to any cab company until you paid it back, plus interest and a processing penalty.
It seems like a "bad client" list would be, at least, a partial solution.
I would imagine something like that in New York. Over here, in a much less stressful European city, I am familiar with the opposite. If the driver really likes you, he'll give you his direct number, so you can call him directly and skip (at least most of) the line.
Women always seem to be the ones who get those deals. Hmm.
- a software house whose biggest client found out that they were 75% of their business. So they just stopped paying their bills and waited them out until the source code ended up in receivership.
- A contractor that bid a time and material job, deployed it successfully, and got paid. He was then called back in to change a few things for which he was not paid because, "We paid for it to be right in the first place."
- a local trucker that made 500 successful deliveries buy screwed one up, so he got paid nothing. He blocked the parking lot with his truck in order to get paid. (The company would rather pay him that get the bad press from the local newspaper.)
- bounced checks, checks without signature, checks where the 2 amounts didn't match, checks with next year's date: too many to mention
Also, I'm surprised no one has mentioned a controversial practice I know that others have used: time bombs in the software. It goes something like this: Here is your working version which we will make permanent when you're paid in full.
I have never resorted to something like this and I hope I never do. Has anyone ever tried this? What are the ramifications, financial, business, and legal?