Thank you.

Along with shopping for electronic payment methods so I no longer rely on snailmail, I was considering shortening my payment terms. Your post – and all the great responses that validate it – helps me easily whack ’7 days’ onto my future invoices as well. So many thanks, John!

I started putting 30 days payment terms because my tutor suggested in. His reasoning was that most companies only pay all their invoices every month. 30 days was a way of making sure you hit that monthly pay day.

However what i have seen happening is that almost all my clients see the “payment within 30 days” and read it as “payment after 30 days”. This means that i never get paid within the 30 days.

Im going to wack 7 days on all my invoices straight away! Great advice. Thanks for sharing.

I have found that i no longer need to talk about completion dates.
The customer is also satisfied because they can see where every 10 hours has got them.

However, I have been questioning the right way to go about this whole thing. What % up front? Do you take final payment before going live? etc. etc. Whilst always thinking will clients like/accept this. After reading this blog and comments I think it really highlights how naive/stupid I’ve been in this regard. It stops here! I set out my terms, and stick to it, if someone’s got issues with them – do I really want to do business with them?

Thanks, John (and everyone else for sharing their insight).

I found your post after googling ’30 day payment terms’ or something similar.

One company I do some work for has *40* days as standard. Unfortunately I’m not in a postion to negotiate on terms yet but you have certainly given me plenty of food for thought :-)

This has been working great so far, I was approached by an adversing/B2B agency in the Colorado, they seem very legit and professionally not a small studio. They agreed to the 50% deposit however final payment will be 30 days after project completion.

While I usually don’t agree to something like this and currently I’m not that hungry for work there project seems like something that I would want to it’s risk for me as I’m located in Israel what would be your thought’s.

“Why make it hard on yourself?!”

So, I’ve never used “30 day” payment due. I always set dates when payment are due in the agreement and a client has never complained or been late.
Great article and I entirely agree!

For us, the trickiest part is that we’re still building up our company, and I’m also only at it part-time (I have a full-time development job elsewhere), so projects take a long time to complete. A $1500 website can end up spanning three months, because the workload isn’t predictable yet and we have a hard time keeping things structured between multiple clients.

We have made one huge improvement recently. We just started doing all our invoicing in Harvest, and its automatic billing feature is GREAT for monthly hosting charges to our clients. Before Harvest, we charged hosting by the year, and would subsequently forget to bill clients for the second (or third, or fourth) year. Now the invoice gets sent out automatically. Also, the ability for clients to pay online through PayPal has brought our average wait for payments from 15 days down to two or three.

Thanks for taking the time to share your experiences!

Bill

I use FreshBooks for all of my billing, and as it stands my invoices are marked “Please remit payment within 15 days of the invoice date”. If no payment is received within that time, my clients are sent a reminder at the 15-day mark, again at the 30-day mark (if necessary), then once again at 45 days (God forbid). After that I send thugs who don’t speak English anyway, so all the begging and pleading in the world won’t save their asses!

After reading your article, I’m considering going with a 10-day expectation, with subsequent reminders at the 20 and 30-day marks.

As far as establishing a contract is concerned, lately I’ve had some favourable feedback and success with a structure of 50% up front, then the remaining 50% spread over 11 monthly payments. This type of setup affords opportunities to do two things:

1) Gently market some value-added services to my existing clients with on a monthly basis
2) An automatic reminder to take them to lunch in celebration of our 1-year anniversary, and revisit their current services after one full year of data can be scrutinized

As a freelancer, I don’t just try to touch every aspect of every project, but I also try to connect often with every client. This “monthly payment” program helps me do that, as well as create steady reliable cash flow to help out during the lean times.

I’ve never done a 30 day payment structure for anything. I generally do a 30/30/40 structure seeing as the clients I have always take their good old time getting me their content and input.

I totally agree that 30 day payments are not the way to go. I always get something upfront.

30 day terms.. I try not to offer them to anybody, but some people like them, and yeah, big companies are often worst. A strategy back a few years ago was for developers to ask for terms from design-build contractors on their buildings, where jobs would be easily $80,000. The developers would then drag out payment long enough to put the design-build firm out of business, and voila! They didn’t have to pay for the work. The smart guys would call their lawyers IMMEDIATELY, and even the threat of a mechanics lien would get the check moving, but that’s a pain in the ass when a lawyer costs $500 and the whole job was only $2000, for example.

My first policy was 50/50 – That is 50% up front, 50% on delivery. For small jobs, that’s still what I do. Other guys cover materials and consumables for a deposit, then the balance on delivery.

Now I’ve moved to a credit limit system. I give them… say $3600, and 30 days on labor and services. Materials are up front almost always. If they go out past 30 days on any invoice, ALL work halts on everything, and if they’re up to their credit limit, then new work has to be paid on a cash basis. That’s the thing. Terms are a pain in the neck, and unless you have REALLY steady work, it will screw with your cash flow for sure.

A friend has a very different business to mine, a number of clients charged around £50. If he has a non or slow payer then he can live with it. When you have only a small number of clients being charged larger amounts, a single non or slow payer can throw everything upside down, (especially with a young business that has yet to build up a ‘buffer’ in the bank account.

(This is in regard to ongoing contract work. Limited term projects are different, that’s 50% upfront, 25% on go-live and 25% after two weeks from go live)

I find that the terms of setting hard date/milestones for payment is the best idea I have heard in a long time. Most times, if you are the designer you know you are, “Kick-A$$, Super Hero, Rockstar”, you will always hit your deadline. And so, why not be rewarded for your efforts. Just never thought about it this way. Here’s to getting paid in 2010… and BEEEEEEYOND!

“Worth noting that web development is a service, not a product. You can’t get your toilet plunged for Net-30 terms, and you shouldn’t expect someone to put in 40+ hours and then get paid a month or two later.”

I have just sacked a restaurant client who took 90 days to pay. Never seen three months credit advertised on a menu!

And sometimes we get screwed out of payment entirely when not dealing with partial up-front payment.

I have kind of accepted this now and make sure that things like hosting costs are invoiced for super advance, i.e. using their rules to my advantage, e.g. something due on 1 December was invoiced for in September. And they paid end October! Shows how much they pay attention / care! I got my money a month early.

Additionally, if they ask for work, I ask for 50% upfront, amazingly it doesn’t take them 6+ weeks to pay that, does it!

“Our accountant pays everyone ‘net monthly’ which means she logs all the invoices at the end of the month and then counts 35 days before she pays.
If you invoice us on say the 7th. She will enter it on the 30th and then start counting.
This means that at your end it looks like we are heading for 60 days but not at our end.”

This clearly means they ignore individual payment terms to every company they owe money to, not just me, and I think other companies implicate this policy too…..maybe just in UK perhaps?! (the reason I think they do it is possibly based on the idea that the longer they hold the money they owe in their accounts, the more interest they can earn on it).

I keep the payment issue real simple. 50% or smaller for a big project up front and final payment due before launch. With good or repeat customers I just send them an invoice after launch that says due on receipt.