Landed my first client - Nervous about payment

[Greg Kristy]

Just when the search was looking completely hopeless, I get an email from a 10 person engineering firm that builds medical devices. I was actually advertising to both residential and businesses, surprisingly I get a small business.

I was posting on CL with low rates to match what i'm use to getting as an outsourced contractor, in hopes of beating the competition.
I'm in a major US city and I offered 50$/hour for tier 1 and 75$/hour for tier 2. $125 is pretty standard around here from a fully stocked IT/MSP outfit.
Alas, for now I am but one man.

With several years of IT Support and Sales experience under my belt, I confidently talked the owner into an initial free 1 hour visit.

2 Weeks later they emailed asking to proceed, initially, with setting up backup from a server to a NAS device.

So far I've got a free Pay Pal for Business account that allows me to generate invoices and can accept credit cards with a very high processing fee.

I bought the technibble business package and had them sign away my liability to damage beyond my control.

I emailed to ask them, for the time being, to write me a check upon completing my work. Intending to set them up on an invoicing system a bit later once I feel more comfortable.

The response did not come from the owner and check cutter, but from the employee who has taken an interest in IT matters and was my cohort when I first went over there.

Sent July 18:

Hello --------,


Unfortunately, ----- needs to write the check and he is on vacation until July 25th. I would like to ask if you could wait for payment until his return, and would also add that we are a Net-30 company. If the terms are not acceptable, then perhaps we are not a good client for you. Please let us know of your decision. Thank you.


Regards,
​

In my old company we probably would have just said bye-bye or asked for a credit card number to keep on file.

I simply caved. I said ok, no prob.

My first client after all. These are engineers. I had met them and my gut really was telling me that they surely wouldn't be pulling a deliberate scam.


Now I'm going onsite on Wednesday to install a brand new server form scratch. Charging tier 2 rate and expect at least 5 hours onsite.

Any advice? Any middle ground between a confrontation and passive acceptance?

Thanks!

 

[Slaters Kustum Machines]

For us all invoices are due upon completion of work/project and all hardware/software is to be paid up front. This is in our contract. As for this client, you're in a tough situation since you agreed to their terms.

 

[Frick]

Get payment for all hardware before you order, definitely before you install.

 

[Greg Kristy]

I see the wisdom in that policy SKM. But I know from experience in my area that invoicing at Net 30 terms is common practice. I also feel reassured that upon my second visit, I was invited to create my own AD account with Domain Admin privileges, and when I installed Crashplan to perform local backups, the employee suggested I use my own email to receive email alerts about backups.

I did agree to the terms, but it's not too late for me to ask for a credit card number to keep on file. Another colleague suggested asking for payment on retainer - another totally different suggestion I would never think of!

 

[Greg Kristy]

Frick the hardware was purchased by the client. To be honest I am bootstrapping my company. No chance I could afford to put up the money for any hardware

 

[Vyper28]

My clients don't set my payment terms...

 

[gikstar]

There are no hard set rules when it comes to companies paying invoices. Does the employee who emailed you wait 30 days for his paycheck? I think not. Go online and check their BBB rating and do some additional research of them (Yelp?)
Since they are a new client you don't do business with a new client on 30 day terms until they establish a payment history with you.
Whoever this person is, they may be just blowing smoke up you butt. I would suggest that you hand over your invoice to the owner and ask if he/she couldn't expedite the payment of it for you.
We have a dental client whose wife pays the invoices and she says she doesn't pay late fees. Well they keep accumulating. One of these days we will part ways and they will be paid before we let them out of their contract or she won't be available to make payments and we'll slip it through.

 

[gikstar]

We try to make friends with the person who pays the invoices... find out who that is and see how you can smouze(?) them into getting your invoices paid in a timely manner. Time to deliver donuts along with your invoice?
Net 30? That would still mean that they must be cutting checks at least weekly.

 

[4ycr]

Most of the businesses I invoice are on a 15 net but a couple are on 30 days as they have been honest with me and told me that is their system. I usually get paid on time. Some of the bigger companies only pay on a certain day due to the number they receive and they dedicate a staff member to doing that one day a month.

 

[cypress]

There are no hard set rules when it comes to companies paying invoices. Does the employee who emailed you wait 30 days for his paycheck? I think not. Go online and check their BBB rating and do some additional research of them (Yelp?)
Since they are a new client you don't do business with a new client on 30 day terms until they establish a payment history with you.
Whoever this person is, they may be just blowing smoke up you butt. I would suggest that you hand over your invoice to the owner and ask if he/she couldn't expedite the payment of it for you.

Yes and Yes! I agree with doing some background check on that company, checking reviews and such and see what they are about. The most I do with businesses are Net 15 and that is only a couple of clients that I have that do that. I get paid when the employees get paid. They need to establish a good payment history with you like stated. I sure as heck wouldn't be talking to anyone that doesn't write the checks.

This needs to resolved before you even go on site.

 

[DMC Unlimited]

I would agree with those who have suggested setting terms after you have them established as a client. Most of our business clients are setup as Net 15 or Net 30, but we generally require our first time clients to pay the invoice upon completion of the job and then agree to terms for the future. The phrasing of your client's e-mail is what raises a red flag for me. It is as though they are giving you an ultimatum. "Accept our terms or we'll take our business elsewhere." At this point, you'll need to go with your gut since you've already agreed to their terms. You can proceed as agreed and hopefully not get burned, or you can try to backpedal and risk some damage to your reputation. Let us know how this turns out for you.

 

[nlinecomputers]

Next time make them buy you dinner first before you get screwed. Always operate with professional terms. Every client is a poker game. Don't act desperate. And don't let your desperation dictate your terms.
'

 

[Rosco]

With new client dictating the terms of payment before you even start work it might not be right. I know it is your first client but that makes it even more important that it goes right. I have turned people way that tell me what to do. I had one client call last month and tell me i had to become a partner for some VIOP phone company if i wanted to work with them and a bunch of other stipulations. I said call back when you are ready. I am sure we all have a bunch of stories like this.

 

[TAPtech]

I do standard NET30, which is the norm around here. You'll learn how good your clients are at paying in short time.. then you cater your pricing to suit. Is it going to take you an extra 30 minutes of chasing down payment for every invoice? Well, that's an extra 30 minutes of billable time.

I require a 50% down payment for anything over $500, especially with new or "flaky" clients. With clients I've been doing business with for a while and they have a good track record, I don't really care.

$50/hr is a really low rate. Did these guys bite your CL ad because it had those low rates listed? If so that might be a red flag.

 

[Diggs]

My clients don't set my payment terms...

I was an IT buyer in another life. The vendor doesn't set my terms, they can change their price based on my terms, but I always set the terms. Too many choices to even glance at a vendor that couldn't work this way.

 

[gikstar]

I was an IT buyer in another life. The vendor doesn't set my terms, they can change their price based on my terms, but I always set the terms. Too many choices to even glance at a vendor that couldn't work this way.

That would work for larger companies who have set rules on when they pay their bills but very few small businesses are that stuffy and unaccommodating.
I would bet the company you worked for paid their city, county, state, and federal taxes when those entities deemed them due... and, if you did not own the company you were a buyer for, I suspect that if the owner came to you with an invoice in hand and told you he wanted a check written today, you would probably it forthwith.
Again, I suggest that the OP talk to the owner because the accounts payable person wants to do what is most convenient for themselves.

 

[Vyper28]

I was an IT buyer in another life. The vendor doesn't set my terms, they can change their price based on my terms, but I always set the terms. Too many choices to even glance at a vendor that couldn't work this way.

I dont trust a new client to pay me at all, I.T. buyer or not, you're paying upfront for hardware and within 14 days for labour, if they have a problem with that, I don't need that client. Simple really, 95% of my clients pay within 48 hours of my invoice going out. A couple of them pay on the 15/30th when the cheque runs go out for payroll. There is no business that is only cutting cheques once in 30 days, they expect me to jump when something is wrong, so I expect them to pay. If they want a 30 day response time, they can pay on 30 day terms.

 

[ohio_grad_06]

Also, I would begin to make it a practice that all equipment is paid for up front. That way, if you provide equipment, you are paid for that up front. Make sure to include a nice markup there too. Then even if they do back out, you aren't holding the bag and still made a little money. I don't deal on craigslist though. Sure I'll peruse things, but seems like people on there are mostly being cheap. You don't want cheap clients imo.

 

[resolvetech]

Do your best to get all payments in advance or day of services (for new customer). Any product paid BEFORE ordering. You're not a bank. Good clients won't even bat an eyelash.

 

[jzukerman]

It took me 11 years in business to finally see the light about getting payment for hardware and software up front, for all clients new or established. Most have not given me any issue with this change in policy. As for new clients, I request before starting any work that the first invoice be paid upon receipt (i.e. I don't leave their business without a check in hand). Once the check clears, then I can setup NET terms with them (NET30 is what I use). The majority of my clients pay within that. Those that don't I charge the usual 1.5% interest. 95% of my clients pay by check. Only a few pay by credit card, and I too use Paypal. Not enough regular income to warranty a merchant account or use some other system.

Explain to the new client that you want a check before you leave. There has to be someone who can sign a check, even if the Accounts Payable person isn't around.