Screw you. Pay me.
venturebeat.com
venturebeat.com
- 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?
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.
"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.
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.
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 . . .
GPL version with no support. NON-GPL version with support.
This is a widely used method for monetizing own projects with enterprises as they feel safer using NON-GPL apps/code for perceived legal issues.
Not if it was in the original contract.
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.
http://www.courtinfo.ca.gov/selfhelp/smallclaims/collectlien...
EDIT: Yes, it's lien. Proofreading, spelling and slowing down. It's life long struggle :)
You could do that legally, if you made an expiring license mechanism, and included it in the contract.
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.
That's a good way to state that. I hadn't thought of that way to state the exact sentiment.
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.
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.
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.
Law firms were they worst. I guess because whaddya gonna do? sue them?
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.
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 $50,000. That is their special talent.
Personally this is rule 1.
I do have some questions for the HN community if anyone has some advice, thanks in advance.
What's the best way to go about contracts, especially form contracts. Most of the work I do is the same kind of thing and normally the only variables are rate / duration / deliverables. Is the best way to go about this to find a lawyer and have him draft something that I can just drop "$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.
It's kind of like a franchise kit for freelancers.
* 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).
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.
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.
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 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.
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. :/
It supposedly works on IBM.
I don't really understand what you mean, sounds interesting though.
Obviously the company is in need of money, seeing as it can't pay its bills....
For contracts, you can hire a local lawyer if they put Nevada as the jurisdiction in the contract. Also, you can then sue them in Nevada.
It seems like a "bad client" list would be, at least, a partial solution.
Women always seem to be the ones who get those deals. Hmm.