Comment by coryking | Hacker News Reader

Comment by coryking | Hacker News Reader

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In my time at MSFT there was at least one staffing firm that was founded by a couple contractors who decided to just fuck it and make their own LLC so they didn't have to "pay the pimp" as some put it. If you went through them, you could do so as a 1099.

Given their "fuck it" roots, I'm not actually sure how much of a shield they provided between you and Microsoft's Accounts Payable. I bet they paid you every week like most of these staffing firms no matter how fast or slow Microsoft felt like paying its invoices. I'm also pretty sure they provided you with equipment (though how that works if you are also a 1099... I'm not sure).

What a lot of people who haven't done true 1099 work don't realize is... people and companies can be incredibly slow paying you. And as a 1099 you are your own collection agency so it's upon you to hassle them into paying you.

What I'm saying is... if there is a will there is a way. I bet there is more than a few Microsoft contractors who act like their own agency. It's probably a lot of paperwork, and I have no clue if it is worth it.

Oh man, the industry expectation of delayed payment was my largest headache as an independent contractor.

When I was first starting out, and still struggling to get a good stable of clients, delayed payment was often something I let slide in negotiations. Better to secure a 100k contract w/ payment 3-6(!) months out than risk losing out to another shop.

Even though I was bringing in a lot of income, cash flow was a constant struggle. It took a long time to build up enough billable work to smooth out income curve over time.

The worst of it was when I was just transitioning from a single man shop to bringing on additional help. Conversion from independent 1099 to having your own subs, or worse, trying to carry people on overhead is hard. As the owner, you've bought into the idea of lean times, and variable income, but staff expect to be paid every week. Gogo credit cards as short term emergency bridge loans.

Ahh, the fun of being a small business owner.

The trick for billing big companies (those with a separate accounts payable division) is to incentivize early payment (say with a 5% discount). Most account payable divisions will always try and pay the lowest amount, so they will pay early to receive the discount. Of course you bump up your rate in initial contract negotiations to make up for the discount.

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