How do you guys make sure you get paid?

Dan Shafer revdan at danshafer.com
Fri Feb 18 11:27:01 CST 2005


Jonathan.....

About 25 years ago when I began my consulting career, my accountant 
gave me some great advice from which I have never deviated.

Always be working on the other guy's dime. You're not his bank. If he 
can't afford to pay you up front, then unless you're willing to take a 
risk or a royalty stream or something, just pass on the project.

In practice, this translates for me to:

1. Typically get 1/3 to 1/2 of the project fee (or estimate) on signing 
the deal.
2. Tie milestone payments to deliveries where possible.
3. Stop work if and when payments are late or stop.
4. Get it in writing.
5. Make sure the spec is clear and that any changes have to be in 
writing and approved by both parties. It's even better if changes also 
incur a charge and/or include the right to adjust the agreed-upon fee.
6. Leave a percentage -- 10-20 usually works -- to be paid N days after 
final delivery or on acceptance of the project, whichever occurs first.

IN rare cases where you love the project and think it will make your 
client rich (or at least comfortable) and he's not in a position to pay 
up front, then get a royalty stream or equity participation and then 
expect that about 75% of the time you'll be wrong and won't get paid 
anything. You can take on some of these projects if you're flush and 
business is good.

FWIW.

Dan

On Feb 18, 2005, at 6:58 AM, Lynch, Jonathan wrote:
> If you create an application for someone, and periodically e-mail an
> updated version of the incomplete app to them, to make sure you are
> creating exactly what they want, then how do you prevent them from just
> keeping the last incomplete version, using that, and not giving final
> payment?
>
> Yes, you could always sue them, but that is such a mess.
>
> Also, how do you ensure that they do not change their mind and decide
> they don't want it at the last minute, after you have put great work
> into it?
>
> Or - are these things not really problems because they happen too 
> rarely
> to be a concern?
>
> Cheers,
>
> Jonathan
>
>
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