[consulting] Proper Collections Procedure

[Gary Feldman]

Larry Garfield wrote:
> On Wednesday 16 August 2006 10:51, Trevor Twining wrote:
>   
>> For all my clients I charge deployment separately from development. I
>> don't release any code until the development project is completely
>> signed off and paid for. Then I charge a nominal fee for deployment on
>> outside servers. That way I maintain control over the product until I am
>> compensated, and if they stiff me on deployment, I'm not out for the
>> entire project.
>>     
> I'm not an independent consultant currently, but I want to second the 
> multi-stage billing.  Everything I've read or seen on the subject says that 
> billing per-stage is critical, as it provides a milestone for you,  for the 
> client, and for your wallet.
>   
I agree with this, and will raise you one:
> After the spec is finalized, there's a billing milestone.  Work does not 
> continue until it's paid.
>   
The best piece of advice I've seen is to get at least two weeks in 
advance, preferably four, and bill every two weeks, net 15.  Thus after 
the first two weeks, you're out nothing if they don't pay anymore.  Two 
weeks later, if they haven't paid the first bill, you stop all work, and 
you're only out two weeks of work.  Collect, work, bill, repeat.

The advantage of this is that you don't get into arguments over what it 
means for a spec to be finalized, and don't get into a situation where 
they want to see some actual coding or prototypes before they sign off 
on the spec.  You've tied the billing to an objective milestone, not a 
subjective one.  It also encourages you both to work with very short 
milestones, which are easier to schedule accurately and to agree on what 
deliverables are acceptable.  This short iteration cycle is at the heart 
of agile methodologies such as XP and Scrum, but I think the idea for 
using it for billing predates the popularity of those methodologies.

Some companies may object to net 15, but try hard to get it.  Bill every 
two weeks regardless.  Be prepared to deliver incomplete, intermediate 
code if they want it - if they're paying every two weeks, they own the 
stuff you've done for what they've paid.  A harder sell is getting their 
time to review the deliverables for each cycle, but in the long run this 
will increase both the usability of the results and customer satisfaction.

Gary