4 ms·

What do you mean by "billed immediately?" $5,000 is maybe a week of work. I'm generally not billing more than once a week.

enraged_camel 10y ago
It depends on the terms of payment. For example, for some of our projects we collect 50% of payment upfront and 50% upon project completion. The client is "billed immediately" at those times. We also have "open-ended" projects where the client can use our services on an ad-hoc (as opposed to per project) basis. For those, we bill the client once a month, on the last day of the month.
- tptacek 10y ago
  In high-dollar consulting, up-front payment is a super weird term. Friends and acquaintances ask me for sanity checks on bids and pricing and deal structure all the time. If I ever see "pay me up front", I red-flag. If you're dealing with a client where you feel you really need a safety deposit, that's a sign from the universe that they shouldn't be your client. Do what you need to when you're just getting started, I get it. But try to move away from the kind of work where you get paid half up front, as soon as you can.
  - morgante 10y ago
    I disagree. Most of my clients pay each milestone upfront (they pay for the first milestone before work begins). Gigster has also built a pretty sizable business with this payment model.
    - tptacek 10y ago
      Your experience is different from mine, but I've definitely done mid-high six figure single contract deals where my team worked for a month and a half, fully delivered, and then sent off an invoice and "hoped" --- though "hope" didn't really play into it, because in srs bzns, when people get an invoice for a project for which they signed a SOW with a price tag on it, they pay. I have no doubt there is a class of client for which this isn't true, but: don't work with those clients. Good rule of thumb: if the median HN reader has heard of a company, that company cannot afford to stiff consultants.
      - morgante 10y ago
        In many cases it's less a concern of the client not paying (I've literally never had a client do that once I broke out of the <$100/hr market) so much as that an upfront payment is a much stronger signal of commitment to the project. In my experience, clients who haven't yet paid anything are less invested in the process and more likely to delay communication/deliverables. It's also a consequence of occasionally doing work with startups who, while they have every intention of paying, don't always have rigorous financial controls in place and sometimes end up running into cashflow problems. I'd flip your analysis on its head: if there's a consultant you're not comfortable with paying upfront, you probably don't want to hire them.
      - csomar 10y ago
        If I'm doing one month work for Thomas, I'll bill him at the end of the month and assume paid. If I'm doing one week work for Capita21 in Mexico (really picked it at random); I'll ask for "full" up-front payment and divide the project into different milestones. Let me ask you a question: Was that client a local client? Was it in the USA?
  - enraged_camel 10y ago
    Our particular industry is full of small and medium size enterprises, and collecting a (negotiable) percentage of the total project price upfront has worked very well for us, and saved our ass more than once. If you work exclusively with Fortune 500 or equivalent then it's not necessary (and would probably be a red flag, as you say) but for everyone else it's pretty common practice. Of course, if what you're trying to say is that the only "serious consulting" is "high-dollar consulting" where you serve such clients, then I don't know what to tell you. But that's neither here nor there. For the record, our projects range from $25k to $150k.
    - tptacek 10y ago
      You got half up front for a $150k SOW?
      - enraged_camel 10y ago
        If the client wanted to pay cash, yeah. Most clients are very understanding, because our offering includes purchasing licenses for certain enterprise software and tooling, and the upfront payment from the client covers those costs. That said, for projects that size we also offer a lease option (basically a 60-month term) and a lot of clients prefer that since it becomes an operational expense at that point (and therefore easier to swallow) rather than a capital expense. In those situations, we work with a leasing company who pays us 100% of the price upfront, and the client makes their monthly payments to the leasing company.
  - csomar 10y ago
    > In high-dollar consulting, up-front payment is a super weird term. Friends and acquaintances ask me for sanity checks on bids and pricing and deal structure all the time. If I ever see "pay me up front", I red-flag. That, and I don't see how a "project cost" makes sense anymore. The project will cost what it'll cost. If there is a budget, I'll start billing into one. Also, as a freelance, you can't work in high-dollar and be the only guy working on that project. You are just part of an organization. > If you're dealing with a client where you feel you really need a safety deposit, that's a sign from the universe that they shouldn't be your client. I'm not sure I agree on this. I've seen very good people change on stressful situation. I'd prefer that I have my terms secured. If you are working with big clients I guess you can make use of factoring? > Do what you need to when you're just getting started, I get it. But try to move away from the kind of work where you get paid half up front, as soon as you can. I can't stress this enough. I live in a third-world and moving from oDesk to high-dollars meant that I moved from working 5-6 days a week to having the ability of not working for the next 5-8 years (just a few months of work).
- morgante 10y ago
  > For example, for some of our projects we collect 50% of payment upfront and 50% upon project completion. The client is "billed immediately" at those times. That's pretty standard. But that means you don't have any $10k projects? I'm not following how you never have $5k receivables unless your consultancy exclusively does small projects.

enraged_camel 10y ago

It depends on the terms of payment. For example, for some of our projects we collect 50% of payment upfront and 50% upon project completion. The client is "billed immediately" at those times. We also have "open-ended" projects where the client can use our services on an ad-hoc (as opposed to per project) basis. For those, we bill the client once a month, on the last day of the month.

tptacek 10y ago
In high-dollar consulting, up-front payment is a super weird term. Friends and acquaintances ask me for sanity checks on bids and pricing and deal structure all the time. If I ever see "pay me up front", I red-flag. If you're dealing with a client where you feel you really need a safety deposit, that's a sign from the universe that they shouldn't be your client. Do what you need to when you're just getting started, I get it. But try to move away from the kind of work where you get paid half up front, as soon as you can.
- morgante 10y ago
  I disagree. Most of my clients pay each milestone upfront (they pay for the first milestone before work begins). Gigster has also built a pretty sizable business with this payment model.
  - tptacek 10y ago
    Your experience is different from mine, but I've definitely done mid-high six figure single contract deals where my team worked for a month and a half, fully delivered, and then sent off an invoice and "hoped" --- though "hope" didn't really play into it, because in srs bzns, when people get an invoice for a project for which they signed a SOW with a price tag on it, they pay. I have no doubt there is a class of client for which this isn't true, but: don't work with those clients. Good rule of thumb: if the median HN reader has heard of a company, that company cannot afford to stiff consultants.
    - morgante 10y ago
      In many cases it's less a concern of the client not paying (I've literally never had a client do that once I broke out of the <$100/hr market) so much as that an upfront payment is a much stronger signal of commitment to the project. In my experience, clients who haven't yet paid anything are less invested in the process and more likely to delay communication/deliverables. It's also a consequence of occasionally doing work with startups who, while they have every intention of paying, don't always have rigorous financial controls in place and sometimes end up running into cashflow problems. I'd flip your analysis on its head: if there's a consultant you're not comfortable with paying upfront, you probably don't want to hire them.
    - csomar 10y ago
      If I'm doing one month work for Thomas, I'll bill him at the end of the month and assume paid. If I'm doing one week work for Capita21 in Mexico (really picked it at random); I'll ask for "full" up-front payment and divide the project into different milestones. Let me ask you a question: Was that client a local client? Was it in the USA?
- enraged_camel 10y ago
  Our particular industry is full of small and medium size enterprises, and collecting a (negotiable) percentage of the total project price upfront has worked very well for us, and saved our ass more than once. If you work exclusively with Fortune 500 or equivalent then it's not necessary (and would probably be a red flag, as you say) but for everyone else it's pretty common practice. Of course, if what you're trying to say is that the only "serious consulting" is "high-dollar consulting" where you serve such clients, then I don't know what to tell you. But that's neither here nor there. For the record, our projects range from $25k to $150k.
  - tptacek 10y ago
    You got half up front for a $150k SOW?
    - enraged_camel 10y ago
      If the client wanted to pay cash, yeah. Most clients are very understanding, because our offering includes purchasing licenses for certain enterprise software and tooling, and the upfront payment from the client covers those costs. That said, for projects that size we also offer a lease option (basically a 60-month term) and a lot of clients prefer that since it becomes an operational expense at that point (and therefore easier to swallow) rather than a capital expense. In those situations, we work with a leasing company who pays us 100% of the price upfront, and the client makes their monthly payments to the leasing company.
- csomar 10y ago
  > In high-dollar consulting, up-front payment is a super weird term. Friends and acquaintances ask me for sanity checks on bids and pricing and deal structure all the time. If I ever see "pay me up front", I red-flag. That, and I don't see how a "project cost" makes sense anymore. The project will cost what it'll cost. If there is a budget, I'll start billing into one. Also, as a freelance, you can't work in high-dollar and be the only guy working on that project. You are just part of an organization. > If you're dealing with a client where you feel you really need a safety deposit, that's a sign from the universe that they shouldn't be your client. I'm not sure I agree on this. I've seen very good people change on stressful situation. I'd prefer that I have my terms secured. If you are working with big clients I guess you can make use of factoring? > Do what you need to when you're just getting started, I get it. But try to move away from the kind of work where you get paid half up front, as soon as you can. I can't stress this enough. I live in a third-world and moving from oDesk to high-dollars meant that I moved from working 5-6 days a week to having the ability of not working for the next 5-8 years (just a few months of work).
morgante 10y ago
> For example, for some of our projects we collect 50% of payment upfront and 50% upon project completion. The client is "billed immediately" at those times. That's pretty standard. But that means you don't have any $10k projects? I'm not following how you never have $5k receivables unless your consultancy exclusively does small projects.