3 ms·

The Payment Dance

36 points by ColinWright 5y ago

ColinWright 5y ago
This is pretty high-level and simplistic, but a number of otherwise knowledgeable and experienced people have said: "Wow ... why have I never seen it explained like this?!?" So I thought I'd share it.
- mchusma 5y ago
  Thanks! Good article. I didn't understand purchase orders in particular until deep into B2B stuff. It was just something I encountered until selling deals like $10k+. I still think they are a bit strange.
  - ColinWright 5y ago
    It helped me to think of them as a "Magic Token" that the Finance Department issues so they know that the invoice is genuine. It means that when the invoice arrives they can look up the appropriate file and check that the details before issuing the payment. A busy Finance Department needs some way to cross-reference incoming invoices against previously issued permissions.
gus_massa 5y ago
In which steps are the failures more usual? Do people expect the talk to be free or "for exposure"? Is it common to not get paid after the talk? How common is to get a bad description of the expected audience? (size, age, math level, ...)
- ColinWright 5y ago
  These are great questions for a more detailed page. Most of the issues you raise are no longer problems for me, because I now have an explicit time-scale and check-list that I go through to preempt them. However: > In which steps are the failures more usual? Usually it's getting the PO number from Finance, or otherwise getting explicit agreement about payment details. > Do people expect the talk to be free or "for exposure"? Some do, but in my very first response I ask "Do you have a budget?" If that's not answered, I repeat the question with no other information. In my field there's a lot of good will, and people (almost invariably) act in good faith. > Is it common to not get paid after the talk? Very uncommon. The expectation is laid down early that I'll give a good presentation, invoice them for an agreed amount, and they'll pay. I think in 30 years I've only had three or four people ghost me and not pay. > How common is to get a bad description of the expected audience? (size, age, math level, ...) Rare. People are asking me to accomplish a task, and they know that if I'm mis-informed then it won't go as well as they'd like. I also make it clear that I'll work with pretty much any audience, at pretty much any level, so they don't need to lie to get me on site. The incentives are all in favour of accurate information. And that last comment is the key. Getting incentives aligned is the key to getting everyone working together effectively. Spending time and effort up front to get that alignment is crucial.
  - gus_massa 5y ago
    Anecdote time: Before the pandemic we used to make math popularization fairs in the university. Sometime the organizers was just us, sometimes with another branch of the university, sometimes with the cooperation of the city or national government. Most of the people were fro schools, but we were open to general public too. Something like 200-300 simultaneously and 3000-5000 total after a few days. We had like 10 stands with different activities and someone prescheduled the schools to 3 or 4 stands with the correct level. The problem was that some schools didn't arrive, or some in charge of a stand didn't arrive, or other similar stuff. So sometimes we had to reschedule on the spot. So perhaps someone was expecting a student group of 18 y.o. with some knowledge of calculus and got a group of 12 y.o. that didn't know how to draw a parable. Sometimes it was possible to fix rescheduling on the spot a third group, so the age difference was smaller. One of the trick was to have a wide range of related activities in each stand, so when a group arrives the person in charge would decide which activities to do and change them in case they are too difficult or too easy for the group.
wdb 5y ago
Getting purchase order is quite a pain when you work with one of the Big Four consulting companies. They give PO number and then when you issue your invoice on that they say it's incorrect, or say they decided the payment period is six months instead of your 14 days. It's a mess
- ColinWright 5y ago
  Agreed. This submission was simply to show the flow. Making it work is the subject of many articles and books. Broadly, you need to assess where the risks are, and then put mitigations in place. You suspect they won't pay? Make sure the contract states explicitly the PO number, the payment schedule, and the penalty rates. If they don't pay have a clear path to small claims court (or equivalent), or other legal route. Balance that against against the possibility that you'll never get work from them again, and the time you will spend to pursue it. Factor those into the price you quote. Offer a discount for prompt payment. So there are processes to follow to reduce the problems. The main problem is that people assume all will be well, and have no way to deal with the issues that arise. Remember, in human terms, corporations are sociopaths. Defend yourself accordingly.
  - Throwawayaerlei 5y ago
    Units of US Federal government can also be "sociopathic" about payments, especially timescales for small, cash flow focused companies. One of those I worked for which did a fair amount of business with them in the 1990s found a discount for payment in 30 days worked wonders.
  - wdb 5y ago
    Yeah, we stopped delivering the servers after they didn't pay two invoices over a period of 8 months (€200k+). Which was part of the contract with them that we could if they didn't pay. The quickly paid once they couldn't deliver our service to one of their Fortune 100 customers. Paid all the fees, got payment in advance. These companies only pay when themselves get in trouble with their own customers
    - 5y ago
throwaway378037 5y ago
This was great to read. Building a sass company over the past 10 years, nobody ever tells you how much of your life is going to be spent doing the payment dance with your customers. The only part that’s missing from this lovely write-up is having to deal with multiple people or departments in the organisation which can multiply the time and energy involved, and of course having to sign “supplier terms and conditions” and things of that sort. Part of me enjoys the dance, it reminds me that there’s a real person on the other end and I get to experience their systems and processes. But most of the time I find it a bore
tgsovlerkhgsel 5y ago
For small transactions, the overhead of dealing with all this can easily exceed the value of the transaction. How do people usually deal with this? Just raise prices across the board?

36 points by ColinWright 5y ago

This is pretty high-level and simplistic, but a number of otherwise knowledgeable and experienced people have said: "Wow ... why have I never seen it explained like this?!?" So I thought I'd share it.

mchusma 5y ago
Thanks! Good article. I didn't understand purchase orders in particular until deep into B2B stuff. It was just something I encountered until selling deals like $10k+. I still think they are a bit strange.
- ColinWright 5y ago
  It helped me to think of them as a "Magic Token" that the Finance Department issues so they know that the invoice is genuine. It means that when the invoice arrives they can look up the appropriate file and check that the details before issuing the payment. A busy Finance Department needs some way to cross-reference incoming invoices against previously issued permissions.

gus_massa 5y ago

In which steps are the failures more usual? Do people expect the talk to be free or "for exposure"? Is it common to not get paid after the talk? How common is to get a bad description of the expected audience? (size, age, math level, ...)

ColinWright 5y ago
These are great questions for a more detailed page. Most of the issues you raise are no longer problems for me, because I now have an explicit time-scale and check-list that I go through to preempt them. However: > In which steps are the failures more usual? Usually it's getting the PO number from Finance, or otherwise getting explicit agreement about payment details. > Do people expect the talk to be free or "for exposure"? Some do, but in my very first response I ask "Do you have a budget?" If that's not answered, I repeat the question with no other information. In my field there's a lot of good will, and people (almost invariably) act in good faith. > Is it common to not get paid after the talk? Very uncommon. The expectation is laid down early that I'll give a good presentation, invoice them for an agreed amount, and they'll pay. I think in 30 years I've only had three or four people ghost me and not pay. > How common is to get a bad description of the expected audience? (size, age, math level, ...) Rare. People are asking me to accomplish a task, and they know that if I'm mis-informed then it won't go as well as they'd like. I also make it clear that I'll work with pretty much any audience, at pretty much any level, so they don't need to lie to get me on site. The incentives are all in favour of accurate information. And that last comment is the key. Getting incentives aligned is the key to getting everyone working together effectively. Spending time and effort up front to get that alignment is crucial.
- gus_massa 5y ago
  Anecdote time: Before the pandemic we used to make math popularization fairs in the university. Sometime the organizers was just us, sometimes with another branch of the university, sometimes with the cooperation of the city or national government. Most of the people were fro schools, but we were open to general public too. Something like 200-300 simultaneously and 3000-5000 total after a few days. We had like 10 stands with different activities and someone prescheduled the schools to 3 or 4 stands with the correct level. The problem was that some schools didn't arrive, or some in charge of a stand didn't arrive, or other similar stuff. So sometimes we had to reschedule on the spot. So perhaps someone was expecting a student group of 18 y.o. with some knowledge of calculus and got a group of 12 y.o. that didn't know how to draw a parable. Sometimes it was possible to fix rescheduling on the spot a third group, so the age difference was smaller. One of the trick was to have a wide range of related activities in each stand, so when a group arrives the person in charge would decide which activities to do and change them in case they are too difficult or too easy for the group.

wdb 5y ago

Getting purchase order is quite a pain when you work with one of the Big Four consulting companies. They give PO number and then when you issue your invoice on that they say it's incorrect, or say they decided the payment period is six months instead of your 14 days. It's a mess

ColinWright 5y ago
Agreed. This submission was simply to show the flow. Making it work is the subject of many articles and books. Broadly, you need to assess where the risks are, and then put mitigations in place. You suspect they won't pay? Make sure the contract states explicitly the PO number, the payment schedule, and the penalty rates. If they don't pay have a clear path to small claims court (or equivalent), or other legal route. Balance that against against the possibility that you'll never get work from them again, and the time you will spend to pursue it. Factor those into the price you quote. Offer a discount for prompt payment. So there are processes to follow to reduce the problems. The main problem is that people assume all will be well, and have no way to deal with the issues that arise. Remember, in human terms, corporations are sociopaths. Defend yourself accordingly.
- Throwawayaerlei 5y ago
  Units of US Federal government can also be "sociopathic" about payments, especially timescales for small, cash flow focused companies. One of those I worked for which did a fair amount of business with them in the 1990s found a discount for payment in 30 days worked wonders.
- wdb 5y ago
  Yeah, we stopped delivering the servers after they didn't pay two invoices over a period of 8 months (€200k+). Which was part of the contract with them that we could if they didn't pay. The quickly paid once they couldn't deliver our service to one of their Fortune 100 customers. Paid all the fees, got payment in advance. These companies only pay when themselves get in trouble with their own customers
  - 5y ago

throwaway378037 5y ago

This was great to read. Building a sass company over the past 10 years, nobody ever tells you how much of your life is going to be spent doing the payment dance with your customers. The only part that’s missing from this lovely write-up is having to deal with multiple people or departments in the organisation which can multiply the time and energy involved, and of course having to sign “supplier terms and conditions” and things of that sort. Part of me enjoys the dance, it reminds me that there’s a real person on the other end and I get to experience their systems and processes. But most of the time I find it a bore

tgsovlerkhgsel 5y ago

For small transactions, the overhead of dealing with all this can easily exceed the value of the transaction. How do people usually deal with this? Just raise prices across the board?